Foreign trade surplus expected to be strong in 2007

14 May '07

2 min read

The imminent announcement of April trade figures may give the US and the European Union fresh excuses to force another round of RMB appreciation.

According to the latest figures released by the Forecast Science Research Center of Academy of Sciences, China's trade surplus will reach about $57.5 billion second quarter this year, a $10 billion rise compared with the first quarter.

The report predicts trade surplus will continue to increase in the third and the fourth quarters. It is expected to climb to $254.03 billion for the whole year, an increase of 42.8 percent.

China Economic Research Center of Beijing University on April 28 released another report saying trade surplus in second quarter will expand at about 5.4 percent higher than in imports. Trade surplus is estimated at over $240 billion during the year.

Academy attributes main reasons for China's trade surplus continuing to grow in 2007 to growing Sino-EU trade volume rise, same is expected for Sino-US trade with China's trade surplus expected to remain at a high level.

The report foresees that in 2007, China's trade surplus with the US, and EU will reach $178.2 billion and $128.6 billion, up 23 percent and 44 percent, respectively.

Excessively large trade surplus reflects the growth of Chinese economy on external demand. If the forecasts come true, the Central Bank will have to put in circulation RMB to hedge dollars, thus adding fuel to the increasing social funds.

This, added measures by the Central Bank will also be necessary on urgency basis, according to the reports.

Fibre2fashion, News Desk - China

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