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China’s Export Growth Likely To Cool In H2: Report

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China’s Export Growth Likely To Cool In H2: Report
July 19,2010

(RTTNews) - China’s exports are likely to grow at a slower pace in the second half of this year compared to the first six months, the state-run China Securities Journal reported Monday, citing a think tank.

The State Information Center said exports in the latter part of this year would grow 16.3% year-on-year. That would be much slower than the 35% increase recorded in the first half. The think tank attributed the decline in export growth to the removal of tax rates and the European debt crisis. For the full year, it foresees 24.5% growth in overseas sales.

According to the newspaper, imports are forecast to increase about 19.3% in the second half, taking the full year growth to 33.6%.

On July 12, data released by the country’s General Administration of Customs showed that exports surged 43.9% year-on-year in June and imports surged 34.1%. The surge in exports is likely intensify calls for China to let the yuan to appreciate more freely. The U.S. has repeatedly said the yuan is still undervalued.

Chinese authorities had kept the yuan stable since July 2008 to help exporters cope with the global financial downturn. The currency appreciated 21% in the three years after a peg to the U.S. dollar was scrapped in July 2005 and replaced by a managed float against a basket of currencies including the euro.

In June 2010, the Chinese government said it would loosen its exchange rate regime, although it ruled out a large one-off revaluation. The yuan has gained around 0.8% against the dollar since then.

A significant slowdown in exports would ease China’s economic growth in the second half of this year. Last week, data released by the National Bureau of Statistics showed that China’s gross domestic product rose 10.3% in the second quarter of 2010 from a year ago. Growth slowed from 11.9% recorded in the first three months.

On Friday, People’s Bank of China adviser Li Daokui said the Chinese government should continue its stable macroeconomic policies in the latter part of the year. Earlier this month, the Chinese central bank had said it will continue to maintain a moderately loose monetary policy, although the economy is heading in the right direction.

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