China's trade surplus to shrink for first time in five years

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BEIJING, June 5 (AFP): China's trade surplus is likely to shrink in 2008 for the first time in five years, with a rising local currency and the US economy's slowdown two of the prime reasons, the government said today.

"We forecast that for the full year, the slowdown in exports will continue, while imports will keep picking up speed," the Customs Administration said in a statement on its website.

"This will result in a reversal of the swift growth in the trade surplus and in the trade imbalances," it said.

Among factors leading to this prediction, the customs authorities pointed to a "clear acceleration" in the value of the Chinese currency, the yuan, against the US dollar.

Other factors included a slowdown in overseas demand, brought about partly by the weakening US economic outlook triggered by the subprime crisis, as well as a surge in global protectionism.

China's trade surplus hit 58 billion dollars in the first four months of the year, down 7.9 per cent from the same period in 2007.

The nation's trade surplus surged to a record 262.2 billion dollars last year, up 47.7 per cent from 2006. The 2007 figure was a 10-fold rise from 2003, when the surplus first started to expand dramatically.