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China trade surplus cut to $10.5bn
Updated: 2005-12-09 21:08

China's trade surplus for November fell to $10.5 billion as export growth unexpectedly slowed, but it remained at levels that are likely to sustain U.S. demands that Beijing let the yuan rise more quickly.

The surplus, which had hit a record $12 billion in October, fell short of forecasts of $11.7 billion as annual import growth of 20.9 percent outpaced export growth of 18.4 percent, the Ministry of Commerce said on Friday.

Economists attributed the decline in part to a high statistical base of comparison for exports in November 2004 and said China's inherent competitiveness remained strong.

"The trade surplus for the whole year will quite possibly amount to about $100 billion. That's an eye-catching number and is likely to offer U.S. law-makers an excuse to apply more pressure for a stronger yuan," said Qu Hongbin, an economist with HSBC in Hong Kong.

For the first 11 months of the year, the surplus came to $90.82 billion compared with $32 billion in all of 2004.

Rob Subbaraman with Lehman Brothers in Tokyo said the November surplus, though below expectations, was still huge.

But he said China could be starting to feel the impact of a stronger yuan, which closed on Friday at its highest level since the revaluation.

At 8.0765 per dollar, the yuan has now gained another 0.4 percent since July's landmark 2.1 percent revaluation.

The yuan, also known as the renminbi, has risen much more sharply this year against the euro and yen.

"China's trade-weighted exchange rate has appreciated by a reasonable amount," Subbaraman said. Europe and Japan take about 30 percent of China's exports.

Wang Chuanglian, an economist with Great Wall Fund Management in Shenzhen, said he expected exports to remain strong next year.

"The trade surplus will probably continue to widen next year to $120 billion," he said.

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