Asian woes to affect Chinese exports

Asian woes to affect Chinese exports

BEIJING (Reuters): Weaker currencies in Southeast Asia and rising trade friction are likely to dampen China's exports in 1998, Chinese Trade Minister Wu Yi was quoted on Tuesday as saying.

"Compared with 1997, China's imports, exports and the use of foreign capital will face greater challenges next year," she said in an interview with the official People's Daily.

While currencies in Southeast Asian countries such as Thailand, Indonesia and Malaysia have tumbled in a regional financial crisis this year, China's yuan is facing upward pressure from a surging trade surplus and a steady inflow of foreign funds.

China has ruled out a devaluation of the yuan to support its exports or attract foreign investment. Despite strong export growth and steady inflows of foreign investment this year, alarm bells are ringing in Beijing due to the currency crisis.

"The composition and the markets of goods exported by China and Southeast Asian nations are identical, so the financial disturbance will reduce the competitiveness of our exports," Wu was quoted as saying.

Many currencies in Southeast Asia have depreciated sharply in recent months, putting downward pressure on units in the region which have not fallen in value.

Wu also saw trade trouble for China in the form of rising international protectionism which has prompted "increasing anti- dumping charges and non-tariff barriers that are targeting Chinese exports", she said.

Friction with China's key trade partners has worsened because of its surging trade surplus in recent years, she said. China registered a trade surplus of $40.23 billion in the first 11 months of 1997, a huge surge over the $13.93 billion in the same period last year.

"The problem of imbalance does exist in bilateral trade between China and the United States," Wu Yi said.

China's trade surplus with the United States is expected to hit $50 billion this year and Beijing officials have said they were concerned over the imbalance.

Economists have said any devaluation of the yuan would further aggravate trade friction with the United States.

Wu said Washington has "overestimated" China's exports to the United States and "underestimated" U.S. exports to China because of different calculations on entrepot trade through a third country or region, mainly Hong Kong.

"The Chinese side hopes to see rising exports by the United States to China," she said.

"At the same time, we hope that the United States will ease restrictions on its exports to China," she said, referring to U.S. controls on high technology and nuclear equipment.

In October, China sent its biggest ever trade mission to the United States ahead of a visit to Washington by President Jiang Zemin that aimed to soothe U.S. anger over the trade imbalance.