MercoPress. South Atlantic News Agency

China record trade surplus but exports growth rate slower

China's trade surplus widened to a record 29.3 billion US dollars in September as exports withstood the global economic slowdown and falling commodity prices reduced the import bill.

Exports rose 21.5% from a year earlier to 136.4 billion US dollars after gaining 21.1% in August according to China's Customs Bureau web site. The surplus swelled China's eecord 1.8 trillion in foreign-currency reserves. Imports increased 21.3% to 107.1 billion US dollars after climbing 23.1% in August. Falling prices for commodities such as copper and oil have trimmed the value of inward shipments. However export growth is down from 25.7% for all of last year. Export growth to the US slowed by 4.6 percentage points from a year earlier to 11.2% in the first nine months, the Customs Bureau said. Trade with India "surged", with imports and exports together jumping 54.9% in the first nine months from a year earlier. With second month running of record trade surplus, China's overall surplus for the last twelve months to September climbed to 257.3 billion US dollars up from 251.9 in August, and nor far from the record 262 billion for the whole of 2007. But in spite of the record trade China said on Monday that improvements in the country's balance of payments showed that greater foreign exchange flexibility had already moved the Yuan closer to an appropriate market-set level. "Exchange rate flexibility has increased markedly and the exchange rate increasingly reflects the fundamentals," said central bank deputy governor Yi Gang in a statement to the board of governors of the International Monetary Fund. China has been under pressure for years to stop intervening to hold down the value of the Yuan against the Euro and dollar to boost exports. Yi noted the growth of its foreign exchange reserves had slowed and the trade surplus had narrowed. "In the past two months, the Yuan has appreciated 15% against the Euro. The ongoing improvement in China's balance of payments demonstrates that the Yuan exchange rate is closer to the fundamentals," Yi said. Referring to the current financial global situation Yi said China was better prepared for such a situation. "Financial institutions in China remain sound. After several years of comprehensive financial reforms, the capital adequacy of financial institutions has reached a historical high," he said, adding that market liquidity was "ample".