Steve Quayle News Alerts

July 10, 2003

BEIJING China's exports and factory production surged in June, exceeding expectations, as rising foreign investment and the yuan's link to a falling dollar bolstered the competitiveness of the country's manufacturers.

Exports rose 33 percent from a year earlier to $34.5 billion, while production increased 17 percent to $363 billion, according to government reports released Thursday. Economists surveyed by Bloomberg News had expected export growth of 27 percent and a 13 percent rise in factory output.

China's entry in the World Trade Organization "triggered a wave of foreign direct investment," said Andy Xie, chief economist at Morgan Stanley in Hong Kong. Other Asian countries such as Singapore "have lost their competitiveness in manufacturing exports," he said.

Exports from China are growing as foreign companies such as Samsung Electronics of South Korea and Siemens of Germany open new plants and increase factory output, taking advantage of the yuan's peg to the dollar.

Foreign investment in China shot up almost two-fifths to $5.45 billion in May, the same month that the outbreak of SARS, or severe acute respiratory syndrome, peaked on the mainland.

China, the country that was worst infected by SARS, is growing even as Singapore said Thursday that its economy shrank in the second quarter because of the disease.

China is due to announce figures for second-quarter gross domestic product next week.

"China's economy has proved remarkably resilient to SARS," said Rob Subbaraman, an economist at Lehman Brothers Japan.

The country's trade surplus narrowed 27 percent to $2.1 billion in June, as imports surged 40 percent to $32.3 billion.

China's growth also was helped by government tax breaks and increased spending during the SARS outbreak.

"The government came out with a lot of policies to encourage investment," said Gao Huiqing, economist at the State Information Center. "Everyone, especially private enterprises, was encouraged to increase investment."

Tax revenues increase

China's tax revenue rose by about a fifth in the first half of this year, thanks to a clampdown on tax cheats and accelerating economic growth.

Tax collection rose 22 percent from a year earlier to 1.03 trillion yuan, the State Administration of Taxation said.

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