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China surplus shrinks as trade slows
Release Date:
2012-01-10
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China's trade surplus shrank in 2011 as import and export growth slowed sharply, official data shows.

The figures add to mounting evidence that the economy is slowing and will increase pressure on Beijing to prevent the world's second largest economy from suffering a painful hard landing.

The surplus narrowed to $US155.14 billion from $US181.51 billion in 2010, the customs agency said in a statement, reflecting economic turmoil in Europe and the United States.

Exports rose 20.3 per cent to $US1.899 trillion in 2011, compared with an increase of 31.3 per cent in the previous year.

Imports rose 24.9 per cent to $US1.743 trillion, much slower than the 38.8 per cent growth in 2010.

Growth in exports is expected to halve this year from 2011, as European woes and a sluggish US economy drag Chinese economic expansion below 9 per cent for the first time in more than a decade.

Weakening demand for exports will "provide further drag on the Chinese economy at least through the first half of the year," said Alistair Thornton, an analyst at IHS Global Insight in Beijing.

Gross domestic product growth could ease to 8.5 per cent in 2012, a senior government researcher said last month.

That would be the slowest pace since 2001, when the economy expanded 8.3 per cent.

But it would still be within the official annual target of 7 to 8 per cent, a level seen as necessary to create enough jobs to keep a lid on social unrest in the country of more than 1.3 billion people.

Despite the grim outlook, Beijing is likely to remain under pressure for a stronger currency, a constant bugbear for China's trade partners who argue the yuan is too cheap and gives domestic exporters an unfair trade advantage.

Monthly trade figures showed December's trade surplus widened to $US16.52 billion from $14.5 billion in November, while year-on-year growth in exports and imports slowed.

Exports rose 13.4 per cent to $US174.72 billion, compared with a rise of 13.8 per cent in November.

And imports increased 11.8 per cent to $US158.2 billion compared with a 22.1 per cent rise in the previous month.

In November, China cut the amount of money banks must hold in reserve for the first time in three years to spur lending and counter global economic turmoil.

Senior Chinese leaders have repeatedly vowed to maintain a "prudent monetary policy and proactive fiscal policy" in 2012, suggesting they will move cautiously to open credit valves to avoid reigniting inflation.

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