China Exports Surge 35.2 Percent as Yuan Climbs, Central Bank Steps In
(MENAFN) China’s export machine is holding its edge, propped up by central bank intervention and a pivot toward higher-value goods, even as a rising yuan raises fears that Beijing could lose its grip on global trade.
Exports jumped 35.2% from a year earlier in October to $412.3 billion. Imports climbed 41.6% to $307 billion, boosted by higher oil prices tied to the conflict in the Middle East. The figures give policymakers breathing room for modest stimulus as they target annual growth of 4.5%-5%.
The import surge cut the monthly trade surplus to $105.3 billion in October, down from $133.5 billion in September. Even so, the surplus for the first 10 months of the year topped $1.04 trillion, while the yuan strengthened against the dollar from 6.98 at the start of the year to 6.64 by Nov. 2.
Asian markets analyst Sadi Kaymaz told a Turkish news agency that the yuan’s gain of roughly 5% against the US dollar, a four-year high, has not yet seriously eroded competitiveness, largely because of interventions by the People’s Bank of China (PBoC). The bank recently decided to raise the reserve requirement ratio on foreign exchange deposits, stoking expectations that it may move to halt the currency’s climb.
Kaymaz said a stronger currency should normally dent competitiveness, but current conditions do not put exporters at a disadvantage because shipments are being driven by artificial intelligence (AI) hardware.
“Chinese chip exports doubled in value and the sensitivity of exports to exchange rate fluctuations remained limited,” he said.
He added that the stronger yuan lowered the cost of energy, raw materials and intermediate goods, cushioning the blow, while slower price increases in China than in its trading partners further softened the effect.
“Low-margin sectors like textiles, toys, and furniture are sensitive to exchange rates and they saw a slight slowdown, but this time the appreciating yuan is not affecting export competitiveness as significantly as expected and the PBoC’s efforts to curb its appreciation played a role in this, allowing exporters to absorb the exchange rate gains over time,” he added.
Exports jumped 35.2% from a year earlier in October to $412.3 billion. Imports climbed 41.6% to $307 billion, boosted by higher oil prices tied to the conflict in the Middle East. The figures give policymakers breathing room for modest stimulus as they target annual growth of 4.5%-5%.
The import surge cut the monthly trade surplus to $105.3 billion in October, down from $133.5 billion in September. Even so, the surplus for the first 10 months of the year topped $1.04 trillion, while the yuan strengthened against the dollar from 6.98 at the start of the year to 6.64 by Nov. 2.
Asian markets analyst Sadi Kaymaz told a Turkish news agency that the yuan’s gain of roughly 5% against the US dollar, a four-year high, has not yet seriously eroded competitiveness, largely because of interventions by the People’s Bank of China (PBoC). The bank recently decided to raise the reserve requirement ratio on foreign exchange deposits, stoking expectations that it may move to halt the currency’s climb.
Kaymaz said a stronger currency should normally dent competitiveness, but current conditions do not put exporters at a disadvantage because shipments are being driven by artificial intelligence (AI) hardware.
“Chinese chip exports doubled in value and the sensitivity of exports to exchange rate fluctuations remained limited,” he said.
He added that the stronger yuan lowered the cost of energy, raw materials and intermediate goods, cushioning the blow, while slower price increases in China than in its trading partners further softened the effect.
“Low-margin sectors like textiles, toys, and furniture are sensitive to exchange rates and they saw a slight slowdown, but this time the appreciating yuan is not affecting export competitiveness as significantly as expected and the PBoC’s efforts to curb its appreciation played a role in this, allowing exporters to absorb the exchange rate gains over time,” he added.
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