iBlogForex » China

China’s economy to maintain double-digit growth this year

Jon — Mon, 03 Jul 2006 08:16:53 +0000

China’s economy will grow by 10.3 percent in the first half of 2006, then slow marginally for a full-year expansion of 10 percent, the central bank said in a new report.

At the same time, inflation will climb slowly, registering 1.3 percent in the first six months of the year and 1.7 percent for the 12 months, according to the report, from the People’s Bank of China’s research bureau.

The forecasts, released over the weekend and published in the Beijing Morning Post on Monday, come despite a stream of government measures aimed at slowing the economy, following growth of 10.3 percent in the first quarter.

China’s economy has showed few signs of responding to the cooling measures, such as an interest rate hike in April and policies targeted at curbing investment in the property sector.

China is the world’s fastest growing major economy, with expansion fueled mainly by investment and exports. It grew 9.9 percent in 2005.

SOURCE: AFP

US trade deficit grows to 63.4 billion dollars

Jon — Mon, 12 Jun 2006 12:27:51 +0000

The US trade deficit widened 2.5 percent in April to 63.4 billion dollars as imports of oil and cheap goods from China rose, the government said.
The US trade performance was better than expected by economists, who had predicted an April figure of 65.0 billion dollars. The March deficit came to a revised 61.9 billion dollars.

The rise came after two consecutive months of falls, and left the deficit at its highest level since the start of the year.
April imports rose 1.3 billion dollars from March to 177.8 billion, while exports fell 0.3 billion to 115.9 billion, the Commerce Department said.

The deterioration was largely owing to a 1.44-billion-dollar increase in the US bill for imported oil, which rose to 23.8 billion dollars during a month when crude prices hit new records over 75 dollars a barrel.

The deficit with China widened 9.0 percent to 17.0 billion dollars as the US economy sucked in more imports of apparel, toys and household electronics.

The US trade gap with Canada, a major oil exporter, jumped 15 percent to 6.1 billion dollars and with Japan, it rose 2.6 percent to 7.8 billion dollars. But the US deficit with the European Union shrank 7.0 percent to 9.4 billion.

SOURCE: AFP

China’s International investment surges by 138%

Jon — Mon, 29 May 2006 07:40:27 +0000

China’s net international investment position (IIP) more than doubled last year, largely as a result of its fast-growing economy and an improved international clearing capacity.

China’s net IIP, or overseas financial assets and direct investment minus such liabilities, was US$287.5 billion at the end of 2005, surging by 138 per cent from a year earlier, according to figures released yesterday by the country’s top foreign exchange body, or State Administration of Foreign Exchange (SAFE).

This is the first time China has published its IIP figures, which the administration said would help complete its macroeconomic statistics, assist macro policymaking and analyze the global financial capital situation.

China ranked sixth largest in terms of net IIP for 2004, and last year’s sharp increase is bound to push its ranking up further, SAFE said.

“China’s international investment position reflects its achievements of opening up and economic development in the past nearly 30 years, indicating the opening up is broadening, (there is a) closer connection with the world economy, and economic strength is improving,” a SAFE spokesman said.

The administration said the growing stockpile of net assets gives China a strong capacity to repay foreign debts, underlining the liquidity and ability to control foreign exchange reserves that make up the bulk of foreign assets and the stability of inward foreign direct investment.

“Such a structure will help prevent financial risk, and has a positive effect on China’s financial stability,” the spokesman said.

Driven by a huge trade surplus and growing capital inflows partly fuelled by expectations for a stronger local currency, China’s forex reserves shot up to US$818.9 billion at the end of last year from US$609.9 billion a year earlier. Forex reserves accounted for an overwhelming 68 per cent of China’s foreign financial assets at the end of last year, and 71 per cent of the 2005 increase in foreign financial assets.

While the growing forex reserves serve to ensure the nation’s international clearing ability, they have complicated monetary policymakers’ job of containing local money supply to harness inflationary pressures and rapid loan growth. They mop up excess dollars to enforce the trading band of the renminbi by issuing new cash, subsequently increasing local money supply.

Government officials have repeatedly said China is not pursuing a huge forex stockpile, and has been taking measures to reduce surpluses.

Source: China Daily

US: China not a currency manipulator

Jon — Fri, 12 May 2006 15:11:37 +0000

The eagerly awaited semi-annual Treasury report on exchange rates has finally been released, and the results may have serious implications. Many members of Congress, among others, had been hoping the US would use the report to officially label China a currency manipulator, which would justify the use of trade sanctions and other economic penalties.

Instead, while admitting it was concerned about widening economic balances engendered by China’s artificially low exchange rate, the Treasury Department stopped short of formally accusing China of currency manipulation. The report may provide the impetus to propel a bill, which would punish China economically, through Congress. The New York Times reports:

They [Senators Schumer and Graham] can be expected to challenge the Treasury report’s conclusion, but they have also kept their bill calling for tariffs on hold