China's exports better than expected. This reduces pressure on the Yaun........................................
scmp.com
Tuesday August 11 1998
Strong export recovery slashes pressure for yuan devaluation
WANG XIANGWEI
Mainland exports staged a strong recovery last month, raising hopes that a sustained rebound could ease mounting pressure and speculation of a possible yuan devaluation.
Exports grew 3.5 per cent year on year in July to US$16.16 billion, up from a 1.6 per cent increase in June after exports fell 1.5 per cent in May for the first time in nearly two months, Xinhua news agency and the China Central Television (CCTV) reported yesterday.
"The July's export performance is much better than market expectations," Liao Qun, a senior economist at the Standard Chartered Bank, said.
As July's imports fell 6.4 per cent to $11.96 billion - the worst monthly decline so far this year - the trade surplus for the month was $4.2 billion, lifting the surplus for the first seven months of this year to $26.71 billion.
"If the recovery sustains and the trade surplus continue to go up, that will be good news for the stability of yuan," Mr Liao said.
Many analysts expected worse, with some predicting a zero export growth in the third quarter and negative growth in the fourth quarter because of the Asian financial crisis.
Mainland exports rose more than 20 per cent last year.
There have been growing fears Beijing might be forced to devalue its currency to increase its export competitiveness.
Such fears have sent jitters across Asia's stock markets in the past few weeks, hitting mainland-related shares in Hong Kong particularly hard.
Beijing has repeatedly said it would not devalue the yuan and has been prepared to pay a heavy price for the promise.
Yesterday, Xinhua hinted the export slump had bottomed out and the recovery was expected to continue in the coming months.
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