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TRADE WARS
China says exports, imports fall in January
by Staff Writers
Beijing (AFP) Feb 10, 2012


China's trade activity fell in January from a year earlier, data showed Friday, as a domestic slowdown, overseas turmoil and factory closures during the Lunar New Year holiday hit demand.

Exports fell 0.5 percent year-on-year in January to $149.94 billion while imports plunged 15.3 percent to $122.66 billion, customs said in a statement, marking the worst trade data since 2009 during the global financial crisis.

China's politically sensitive trade surplus -- a constant bugbear for its major trade partners -- widened to $27.28 billion in January from $16.52 billion in the previous month, the statement said.

Analysts have cautioned that the January data had been distorted by the earlier-than-usual Chinese Lunar New Year holiday, also known as the Spring Festival, which fell in January this year.

Many of China's factories and businesses cut back production or close their doors during the holiday so employees can travel home to celebrate the most important festival in the Chinese calendar with their families.

Even so, analysts said the latest trade figures added to mounting evidence that the world's second-largest economy was slowing as the eurozone crisis and weakness in the United States hurt demand for Chinese products.

The double-digit fall in imports also reflected "extremely weak domestic demand as investment slumps", said Alistair Thornton, a Beijing-based analyst at IHS Global Insight.

Seasonally adjusted figures show exports and imports rose 10.3 percent and 1.5 percent year on year, respectively, which still marks a sharp slowdown from December when exports rose 13.4 percent and imports were up 11.8 percent.

Chinese shares closed up 0.10 percent, or 2.39 points, at 2,351.98.

Bank of America-Merrill Lynch economist Lu Ting said the European sovereign debt crisis posed the biggest threat to the Chinese economy this year and would be a "major drag" on growth as consumers cut back on spending.

The International Monetary Fund (IMF) this week warned that an escalation of Europe's fiscal woes could slash China's economic growth by half this year, and it urged Beijing to prepare stimulus measures in response.

In the IMF's "downside scenario", China's growth would fall by around 4.0 percentage points this year from the 8.2 percent rate it projected in January.

But Chinese leaders have been cautious about opening the credit valves for fear of reigniting inflation, which has the historic potential to trigger social unrest in the country of more than 1.3 billion people.

Late last year the central bank eased lending restrictions on banks and analysts expect similar moves this year as authorities try to spur economic activity and prevent a collapse in the property market.

Policymakers are also easing taxes and improving funding channels for small and medium-sized businesses which are huge employers but are often shunned by the major banks.

Chinese Commerce Minister Chen Deming said Thursday that smaller businesses were "under growing pressure" and the government planned to adopt a number of measures to help them overcome their current difficulties.

"Should there be any fine-tuning, it will be supportive rather than discouraging," Chen said, echoing comments made by Premier Wen Jiabao at the weekend.

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China wealth fund gets $50bn injection: report
Beijing (AFP) Feb 10, 2012 - China's $410-billion sovereign wealth fund has received a $50 billion capital injection from the central bank, state media said Friday, as the Asian powerhouse ramps up investment overseas.

China Investment Corporation (CIC) was set up in 2007 to invest some of the country's world-beating foreign exchange reserves to get better returns.

The sovereign wealth fund received the money from the People's Bank of China after the Chinese Lunar New Year holiday in January, financial news website Caixin said, citing unidentified sources.

The capital injection increases the value of CIC's assets to $460 billion, based on the latest available figures.

AFP calls to the wealth fund went unanswered and a spokesman for the central bank declined to comment.

The capital injection comes as China's companies and funds increase investment overseas, especially in debt-laden European economies and resource-rich Latin America, as growing competition at home forces them abroad.



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Iran, free trade pact top EU-India summit agenda
New Delhi (AFP) Feb 10, 2012
The European Union looks set to push India at a summit Friday to use its commercial and diplomatic influence to try to bring Iran back to the negotiating table over its disputed nuclear programme. India has a good relationship with Iran, which is the South Asian nation's second-largest oil supplier after Saudi Arabia, providing 12 percent of India's crude needs at an annual cost of around $1 ... read more


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