China’s trade surplus highest since January 2009
China’s trade surplus in July swelled to its highest level in more than two years, led by strong demand from Europe and emerging markets in Asia. But analysts said that’s likely to be unsustainable if the global economy continues to weaken.
The country’s trade surplus rose to $31.5 billion in July, the biggest gap since January 2009 and up from the $22.3-billion surplus registered in June, Beijing said Wednesday.
Chinese exports grew an impressive 20.4% from a year earlier, to $175.1 billion, the strongest performance since April. Meanwhile, imports rose 22.9% from a year earlier, to $143.6 billion.
Growth in shipments to Europe doubled between June and July, and exports to Japan saw solid recovery. Sales of Chinese goods to developing countries in Asia, such as Vietnam and Indonesia, continued to strengthen.
Economists warned that the trade numbers could sour, with this week’s battering of financial markets possibly triggering another global recession.
“The better export and import growth from China may offer some [temporary] relief to the jittery market, though their outlooks look more uncertain as global market turmoil and expected weaker global growth prospects also point to downside risks to China’s trade and economic growth,” wrote Jian Chang of Barclays Capital in a note to clients Wednesday.
The unexpectedly high trade surplus could worsen trade tensions between China and Western nations and bolster calls for China to boost its currency. U.S. and European manufacturers have long complained that Beijing keeps its currency, the yuan, artificially weak to gain a price advantage for its exports.
The yuan rose to a 17-year high against the dollar Wednesday morning, to 6.4170. Analysts say China may be compelled to strengthen the yuan further to help tackle the country’s highest inflation in 37 months.
