Page last updated at 09:35 GMT, Thursday, 10 July 2008 10:35 UK

Chinese exports slow during June

Chinese yuan
China's government has allowed the yuan to rise against the dollar

China's exports grew at their slowest pace in four months in June, causing its trade surplus figure to fall by more than 20% from a year earlier.

The government may now try to slow the growth of China's currency, which is making Chinese exports more expensive.

Exports grew to $121.5bn (62bn), an 18.2% year on year rise but lower than the 28% rise seen in May.

Beijing has let the yuan rise against the dollar to slow incoming export revenue, which is driving up prices.

The surplus of $21.4bn was still China's biggest so far this year since a surplus of $22.7bn in December.

Meanwhile, the growing demand for overseas resources to fuel the country's expanding economy pushed imports up 23.7%, to $100.1bn in June.

Balancing act

The slowdown in the export figures reflects the downturn in global growth and may indicate the world's largest economy, the US, is on the edge of a recession.

The US is China's second biggest export market after the European Union.

The Chinese government has recently allowed the yuan to grow against the dollar as it seeks to tackle inflation in China which is near 12-year highs.

A stronger yuan would help squeeze the export revenue coming into China and which is pushing up prices and fuelling inflation.

But the rise of the yuan has made exports more expensive in dollar terms and is affecting export growth, and the Chinese government may now decide to ease back the yuan's growth against the dollar.

Despite the yuan growth, the US has accused the Chinese government of keeping its currency artificially low in order to give Chinese exporters an unfair advantage in global markets.




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