03/10/2010, 00.00
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Exports and imports rise sharply, inflations follows

Exports are up by 45.7 per cent; imports by 44.7 per cent. Consumer prices jump 2.5 per cent, the highest increase in 16 months. Official sources say public debt by local government could be higher than expected, and reach 6 trillion yuan.

Beijing (AsiaNews/Agencies) – Chinese export jumped 45.7 per cent in February from a year earlier, whilst imports surged 44.7 per cent, the General Administration of Customs said on Wednesday. However, inflation also rose sharply as local governments show a higher than expected debt level.

The faster than expected rise in exports and imports has caught experts by surprise. In fact, no one is ready to venture an explanation, saying only that February figures are unrepresentative since they include Chinese New Year, a time of great celebration and spending. They note that the current surge in exports might be short-lived until China’s main markets (United States and European Union) do not pick up.

In January, exports gained 21.0 per cent, whilst imports increased by 85.5 per cent. China’s trade surplus for February was US$ 7.6 billion, compared with US$ 14.2 billion in January. However, Lu Zhengwei, chief economist at Industrial Bank in Shanghai, urged caution, saying that the base of comparison was much lower early last year, when demand was depressed by the global credit crisis. In fact, adjusting the totals for changes in the number of working days and holidays, exports fell from the previous month for the second month in a row.

Other experts note that trade figures continue to be skewed by the fixed rate of the yuan, held by Beijing at 6.83 to the dollar since July 2008 to help it maintain high volumes of exports.

Central bank governor Zhou Xiaochuan said on Saturday that the decision to re-peg the yuan has been a special response to the international crisis and that China would have to shift from that policy stance sooner or later.

This will have to be done to contain inflation. Consumer prices last month rose 2.5 per cent from a year before, whilst the jump in producer prices was over 5 per cent, the biggest in 16 months. Real estate prices also continue their upward spiral.

Figures from the National Bureau of Statistics (NBS) showed housing prices in China's 70 large and medium-sized cities rose 7.8 percent in December 2009 from a year earlier, up 1.5 percent compared to the previous month.

Relevant figures from the Beijing Municipal Statistics Bureau show that the city's average annual income in 2008 was 44,715 yuan, whilst urban apartments were selling for an average of 15,581 yuan per square metre.

Jia Kang, director of the Research Institute for Fiscal Science at the Ministry of Finance, said that local governments’ hidden debt might be about 6 trillion yuan (about US$ 950 billion). The estimate “may not be very accurate” but the scale should be close to that, Jia said in Beijing today.

Local officials in fact owe their careers to their areas’ economic achievements—this has often led to the reporting of inaccurate data. Now government-spending data might not be very accurate either.

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