hurricanemaxi
Joined: 17 Sep 2011
Posts: 83
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 Posted: Sun Dec 11, 2011 11:04 pm Post subject: China May Add Reserve-Ratio Cuts as Exports Slow |
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China’s shrinking trade surplus and the weakest export growth since 2009 may encourage Premier Wen Jiabao to keep cutting banks’ reserve requirements to sustain expansion in the world’s second-biggest economy.
Overseas shipments rose 13.8 percent in November from a year earlier, according to customs data released Dec. 10 in Beijing. The excess of exports over imports fell by 35 percent.
A smaller trade surplus and signs that capital has started to flow out of the country may encourage the ruling Communist Party to add to a Nov. 30 cut in bank reserve requirements that was the first since 2008. Sliding exports to Germany and Italy weighed on gains in shipments to emerging nations, and President Hu Jintao yesterday marked 10 years in the World Trade Organization by warning that the global economy faces “severe” challenges.
“China’s capital outflows will continue and the trade surplus may shrink further, forcing the central bank to cut reserve ratios” and use bill sales to inject liquidity and bolster growth, said Shen Jianguang, a Hong Kong-based economist at Mizuho Securities Asia Ltd. “It’s very likely China will see a trade deficit in the next quarter,” said Shen, who previously worked at the International Monetary Fund and the European Central Bank.
Shares Drop
Stocks in China fell for a third day on concern an economic slowdown is deepening and the government said it will maintain property curbs next year. The benchmark Shanghai Composite Index (SHCOMP) dropped 0.4 percent to 2,306 as of 10:21 local time. The value of shares traded in Shanghai slumped to the lowest level in almost three years on Dec. 9.
The yuan was trading 0.08 percent higher at 6.3594 per dollar at 10:24 a.m. in Shanghai after the central bank set the strongest reference rate in a month. Investors have pared expectations for gains in the currency, with 12-month non- deliverable forwards dropping 0.5 percent last week.
Last month’s gain in overseas shipments compared with the 10.9 percent median estimate in a Bloomberg News survey and a 15.9 percent increase in October. Excluding distortions in January and February each year, the rise was the smallest since export growth resumed in December 2009. The expansion in imports slowed to 22.1 percent and the trade surplus narrowed more than estimated to $14.5 billion.
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