Premier Wen Jiabao said China needs targeted measures to promote steady export growth, which will help the nation meet its annual economic goals, the official Xinhua News Agency reported.
The country must pay attention to problems in imports and exports, Xinhua cited Wen as saying during an inspection tour in Guangdong, China’s biggest exporting province. He reiterated the government needs to increase the intensity of macro-economic adjustments to stabilize expansion in the second half of the year.
China’s export growth collapsed to 1 percent in July while industrial output and new yuan loans trailed estimates, heightening concerns that a slowdown in the world’s second- biggest economy is deepening. A private survey on Thursday showed manufacturing may contract in August at the fastest pace in nine months and a gauge of new export orders was at its lowest level in more than three years.
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Chinese Premier Wen Jiabao (right) inspects an LED production company in Guangzhou city of south China’s Guangdong province on Friday. (Xinhua-Yonhap News) |
“There will still be a lot of problems and uncertainties in exports going forward,” Xinhua cited Wen as saying during a two-day visit to the southern province that ended Saturday. “The third quarter is a crucial period for realizing full-year targets on export growth.”
Overseas shipments in the first seven months of the year rose 7.8 percent and imports gained 6.4 percent, putting China at risk of missing its 10 percent goal of trade expansion for the year. July’s export growth was the lowest since 2009, excluding distortions caused by the timing of the Lunar New Year holiday. Imports rose 4.7 percent from a year earlier, trailing analysts’ estimates.
Yuan Gains
Measures that will help exports include speedier payment of export tax rebates and an expansion in financial products used to hedge foreign exchange risks, Wen was cited as saying. The Xinhua and state television reports of his comments made no mention of the Chinese currency.
The central bank has halted gains in the yuan this year, providing some help to exporters amid deteriorating global demand. The currency has dropped by almost 1 percent against the U.S. dollar this year after a 4.7 percent gain in 2011.
China should expand imports, especially high-end equipment and critical components, as well as daily consumer products, Xinhua cited Wen as saying. The nation should also deal appropriately with trade friction and reduce the risk and impact of such incidents, he said.
The country is embroiled in a series of disputes with trading partners over issues such as rare-earth minerals, solar panels and wind turbines.
Trade Spats
The World Trade Organization’s judges will probe China’s export quotas and tariffs on rare earths, tungsten and molybdenum, following complaints by the U.S., European Union and Japan that the curbs break global commerce rules. U.S. President Barack Obama last month accused China of imposing unfair taxes on American vehicles, mostly from General Motors Co. and Chrysler Group LLC.
China’s economy expanded 7.6 percent in the second quarter from a year earlier, the least in three years, as Europe’s debt crisis and elevated unemployment in the U.S. crimped export growth, and a prolonged crackdown on property speculation curbed domestic demand.
The benchmark Shanghai Composite Index of stocks fell to the lowest level since March 2009 on Saturiday on concern the nation’s economic slowdown is hurting corporate earnings.
Slowing Demand
China Shipping Development Co. said on Aug. 22 it is seeking to delay delivery of 10 new commodity and oil vessels as slowing demand and a global glut damped rates. The Shanghai- based ship operator swung to a loss in the first half of the year and predicted it would remain unprofitable for the nine months ending September.
Bank of America Corp. and Deutsche Bank AG this month reduced their forecasts for China’s economic expansion in 2012 to 7.7 percent, which would be the slowest pace in 13 years. Wen in March set a target of 7.5 percent.
Wen said there are still many “negative factors that will affect stable economic operations in the second half” and the difficulties of stabilizing economic growth are “still relatively large.”
“Facing the current difficulties, we have to improve the operating environment for companies and enhance the corporate confidence,” Xinhua cited Wen as saying.
Good Results
Even so, “China’s economic fundamentals haven’t changed, and we have a lot of good conditions and optimistic factors that will help stabilize growth,” Xinhua cited Wen as saying. The central government has been enhancing policy fine-tuning, and has achieved good results on stabilizing economic growth and improving market confidence, he said.
The premier visited the cities of Guangzhou, Foshan and Dongguan, according to China Central Television, whose footage showed Wen accompanied by the province’s Communist Party chief Wang Yang.
Wang is a candidate for the Politburo Standing Committee, the party’s highest decision-making body, in China’s once-a- decade leadership transition later this year.
Wen said he has “faith in Guangdong’s future,” CCTV reported. The province’s development outlook “will get even better,” he said.
Guangdong was the biggest contributor to China’s economy in 2010, accounting for about 11 percent of gross domestic product and 30 percent of the nation’s exports, statistics bureau data show.
The province, which grew 7.4 percent in the first half, is set for the weakest full-year expansion since 1989 as toy, shoe and textile industries move inland or abroad and a transformation to higher-value production and services remains unfinished.
Dongguan’s expansion in the first half of the year was 2.5 percent compared with 7.8 percent for the nation as a whole, government data show.
(Bloomberg)
