More economic milestones for China in 2007
The WSJ reports that China’s exports topped a trillion dollars in 2007, that forex reserves are now over $1.5 trillion, and that Chinese authorities say that the country can well weather a slowdown in export growth, an event which seems pretty likely in 2008:
China’s global trade surplus surged 48% to a new record in 2007…The trade surplus in goods, the excess of exports over imports, expanded to $262.2 billion in 2007 from $177.5 billion in 2006, according to customs figures issued Friday. Exports for the year were up 25.7% to $1.22 trillion, shrugging off a stronger currency, product-safety scares and higher taxes. Imports expanded 20.8% to $955.8 billion.
China’s foreign-exchange reserves, now the world’s largest. That stockpile ended the year at $1.53 trillion, representing an increase of about $38 billion each month, according to separate figures issued Friday. Total bank loans outstanding, meanwhile, grew 16% in 2007…
Based on official estimates, exports contributed about 2.5 percentage points of China’s 11.5% growth rate in the first three quarters of 2007…”Although China’s export growth is expected to slow significantly, strong investment growth and a pickup in consumption are expected to sustain overall GDP growth,”says Wang Tao, China economist for Bank of America, who is forecasting a 10% overall economic expansion in 2008.
Though some local economists have begun to sound warnings about slower growth this year, officials remain largely optimistic. “In the foreseeable future the growth of China’s trade surplus is expected to slow down, but it will still remain at a relatively high level,” the People’s Bank of China wrote in its most recent monetary-policy report. “China’s increased diversification of foreign trade will also help reduce any negative impacts on global trade caused by regional economic slowdowns.”
The piece noted that the trade “surplus for December was a smaller-than-expected $22.69 billion, as export growth slowed to 21.7%, in what could be an early signal that tougher times are ahead for China’s export engine.” We shall see if the “official estimates” are accurate that exports now only account for 2.5% of China’s GDP growth rate. It would be good news if that were true and not the result of wishful thinking.