Analysts warn China`s imports may fall, after exports rise 44pc

CHINA registered a 44 per cent increase in exports in June compared to the same month a year earlier.

The US$20 billion result added to the surplus of $19.5 billion in May and indicates "China`s external surplus might balloon in second half of year," reports London`s Financial Times.


"The June figures showed no signs of an expected slowing in global growth that has gripped investors, with exports to Europe increasing a higher-than-expected 43 per cent, year on year, and to the US 44 per cent. In dollar terms, exports increased from $131.76 billion in May to $137.39 billion," the report said.


"China`s trade account [is] continuing to defy gravity," Tom Orlik, an economist at Stone & McCarthy in Beijing, was quoted as saying. "A resurgent trade surplus will clearly strengthen the argument for rapid appreciation of the renminbi."


Exports of steel rose by 14 per cent in June over the month before to 5.6 million tons; and the Central Government in Beijing announced late last month an end to export tax rebates for steel and other metals.


Imports grew 34.1 per cent in June, year on year, down from the 48.3 per cent expansion seen in May, "which could be an indication that measures to slow the property market were already having an impact on investment in China," the FT said.


"More signs of domestic slowing were evident in other figures... including the M2 measure of money supply whose rate of growth fell to 18.5 per cent in June, year on year, from 21 per cent in May and 29.7 per cent in November.


"China`s foreign exchange reserves rose only by a relatively modest $7.1 billion in the second quarter to $2,454 billion, compared to an increase in the whole of last year of $453 billion.


The muted increase was partly explained by a steep drop in the dollar value of China`s euro assets. However, economists said it could also reflect a significant capital outflow over the period, as expectations about currency appreciation were scaled back."


The report added: "Going forwards, analysts believe that imports could slow further as the property market clampdown and efforts to control borrowing by local governments for infrastructure projects will restrain the demand for imported raw materials."