China's export juggernaut picked up momentum in August, dashing any expectations that a small currency revaluation on July 21 would act as a speed bump to slow it down.
Exports in August hit $67.82 billion, which was 3.4 percent higher than July's $65.6 billion and 32 percent higher than those of August 2004.
Imports in August totaled $57.78 billion, up 23 percent from a year earlier, giving China a monthly surplus of $10.04 billion, according to data announced yesterday by the Ministry of Commerce.
China now faces the prospect of more intense pressure from the United States and other major trading partners for a steeper currency appreciation. China allowed a 2.1 percent appreciation of the yuan against the dollar in July.
Economists warn that support in the U.S. Congress for protectionist trade policies, muted somewhat after China's revaluation, could bubble up again.
Chinese trade negotiators are heading to the United States at the end of this month to try to reach a textile agreement in the face of unilateral curbs on surging Chinese exports. Their goal is to negotiate an accord similar to one agreed to with the European Union that guarantees steady expansion of China's textile exports within quota limits.
Also yesterday, China's National Bureau of Statistics said the country's consumer prices in August rose 1.3 percent from a year earlier, down from annualized growth of 1.8 percent in July, largely as a result of falling food prices.
Declining inflation also reflects a market glut of everything from steel to autos and household appliances as a result of overinvestment. For the first eight months of this year, consumer prices grew 2.1 percent from a year earlier, the bureau said in a statement.
The August trade data offered some comfort to Beijing authorities as the pace of imports picked up. Imports are the key to bringing down China's trade surplus, which has ballooned this year because imports have grown far more slowly than exports.
Growing imports could indicate that Chinese companies are building up inventories again. Many companies had put off overseas purchases on expectations that the yuan could strengthen more, making imports cheaper in local currency terms. At the same time, corporate spending has been crimped by a government-orchestrated austerity program that kicked in last year to cool the economy, particularly in real estate.
In recent years, huge trade surpluses with the United States and Europe have been largely offset by deficits with much of Asia, giving China only modest overall surpluses. Investment has been the main driver of growth.
For the first eight months of this year, China's trade surplus totaled $60.22 billion, the Commerce Ministry said, compared with a deficit of $1.1 billion during the same period last year. The surplus for all of 2004 was $32 billion. Chinese exports usually surge during the final quarter of the year as factories rush out Christmas orders. That means the surplus for the whole of this year could easily exceed $100 billion.