“China had its third-highest monthly trade surplus on record in June as exports surged to an all-time high, suggesting trade disputes and calls for the nation to revalue its currency won’t ease.
The trade surplus widened to $9.7 billion from $1.63 billion a year earlier and $8.99 billion in May, according to figures released by the customs bureau. Exports jumped 30.6 percent form a year earlier to $66 billion, while imports rose 15.1 percent to $56.3 billion, the Beijing-based bureau said on its Web site.
or the first half, exports rose 32.7 percent to $342.3 billion and imports increased 14 percent to $302.7 billion, the customs bureau said. June exports were expected to rise 25 percent, according to the median forecast of seven economists surveyed by Bloomberg News, and imports were expected to climb 11 percent.
China’s exports of electrical appliances and electronic products rose 30.6 percent in the first half to $72.5 billion, while machinery shipments increased 29.7 percent to $68.7 billion, the customs bureau said. Clothing exports rose 19.8 percent to $31.1 billion and shipments of yarn and knitted products increased 23 percent to $19.3 billion.
Growth in textile exports may slow as the impact of quotas imposed by the U.S. and Europe in May and June take effect. Shipments of knit shirts and underwear to the U.S. on July 8 reached their limit for this year and trouser exports were nearing their cap.
China, the world’s largest steel producer and consumer, became a net exporter of the alloy for the first time this year, with overseas shipments rising more than three fold to 6.7 million tons in the first four months of the year. Asian steelmakers including South Korea’s INI Steel Co. and Tokyo Steel Manufacturing Co. said they are cutting prices because of rising Chinese imports.”
The US trade deficit figures come out on Wednesday. Don’t expect them to be pretty. The US is still on the path to a record trade deficit this year. Although the US dollar has rallied since the beginning of this year, it was in a step decline last year as forex traders focused on the trade imbalances between the US and Asia. Despite the loss in value, the US had a record trade deficit last year. Currently, forex traders are focused on the growth and interest rate differentials between the US and Europe. However, the trade deficit still looms on the horizon.
Also expect the US to continue to call for a revaluation of the yuan throughout this year. Don’t expect China to do much about this either. The Chinese government refuses to be pressured by foreign governments in internal Chinese matters. In addition, an upward revaluation of the yuan would lower the value of their over 200 billion in US treasuries, which could hurt their domestic economic expansion.
The answer to this problem is a growth in the US manufacturing base. However, the manufacturing sector has lost 2.5 million jobs under Bush, indicating this solution won’t happen under the present system of US economic policy.
In other words, the trade deficit will continue to expand, further endangering the US economy.
Bush will blame the Chinese. Or 9/11. Or the London attacks. Or the Democrats. The proper villain depends on what way of the week it is.