Perhaps China is right not to be intimidated by Western fears. The global economy doesn't seem to be slowing down as much as investors predicted and the policy of keeping the yen low doesn't seem to have hurt Beijing's accounts. In fact, in July, Chinese exports increased by 20,4% on an annual basis, pushing the trade balance to a surplus of 31,5 billion. It is the largest positive balance of the last two years, with a jump of 41% compared to 22,3 billion in June.
Exports increased by 20,4% (17,9% in June) and imports grew even more with an increase of 22,9% (up compared to 19,3% in June).
"The extension of China's structural surplus will certainly put more pressure on [the renminbi's] appreciation," said Xianfang Ren and Alistair Thornton, analysts at IHS Global Insight. However, economists warn that the falls in global equity markets over the past two weeks could have lagged effects on exports. With orders placed months in advance, damages may only become apparent towards the end of the year.
Yesterday, however, the economic statistics published by Beijing were not as optimistic. They concerned industrial production, which grew in July (+14% on an annual basis) but less rapidly than expected, and retail sales. These too fell short of expectations, although the leap forward compared to July 2010 was still 17,2 per cent.
At yesterday's meeting, the State Council also discussed the turmoil of global markets and proposed precautionary plans against possible damage. After the meeting the Premier Wen Jiabao he said it was important to strike the right balance between supporting growth and managing inflationary expectations.
Today's data had a positive influence on Asian stock performance this morning.
