The Chinese trade surplus fell last month to $21.35 Billion due to low demand for Chinese products in importing countries, weak US dollar, and global recession.
According to the General Administration of Customs, China, the trade surplus in June 2008 was at $21.35 Billion, substantially low in comparison to $26.91 Billion in June 2007, but the highest monthly surplus till now this year, as reported by quamnet.
The administrative agency of China also revealed that the Chinese trade surplus during the first six months of 2008 slumped 11.8% to $99.03 Billion against $112.7 Billion in the same period last year. Exports in June 2008 stood at the total of $121.53 Billion with growth of 17.6% but it sharply fell from the growth of 28.1% recorded in May 2008. Moreover, the Chinese trade surplus with the US during the period January-June 2008 totaled $75.34 Billion, while with the EU, it was $71.85 Billion.
According to the industry experts, the decline in exports from China is caused by falling demands for the Chinese goods in the importer countries, particularly the US, which is the second largest export center for China after Europe. The currently sluggish demand for Chinese products is likely to continue for sometime as majority of countries are heavily weighted down by economic slowdown and there are no indications of improvement.
Besides, the effects of soaring prices of essential commodities, particularly crude oil, soybean and iron ore, are visible on declining Chinese export. Another important reason that contributed to downfall in exports is weak dollar against Yuan, making export expensive for the exporters.
Nevertheless, the Chinese government is making strategies to support the export industry in present crisis by cutting down export taxes. The reduction in export taxes will encourage the exporters to push up their exports, as there are higher possibilities of earning more profits.
According to a Research Analyst at RNCOS, “The Chinese export industry is badly hit by global economic recession and weak US dollar. The Chinese government is planning to give rebate on export taxes which might boost the exporters’ confidence, but it would hardly have any effect on the industry because the demand from importing countries will not improve. Hence, the Chinese exports might remain low in coming months.”
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