China recorded a remarkable 46 percent increase in exports in February compared to the same month one year ago. The actual result was considerably higher than the earlier predictions of 35 to 40 percent and is likely to increase pressure from the US calling for the People’s Bank of China to allow the yen to appreciate.
For the past 18 months, China has pegged the yen to the US dollar. For American consumers particularly, this means that the cost of goods imported from China have remained unchanged and this certainly contributed to the impressive gains experienced by China. Naturally, this has also increased China’s trade gap with the US, and is sure to elicit further calls from the Obama administration to allow the yuan to increase in value.
“The recovery seems to have gained legs and this will give China’s government more confidence to start revaluing the yuan,” said Ren Xianfang, an economist at IHS Global Insight in Beijing.
However, China’s central bank governor, Zhou Xiaochuan, said at the weekend that the government was “very cautious” about easing exchange rate controls because the global economic outlook was still uncertain.
Source: BBC News
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