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EDITIONS
Tuesday, 12 November, 2002, 07:04 GMT
China's trade surplus soars
Couple walk past Motorola billboards in Beijing
Foreign firms are choosing China as a production base
China's trade surplus has leapt to a three-year high in October as exports jumped 31.5% year on year.


A major structural shift... is occurring in the region, whereby China is rapidly becoming the main outsourcing centre

Rob Subbaraman, Lehman Brothers analyst

China's stellar performance was down to the popularity of China as a manufacturing base, assembling goods for sale worldwide, analysts said.

China's exports were worth $30bn (19bn) in October, official figures from the country's Customs Administration showed.

Imports also rocketed in October, up 33.4% above their October 2001 level, and were worth $25.2bn.

Busy factories

China's trade surplus for October stood at $4.75bn, its highest monthly level since August 1999.

The strong trade figures came a day after China reported booming industrial output had reached its highest level so far this year in October, up 14%.

"The main reason for China's robust exports is because of a major structural shift that is occurring in the region, whereby China is rapidly becoming the main outsourcing centre for the region," said Lehman Brothers analyst Rob Subbaraman.

In addition to global manufacturers who have built their own plants in China, many are outsourcing production to Chinese subcontractors and branding the products with their own logos.

The growth of imports is another sign of the strength of manufacturing, as well as growing consumer demand.

When China joined the World Trade Organisation (WTO) last year, it committed itself to remove tariffs on many foreign imports. One result has been to cheapen the cost of shipping raw materials to Chinese factories.

New facilities

The trade figures are "another proof of the resilience of the Chinese economy, that despite the weaker global outlook and softening demand, Chinese exports are doing quite well," said Dong Tao of Credit Suisse First Boston.

The southern manufacturing boom town of Shenzhen on the border with Hong Kong revealed on Tuesday it was gearing itself to ship even more goods into the world market.

City officials plan to spend 30bn yuan ($3.6bn; 2.2bn) to extend port and airport facilities, a Hong Kong newspaper reported citing the Shenzhen Transportation Bureau.

And the strong market for cargo has prompted investment bank JP Morgan to raise its 2002 profits forecast for China Southern Airlines by 7.9% to 269m yuan.


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05 Nov 02 | Asia-Pacific
05 Nov 02 | Asia-Pacific
06 Nov 02 | Asia-Pacific
16 Oct 02 | Business
02 Feb 02 | Media reports
11 Nov 02 | Business
11 Nov 02 | Business
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