China's trade surplus widens by nearly 90% to $ 32 billion
China's trade surplus widens by nearly 90% to $ 32 billion
Exports rose 11.6 percent from a year earlier, up from the previous month's 9.9 percent rate, data showed Saturday. Import growth held steady at 2.4 percent.
The improvement is a positive sign for the ruling Communist Party, which is holding a congress to hand power to younger leaders who might benefit from an economic uptick.
Still, the commerce minister warned that Chinese exporters face tough conditions ahead due to weak global demand and rising operating costs.
"The trade situation will be relatively grim in the next few months and there will be many difficulties next year," Chen Deming told a news conference.
Analysts say a modest recovery is under way from China's deepest downturn since the 2008 world financial crisis. But they say it will be gradual and too weak to drive global growth without improvement in the United States and Europe.
Data reported Friday showed Chinese auto sales, factory output and investment also improved in October.
Stronger exports will help manufacturers that were battered by last year's slump in global demand. Thousands closed and survivors slashed payrolls, raising the danger of unrest as Communist leaders tried to enforce calm ahead of the leadership transition.
The import weakness meant China's global trade surplus widened by nearly 90 percent over a year ago to $32 billion — the highest monthly level this year.
Chen, the commerce minister, also warned that "growing trade protectionism" might hurt exporters.
World leaders pledged after the 2008 crisis to avoid steps that might hinder trade and hamper a recovery. But Beijing and trading partners including the United States, Europe and Japan have raised tariffs on goods including autos and solar panels in a series of disputes over market access, subsidies and other issues.
Beijing set a target of 10 percent trade growth this year, but it looks increasingly unlikely the country can reach that after total trade rose only about 6 percent for the first 10 months.
Lackluster Chinese import demand reflects government curbs on lending and investment to cool inflation and overheating.
Those controls helped to crush surging prices but hurt China's large construction industry and depressed its voracious appetite for steel beams, wiring and other materials made of imported iron ore, copper and other commodities. That is bad news for miners and other commodity exporters such as Australia and Brazil that supply China.
China's economic growth fell to a three-and-a-half-year low of 7.4 percent in the quarter ending in September. Analysts say the slowdown probably has reached its bottom and activity should improve in the current quarter.
The government said last month it saw "steady economic growth," suggesting there was no need for further major stimulus following interest rate cuts and higher spending on public works construction and investment by state companies.
Demand in debt-plagued Europe was so weak that the 27-nation European Union was temporarily overtaken by the United States as China's biggest trading partner for October.
Exports to the United States rose 9.5 percent to $ 31.2 billion. China's trade surplus with the US widened by 8 percent to $ 21.6 billion.
Exports to Europe fell 5.8 percent to $ 26.4 billion, with more severe declines for some struggling economies. Italy's purchases of Chinese goods plunged 25.7 percent while exports to France were off 9 percent. China's trade surplus with Europe narrowed by 17 percent to $ 10.8 billion.
Iran sanctions shadow falls on smaller German banks
- Some German companies plan to press on with Iran dealings
- German exports to Iran rose 15.5 percent last year
Germany’s biggest lenders have shied away from business with Iran after past penalties for breaching US sanctions, but smaller banks have leapt on opportunities afforded by the nuclear deal rejected by Donald Trump.
There are just months to go until a November deadline issued by Washington after the US president abandoned a hard-fought agreement that loosened business restrictions on the Islamic Republic in exchange for Tehran giving up its pursuit of nuclear weapons.
But some firms plan to press on in their dealings with Iran despite the looming threat of penalties.
“We will continue to serve our clients,” for now, said Patrizia Melfi, a director at the “international competence center” (KCI) founded by six cooperative savings banks in the small town of Tuttlingen in southwest Germany.
The center, which supports companies operating in sensitive markets like Iran or Sudan, has seen demand “rising sharply in the last few years, from firms listed on the Dax (Germany’s index of blue-chip firms), from all over Germany and from Switzerland,” she added.
German exports to Iran have grown since the nuclear deal was signed in 2015, adding 15.5 percent last year to reach almost €2.6 billion ($3.0 billion) after 22-percent growth in 2016.
Such figures remain vanishingly small compared with Germany’s €111.5 billion in exports to the US — its top customer.
Nevertheless, the KCI will “wait and see what the sanctions look like” before turning away from Iran, Melfi said.
Already, firms dealing with Tehran must take great care not to fall foul of US restrictions.
Transactions are carried out in euros, and the KCI does not deal with businesses that have American citizens or green card resident holders on their boards.
What’s more, products sold to Iran cannot contain more than 10 percent of parts manufactured in the US.
One of the most important inputs for the business is “courage among our managers” given the high risks involved, Melfi said.
Germany’s two biggest banks, Deutsche Bank and Commerzbank, avoid Iran completely after being slapped with harsh fines in 2015 over their dealings there, with Deutsche alone paying $258 million in penalties.
DZ Bank, which operates as a central bank for more than 1,000 local co-op lenders, is withdrawing completely from payment services there, a spokesman told AFP.
That left KCI to seek out the German branch of Iranian state-owned bank Melli in Hamburg.
Even that linkage could break if Iran’s biggest business bank appears on a US list of barred businesses as it has before.
Meanwhile, among Germany’s roughly 390 Sparkasse savings banks, business with the regime is mostly limited to producing documents linked to export contracts.
“We will be looking even more closely at those” in the future, a person familiar with the trade told AFP.
Elsewhere in the German economy, the European-Iranian Trade Bank (EIH) founded in 1971 is another conduit to Tehran.
Also based in Hamburg, it for now remains “fully available to you with our products and services,” the bank assures clients on its website, although “business policy decisions by European banks may result in short term or medium term restrictions on payments.”
Neither does the Bundesbank (German central bank) believe that much has so far changed for business with Iran.
“Only the European Union’s sanctions regime will be decisive,” if and when it is changed, the institution told AFP.
Any payment involving an Iranian party would have to be approved by the Bundesbank if things return to their pre-January 2016 state.
German banking lobby group Kreditwirtschaft has called on Berlin and other EU nations to clarify their stance — and to make sure banks and their clients are “effectively protected against possible American sanctions.”
KCI’s Melfi said time is running out for EU governments to act.
“Many firms just want to stop anything with Iran, since they can’t calculate the risk of staying,” she noted.
On Friday for the first time since the Iran nuclear deal came into force in 2015, China, Russia, France, Britain and Germany gathered in Vienna — at Iran’s request — without the US, to discuss how to save the agreement.