Trade Surplus Means More RMB Pressure

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Ahead of the trade figures that will be published next week, a Bloomberg survey suggests that China’s trade surplus in 2006 was probably up 74 percent to US$177 billion – in line with earlier estimates from the National Development and Reform Commission (NDRC). Standard Chartered Bank estimates it could be as high as US$187 billion (according to Business Week).

The pressure on the Chinese Renminbi to appreciate further can be expected to continue. Business Day notes:

    “’Reducing the trade surplus is the number-one policy priority for China,’ Paul Cavey, an economist at Macquarie Securities in Hong Kong, says. ‘The currency is ultimately the solution’.”

    The yuan has risen 5,9% against the dollar since a decade-long link to the dollar was scrapped on July 21 2005.

    China’s currency might strengthen 5% against major currencies this year, the official Xinhua News Agency said on January 2, citing a Xinhua economic analysis report.”

See news source:

    China trade surplus grows to $177bn
    Business Day – Johannesburg,South Africa
    BEIJING — China’s trade surplus probably swelled 74% to a record $177bn last year, piling pressure on Beijing to let the yuan gain more rapidly. …

    China’s Living-Large Trade Surplus
    The mainland’s 2006 global trade surplus probably hit close to $180 billion, a 70%-plus jump over 2005. Expect more fretting on Capitol Hill

2 Responses to “Trade Surplus Means More RMB Pressure”

  1. Jeremy Gordon Says:

    And the final figures were not far off the Bloomberg estimate: “China’s trade surplus in 2006 reached a mind bogging 177.5 billion US dollars compared to 102 billion in 2005, reported Wednesday the Chinese news agency Xinhua”.

  2. bob Says:

    This is a very article, well researched and well presented. China is making massive progress and when the changes take affect regarding the ownership of gold (now in much smaller quantities) then the effect on the price of gold will be dramatic.

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