China Exports Soar 35.2 Percent as PBoC Blunts Yuan’s 4-Year High
(MENAFN) China’s exporters are holding their ground against a surging yuan, shielded by central bank intervention and a shift in the goods they sell abroad, despite warnings that the stronger currency could erode Beijing’s dominance in global trade.
October shipments abroad climbed 35.2% from a year earlier to $412.3 billion, official figures showed. Imports jumped 41.6% to $307 billion, lifted by costlier oil amid the Middle East conflict. The data hands policymakers room for measured stimulus as they chase annual growth of 4.5%-5%.
The faster rise in imports shrank the monthly trade surplus to $105.3 billion in October from $133.5 billion in September. Still, the cumulative surplus over 10 months exceeded $1.04 trillion, even as the yuan gained against the dollar, moving 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 roughly 5% rise against the US dollar, a four-year peak, has so far done little real harm to competitiveness, thanks to interventions by the People’s Bank of China (PBoC). The central bank had moved to lift the reserve requirement ratio on foreign exchange deposits, feeding speculation that it may try to stop the currency’s advance.
Kaymaz said a stronger yuan would ordinarily weaken competitiveness, but exporters are not at a disadvantage right now because artificial intelligence (AI) hardware is powering shipments.
“Chinese chip exports doubled in value and the sensitivity of exports to exchange rate fluctuations remained limited,” he said.
The currency’s strength also made energy, raw materials and intermediate goods cheaper, he noted, offsetting part of the hit, while prices rising more slowly in China than in its trading partners eased the pressure further.
“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.
October shipments abroad climbed 35.2% from a year earlier to $412.3 billion, official figures showed. Imports jumped 41.6% to $307 billion, lifted by costlier oil amid the Middle East conflict. The data hands policymakers room for measured stimulus as they chase annual growth of 4.5%-5%.
The faster rise in imports shrank the monthly trade surplus to $105.3 billion in October from $133.5 billion in September. Still, the cumulative surplus over 10 months exceeded $1.04 trillion, even as the yuan gained against the dollar, moving 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 roughly 5% rise against the US dollar, a four-year peak, has so far done little real harm to competitiveness, thanks to interventions by the People’s Bank of China (PBoC). The central bank had moved to lift the reserve requirement ratio on foreign exchange deposits, feeding speculation that it may try to stop the currency’s advance.
Kaymaz said a stronger yuan would ordinarily weaken competitiveness, but exporters are not at a disadvantage right now because artificial intelligence (AI) hardware is powering shipments.
“Chinese chip exports doubled in value and the sensitivity of exports to exchange rate fluctuations remained limited,” he said.
The currency’s strength also made energy, raw materials and intermediate goods cheaper, he noted, offsetting part of the hit, while prices rising more slowly in China than in its trading partners eased the pressure further.
“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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