China''s
trade surplus with the rest of the world reached a record
$18.8 billion (£10 billion) in August, up from July''s
$14.6 billion record. This brings China''s 2006 global
trade surplus toll date to $95.6 billion.
The
figures were released by Xinhua, China''s official news
agency, though export and import figures are yet to be
released.
According to economists and China''s trading partners,
particularly the US, China has notched major trade account
surpluses with its trading partners by keeping its currency,
the Yuan low to boost exports.
US
trade figures suggest that the growing trade imbalance
with the United States is a major factor with China''s
constant foreign trade surplus. The US is likely to step
up its pressure on China to let the Yuan rise.
It
points out that the Yuan has risen by less than 2 per
cent since being revalued in July 2005 after being tied
to the dollar. China has indicated that it would adjust
its money supply and credit and take comprehensive measures
to mop up liquidity in the banking system.
Since
April, China has raised interest rates twice, as well
as demanding higher reserves for banks, in a move to control
the expanding economy and stem inflation.
China''s
currency and its trade surplus are expected to be key
issues at the forthcoming World Bank and International
Monetary Fund annual meeting due this week in Singapore
to address imbalances in the global economy.
China
is right now the fourth largest economy. Its GDP and foreign
exchange figures are all surging ahead. The main focus
of the World Economic Forum and the China Business Summit
is on sustainable growth through innovation. The underlying
message of the meet is how China''s growth model needs
to reinvent itself.
The
Indian IT engagement with China, though, is still very
limited. The Indian IT companies cater to MNC clients
in China. But the Indian manufacturing business in China
has been successful. The manufacturing company, Bharat
Forge runs a joint venture with the Faw Group in China.
The joint venture has a manufacturing facility in north
China.
However,
the roadblock going ahead for China is the lack of a good
human talent pool. Many Chinese sectors suffer from overcapacity
due to excessive investment. The potential credit history
is bad in several key sectors. The Chinese industry is
excessively dependent on foreign investments.
|