Chinese Exports slowing

The Chinese economy is suffering a double pronged attack as its export growth has slowed in April. With little swing in the export surplus, the government will have increased difficulty in maintaining monetary value.

According to the Vice Premier Wang Qishan China will keep a tight monetary policy in order to avert the Chinese economy from overheating.

The trade surplus was about $16.8 billion compared with $16.7 billion a year earlier, as sales overseas are up by 21.8 percent from the previous year.

Analysts have predicted that Chinese exports will slow further in the second half of the year as demand has further weakened from both the US and the euro zone.

Any further appreciation of the Yuan would cause further damage.

The Governor of the Central Bank Zhou Xiaochuan has indicated that the government does believe that export growth has been a factor in the Yuan’s failure to appreciate and in the meantime the Yuan gained 0.2 percent to 6.9918 and the currency had its biggest gain since a fixed-exchange rate ended in 2005.

The Yuan has climbed 18 percent versus the dollar since the peg to the U.S. dollar has been removed.

Imports during the same period grew about 26.1 percent in April from a year earlier after gaining 24.6 in March.

Economic growth is still strong in the world’s fourth-biggest economy as the country experienced a 10.6 percent growth in the first quarter from last year.

Story link: Chinese Exports slowing