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Export fall may ease in second half, says minister

(China Daily)
Updated: 2009-07-23 07:52

SINGAPORE: The pace of decline in China's exports could ease later this year while the country's stable yuan policy will benefit the global economy, Commerce Minister Chen Deming said Wednesday.

Chen Deming

"Overall, China's economy is stabilizing and improving," Chen told reporters here. "As for exports in the second half, we'll have to look at the global economic situation. If the global economy improves, the pace of export decline should ease."

Trade officials at the gathering discussed ways to revive global trade and pledged measures to fight protectionism.

WTO chief economist Patrick Low said Wednesday China was expected to overtake Germany as the biggest merchandise exporter this year due to a weak performance of the European economy.

"China will play a very important role in Asia's recovery," Low said.

China's merchandise exports of $1.43 trillion in 2008 slightly lagged Germany's exports of $1.47 trillion, the WTO said in its latest World Trade Report.

Any sustained recovery in China's exports would relieve some pressure on the government, which has launched a 4-trillion-yuan stimulus package while boosting bank credit.

Related readings:  China's major export base sees signs of recovery  China boosts export credit insurance  China leads world toward recovery  Signs of stability bring hopes of recovery

Chen said he was confident that China would be able to maintain its share of global trade, which the World Trade Organization expects to fall 10 percent in 2009.

"The renminbi (yuan) has stabilized and its stability will have a positive impact on the global economic recovery," he said when asked whether China might resort to weakening the currency to help spur exports.

China allowed the yuan to appreciate steadily against the dollar after its landmark currency revaluation in 2005, but the rise came to a halt in July 2008 as the global crisis struck.

Beijing has resisted calls by some local exporters to lower the yuan's value to spur sales for fear of sparking competitive currency falls around the globe.

The yuan was hovering near 6.83 per dollar Wednesday.

China's June exports fell 21.4 percent from a year earlier compared with May's slide of 26.4 percent, while June imports were 13.2 percent lower, rebounding from a 25.2-percent fall in May as domestic investment and consumption firmed.

The world's third-largest economy grew a faster-than-expected 7.9 percent in the second quarter from a year earlier, accelerating from 6.1 percent in the first quarter and raising expectations of hitting the full-year target of 8 percent.

Domestic trade has been booming as some exporters turned to the home market as orders from overseas clients fell, Chen said.

China's recovery is a boon for other Asian countries, but analysts say any meaningful recovery in global trade will hinge on a recovery in the United States and other developed economies.

Reuters