China faces lower trade Surplus amid Global economic crisis

Due to the decrease in import and export numbers, trade surplus of china has lessened for the second month running in September. These numbers reflect the global economic weakness and domestic cooling that will deepen policy quandaries facing Beijing.

According to the trade data released on Thursday a stronger yuan was hurting exports and also the fact that slower import growth could lead to rising of pressure for fiscal loosening.

 Lu Peijun, the deputy head of the Chinese customs administration said “The rise in renminbi exchange rate may limit the room for export growth, China is still facing relatively big imported inflationary pressure and trade conditions are also deteriorating”

According to an analyst for Pingan Securities in Beijing “It is now certain that external demand is falling. Chinese export growth will continue to slow in the rest of the year; the figures were unlikely to prompt swift policy shifts. As falling external demand is expected by Chinese policymakers, any broad-based loosening of the monetary policy is unlikely in the short term until we see a clear fall in inflation, the window for possible policy easing is around November and December.”

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