China's Trade Surplus Hits $27.1 Billion for Month of October, Adding to Political Tensions Over Currency Policy

The New York Times reports that China's trade surplus in the month of October totaled $27.1 billion, far outpacing its surplus of $16.9 billion in September. Exports rose 22.9% from a year earlier and imports rose 25.3%. Although some experts claimed the jump in surplus was the result of the holiday season in Western countries--during which time demand for Chinese products tends to spike--there is a risk that the surplus will continue to grow as China dampens its domestic demand and purchasing power by, for example, decreasing access to loans, as part of its effort to temper its fast-paced economic growth. This would decrease the imports to China and, as a result, widen even further its trade surplus.

And with a wider trade surplus may come more complaints from other countries that China is deliberately devaluing the renminbi, and by doing so "giving Chinese exporters a competitive advantage over manufacturers in the United States and elsewhere by effectively making their goods artificially cheap for overseas consumers." Beijing, for its part, fears that a faster rise in the value of its currency--it did rise 3% against the dollar since June--would damage its export sector.

Any political tensions over China's growing trade surplus will likely be expressed at the Group of 20 meeting in Seoul Thursday and Friday.
SSDAN Office

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