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China Trade Figures Rise Slightly, but Weaknesses Persist

May 8, 2013 by Leave a Comment

HONG KONG — Trade figures for April released by the Chinese government on Wednesday morning were slightly better than economists expected, but still indicated that demand was fairly weak in foreign markets and in China itself.

Exports and imports both increased last month compared with a year earlier, but the figures were harder than usual to interpret because April of last year was so weak. Imports and exports all but stopped growing in April of last year as a wide range of industries, perceiving a short, sharp domestic economic slowdown that would last until early autumn, stopped buying industrial commodities, even as foreign buyers cut orders as well.

Compared with that weak base, China’s trade figures for last month looked somewhat better. Exports rose 14.7 percent from a year ago, while imports increased 16.8 percent.

But the trade figures were far from strong enough to suggest that foreign demand could pull China out of what seems to be a deepening economic malaise. Although official figures still show the economy steaming along at a growth rate of nearly 8 percent, a range of purchasing manager surveys last month showed growing worry among business executives across China.

“China is in a very difficult position now,” as American and European consumers seem wary of further increases in the coming months in their purchases of Chinese goods, said Diana Choyleva, an economist in the Hong Kong office of Lombard Street Research, an economic analysis firm.

The discouraging shift in sentiment, after a fairly weak economic performance in March as well, comes despite enormous lending through the autumn, winter and early spring. China’s leaders were able to turn the sharp economic slowdown a year around by flooding the economy with bank and trust loans, and other credit.

But the heavy lending has brought about considerably less economic growth than earlier rounds of monetary easing, raising worries that China’s investment-dominated economy is running out of economically viable projects to pursue and may not be able to shift quickly enough to consumer-led growth.

China has scheduled the release of April inflation data on Thursday, and a wide range of April economic statistics next Monday, including including industrial production, fixed asset investment and retail sales.

Another uncertainty about Wednesday’s trade data lies in whether the export figures are even accurate, or whether they have been artificially inflated. A gradual rise in the value of the renminbi against the dollar over the last year, together with expectations that this rise will continue, has created an incentive for exporters to overstate the value of the goods they ship out of the country, as a way to bypass China’s currency controls and bring more dollars into the country to convert into renminbi.

The Chinese government has opened an investigation into whether exporters are overinvoicing clients, after export data in the first quarter showed unusual patterns, including a surge in reported Chinese exports to Hong Kong that did not match Hong Kong data.

Louis Kuijs, an economist in the Hong Kong office of the Royal Bank of Scotland, estimated that overinvoicing of exports accounted for more than half of the year-on-year growth in China’s exports last month. By adjusting for this, he said that the true growth in China’s exports last month appeared to be more like 5.7 percent than 14.7 percent.

 There has been little sign of manipulation of import figures, which appear to show that domestic demand is holding up a little better than overseas demand.

 

Article source: http://www.nytimes.com/2013/05/08/business/global/china-trade-figures-rise-slightly-but-weaknesses-persist.html?partner=rss&emc=rss

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U.S. Solar Panel Makers Accuse Chinese of Trade Violations

October 19, 2011 by Leave a Comment

The trade case, filed at the Commerce Department, seeks tariffs of more than 100 percent of the wholesale import price of solar panels from China. Imports of Chinese solar panels to the United States totaled $1.6 billion in the first eight months of this year.

The filing, which the Commerce Department has no choice but to review, under federal rules, comes as anti-China sentiments are running high in some Washington corridors.

The Senate recently passed a bill that would require the Treasury Department to order the Commerce Department to impose tough tariffs on certain Chinese goods, if Treasury found that China was improperly valuing its currency to gain an economic advantage. So far, Republicans have declined to bring the House version up for a vote.

Chinese commerce officials had no immediate comment about the solar panel filing, but have long vehemently opposed such trade cases. The matter will probably be controversial within the United States, too. For one thing, if successful it would drive up the cost of solar energy in the name of keeping the American industry competitive.

The case also coincides with criticism by Congressional Republicans of the Obama administration’s efforts to support American clean energy companies. Republicans argue that federal loan guarantees of more than a half-billion dollars to the now-bankrupt solar company Solyndra show the folly of the administration’s trying to guide industrial policy in clean energy.

But two Democratic senators on Wednesday supported the trade case. “American solar operations should be rapidly expanding to keep pace with the skyrocketing demand for these products,” said Senator Ron Wyden of Oregon, who appeared at a Washington news conference on the case held by an Oregon solar panel maker, Solar World Industries America.

“But that is not what has been happening,” Mr. Wyden said. “There seems to be one primary explanation for this; that is, that China is cheating.” He was joined by his Oregon colleague Senator Jeff Merkley, who said China was engaging in “rogue practices.”

Whatever the partisan positioning, though, the trade case would procedurally begin above the political fray. It will follow a quasi-judicial path at the Commerce Department and a related American agency, the International Trade Commission, that is designed to operate without political partisanship influence. Congress created the apolitical process for trade cases during the cold war, because of a perception that Democratic and Republican administrations had tolerated subsidies and dumping by many countries as long as they were American allies against the Soviet Union.

Other recent industry cases against China that have followed this process include one filed in late March, involving galvanized steel wire. The most recently completed tariff case against China, in late May, resulted in tariffs of about 33 percent levied against certain types of imported aluminum products.

A Chinese solar company manager, speaking on condition of anonymity, said in a telephone interview that in any trade case filed by the American industry, “we would be well prepared and are confident we could defend it.”

President Obama recently appeared to support the domestic solar industry’s concerns, in a White House news conference on Oct. 6: “Even if the technology was developed in the United States, they end up going to China because the Chinese government will say, ‘We’re going to help you get started, we’ll help you scale up, we’ll give you low-interest loans or no-interest loans, we will give siting, we will do whatever it takes for you to get started here.’ ”

United States policy toward China has also emerged as an issue in the presidential campaign, provoking an early back-and-forth between the Obama team and Mitt Romney, whom many Democrats expect to be the Republican nominee. Mr. Romney, talking tough in a Republican debate last week, said the United States had been “run over by China” for 20 years and “you have to have a president that will take action.”

In response, Mr. Obama’s senior strategist, David Axelrod, countered that Mr. Romney once again was flip-flopping, having criticized Mr. Obama in the past as “protectionist” for mounting a trade case against China on behalf of American tire producers.

Matthew L. Wald, Jackie Calmes and Eric Lipton contributed reporting.

Article source: http://www.nytimes.com/2011/10/20/business/global/us-solar-manufacturers-to-ask-for-duties-on-imports.html?partner=rss&emc=rss

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Senate Approves Bill Aimed at China’s Currency Policy

October 12, 2011 by Leave a Comment

WASHINGTON — A bipartisan cross-section of Congress seems to agree that China manipulates its currency in ways that make it harder for many American manufacturers to compete. Where they cannot find alignment is on how best to address that problem, while maintaining America’s relationship with its biggest lender and a major trading partner.

On Tuesday, the Senate passed a bill that would require the Treasury Department to order the Commerce Department to impose tough tariffs on certain Chinese goods in the event of a finding by the Treasury that China was improperly valuing its currency to gain an economic advantage.

The measure passed 63 to 35, with 16 Republican votes, an unusual dynamic in the Democrat-controlled Senate. It enjoyed rare support from members of both parties despite the strong disapproval of Senator Mitch McConnell of Kentucky, the Republican leader, who pressed his party colleagues to vote against it.

At the same time, House Republicans have made it clear they have no intention of bringing the currency measure to the floor, and the White House has given it a chilly reception, fearing it too blunt an instrument against China, which has slowly moved to increase its currency value.

This is a reverse of last year when a similar, though less stringent, measure passed the House and the Senate neglected to take it up, preferring its own bill. Democrats are now trying, against political headwinds, to force a vote on that same measure against the desires of Republican leaders.

The tennis ball volleying of the trade legislation underscores the vexing problem that China presents to Congress: Many members, especially those from manufacturing states, want to be seen as doing something about that nation’s trade advantages, yet the White House and some leaders in both parties think it is far too risky to actually pull the trigger on a solution.

As a result, even as some Senate Republicans and many House Democrats pressure House Republicans to get on board, the Obama administration is counting on House Republicans to do what they want, which is to leave any bill to punish the Chinese government over its currency policies in a file cabinet. “Shifting political dynamics and changes in rhetoric about free trade tend to play out in unpredictable ways against the background of a bipartisan desire to get tough with China,” said Eswar S. Prasad, a professor of trade policy at Cornell University. “A lurking concern is that this bill won’t help the U.S. economy significantly and could instead hurt job growth if China retaliates aggressively and trade tensions compound economic uncertainty, setting back an already fragile recovery. I suspect both parties are a little concerned about supporting such legislation if it backfires. “

Regional politics, White House pressures and jurisdictional disputes have impeded a deal. Large multinational companies, especially those that have large investments in China, vehemently oppose the bill, while smaller manufacturing companies, which face far more import competition, tend to favor it.

 The Senate bill would require the Treasury Department to determine whether China was manipulating its currency, and then order the Commerce Department to impose retaliatory tariffs on certain Chinese goods.

   Early Wednesday morning in Beijing, Chinese officials had no immediate reaction to the Senate vote. State-run media reused instead a comment provided to them on Monday by Cui Tiankai, China’s vice foreign minister, who denounced the bill.

The House version of the China measure has 225 co-sponsors, and passed that chamber 348 to 79 while it was under Democratic control last year, with support from 99 Republicans.

House Democrats have been circulating what is known as a discharge petition, a measure used by the minority party to force the party controlling the chamber to bring the bill back to the floor. Such a petition would require 218 signatures; currently only 176 members have signed. Representative Hal Rogers of Kentucky, the chairman of the Appropriations Committee, was the only Republican to sign it but he withdrew his name. Getting further Republican support is unlikely since it essentially puts the lawmaker in opposition with party leadership.

Republican House leaders, who openly criticize many Chinese policies, largely voted against the bill when it came to the floor last year. They oppose the measure because they are concerned that it would start a trade war with China, increase prices of American goods and pull at the threads of the gossamerlike relationship between the two countries. It is a view expressed by Senate opponents, too.

“In many ways we have become dependent on one another,” Senator Joe Lieberman, independent of Connecticut, said on the Senate floor. He added, “During times of economic recession such as the one we are in now, over history nations have repeatedly become protectionists. But history also shows that protectionist policy makes the economic problems worse, not better.”

However, lawmakers from manufacturing-heavy states have pushed hard for it, and will pressure House Republicans to get on board. “I don’t believe you have a middle class in America without a vibrant manufacturing base,” said Senator Jeff Sessions, Republican of Alabama, who urged fellow Republicans to support the bill against the wishes of Mr. McConnell. “We’ll stand up and take our lumps and take our gains in a fair competition.”

Keith Bradsher contributed reporting from Hong Kong.

Article source: http://feeds.nytimes.com/click.phdo?i=dc27020b86b0d460f253a0ee6f7757fe

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Chinese Let Currency Rise Against the Dollar

August 12, 2011 by Leave a Comment

HONG KONG — China’s currency staged a small but unexpected rally this week, as the country’s central bank allowed it to rise 0.72 percent against the dollar, with most of the move coming Wednesday and Thursday.

The State Administration of Foreign Exchange, which is part of the central bank, fixed the initial trading value Thursday morning below 6.4 renminbi to the dollar for the first time in the modern history of the currency.

Economists and traders interpreted the new trading value, 6.3991 to the dollar, as a signal that the central bank might be willing to tolerate a slightly faster rate of appreciation against the dollar, something the United States and other big industrial nations have long pressed China to do.

Daniel Hui, a senior foreign exchange strategist at HSBC, said in a research note that the recent movement in the daily fixing of the renminbi “indicates something has changed — the question is why, and if it will last.”

Allowing the renminbi to strengthen can help China fight inflation, by making imports cheaper. But a stronger renminbi can also hurt exports and employment at China’s many export-oriented factories by making Chinese goods more expensive in foreign markets.

The government’s National Bureau of Statistics announced Tuesday that inflation in consumer prices had reached 6.5 percent in July, the highest level in three years. At the same time, China’s exports were showing unusual strength despite economic weakness in the West.

China’s General Administration of Customs announced Wednesday that exports were up 20.4 percent in July from a year earlier, more than most economists had expected, producing a trade surplus of $31.5 billion, the country’s largest in more than two years.

But any sustained acceleration in the appreciation of the renminbi could bring greater speculative inflows of money to China. As a result, many economists have been predicting that China may soon allow the currency to trade in a wider band each day around the initial fixing, which is done in Shanghai. Greater volatility makes it harder for speculators to borrow money to put bets on a rising renminbi.

The Administration of Foreign Exchange sets an initial trading value each day and then keeps the currency within a tight range around that value through the day by buying dollars, frequently on a large scale, and selling renminbi. In theory, the currency can vary during the day by as much as 0.5 percent, but the government has tended to keep the daily trading in a much tighter range, often less than 0.1 percent.

China’s foreign exchange reserves swelled by $350 billion in the first half of this year — equal to one-ninth of the country’s economic output in the period — mostly because of this currency market intervention. The Administration of Foreign Exchange also earns interest on its reserves, which totaled $3.2 trillion at the end of June.

Article source: http://feeds.nytimes.com/click.phdo?i=ca626d2d8bdea6feb3df3c20f21dbd18

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Chinese Currency Rises Above Key Level

April 29, 2011 by Leave a Comment

HONG KONG — The Chinese currency hit a milestone Friday by rising beyond a level closely watched by analysts — the strongest since Beijing began allowing the currency, the renminbi, to rise in 2005 and a sign that the authorities might be using the appreciation as a weapon against inflation.

The dollar fell below 6.50 renminbi to about 6.491. That marks a 5 percent gain for the renminbi since last June, when it traded around 6.827.

The rise in the Chinese currency engineered by Beijing has gone in fits and starts. In 2005, the authorities allowed the renminbi to strengthen modestly after longstanding accusations by governments around the world that China was keeping its currency artificially weak to increase its exports. But in 2008, Beijing took a long pause, once again holding the renminbi steady to steer its giant economy through the global financial crisis. In June, the rise resumed.

The gains since then are small compared with the sharp upward moves staged by the currencies of many other emerging economies. Economic growth and interest rates well above those seen in developed economies have prompted large flows of cash into many emerging nations, pushing currencies like the Malaysian ringgit, the Mexican peso, the Brazilian real and the South African rand sharply higher since last year.

The renminbi’s strength comes amid a backdrop of a generally weak dollar against a large number of currencies, as investors worry about the strength of the U.S. economic recovery.

The relatively small rise in the renminbi has not been enough to end occasionally vocal criticism by some U.S. policy makers and business executives, who continue to argue that the renminbi’s valuation gives Chinese exporters an unfair advantage over their U.S. counterparts by making Chinese goods inexpensive overseas.

The move Friday past the eye-catching level of 6.50, and a climb of 0.9 percent during April, highlighted that the authorities in Beijing are serious about allowing the renminbi to strengthen — albeit at a pace that is slow enough in their eyes not to damage the Chinese export sector.

At the same time, by making it cheaper for China to import oil, iron ore and other goods, a rise in the renminbi is one way of combating inflation, which has become an increasingly worrisome and politically sensitive problem in China.

“Clearly, policy makers are increasingly using currency appreciation to combat imported inflation,” commented Dariusz Kowalczyk, an economist at Crédit Agricole in Hong Kong, wrote in a research note.

Most observers believe China will continue with a gradual appreciation rather than an all-out revaluation.

A revaluation would have meaningful disinflationary effect only if it were large enough to outweigh the sharp rises that global commodity prices have staged this year, Mr. Kowalczyk wrote. However, a gain of such magnitude “would have a devastating impact on Chinese exports and employment, a side effect too negative to be acceptable for policy makers,” he said.

Article source: http://www.nytimes.com/2011/04/30/business/global/30yuan.html?partner=rss&emc=rss

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