Jul 15

China Watch Blog picked up this article which quoted a leading Chinese trade think-tank calling on the government to ensure there are no major changes to currency and export-related policies, citing the “unhopeful” prospects for Chinese exports in the coming months despite the better-than-expected performance in June.

Long Guoqiang, a senior research fellow from the Development Research Center of the State Council, was quoted as saying in a  China Daily report that the nation’s export growth will “decelerate” in the second half and the strong growth momentum witnessed in June cannot be sustained.

Last weekend, the Customs announced China’s exports for June jumped 43.9 percent to $137.4 billion, the highest growth since July 2008, which sparked speculation that a robust export recovery was under way.

A Deutsche Bank report said the rise in exports boosted sentiment and eased concern that the economic slowdown worldwide had shrunk demand for Chinese goods, financial sources said.

“I cannot see any clues that the nation’s exports will surge. Given high unemployment rates, coming austerity policies and the conclusion of stock replenishment in overseas markets, China’s shipments overseas will be lower in the second half of the year,” said Long, also director-general of the center’s Research Department of Foreign Economic Relations.

“I strongly suggest that policies related to external demand remain unchanged, at least for the rest of the year. Any big move in the short term will make things even worse for Chinese exporters,” Long said.

The Chinese government recently initiated a series of new policies that impact exporters. In mid-June, China launched a reform of its foreign exchange regime, ending a two-year peg to the dollar. During the past three weeks, the yuan has gained by 0.7 percent.

But China still remains under pressure from US political and business figures to let its currency rise further, with threats from some in Washington to bring the yuan issue up at the World Trade Organization.

Let’s hope the solutions will be a boon to the industry, otherwise, many businesses are going to suffer – and it will hurt many many people and families.

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