Beijing: Debt strains in the euro zone will take a toll on Chinese exports in the coming months, the Ministry of Commerce said Saturday.
Exports surged 48.5 per cent in May from a year earlier, the government reported on Thursday, sending a reassuring signal to markets about the vigour of global demand.
But the ministry said it typically takes Chinese companies two months or so to fulfil orders, so May's shipments reflected orders booked before Europe's debt mess deepened.
The euro zone and the International Monetary Fund had to bail Greece out in April after it was unable to roll over its debts in the bond market, raising fears about the financial health of other big borrowers and triggering a plunge in the euro.
"In the next few months the negative impact from Europe's debt crisis on Chinese exports may gradually show up," the ministry said in a statement distributed at a monthly news conference.
Yao Jian, a spokesman for the ministry, told the conference that export growth would slow from July onwards.
"In the next two to three months, we will keep a close eye on changes in European markets, especially in Germany, Spain, Italy and Britain, and take some measures," Yao said. He did not specify what steps China would take and when.
But Yao did say that China might cut export tax rebates for energy-intensive products, thus penalising the manufacture of such goods, in a bid to reach its goals for cleaner growth.
China is racing against the clock to meet its five-year plan to cut energy intensity per unit of GDP by 20 per cent in the years from 2006-2010.
The commerce ministry also said the sovereign debt crisis in the euro zone was one of several uncertainties hanging over the world economy and would limit the pace of the global recovery.
Despite May's export surge, it was hard to be optimistic about full-year prospects, the ministry said.
Parity with dollar
The euro will drop to parity with the US dollar in 2011 before the "inevitable" break up of the currency that is now used by 16 nations, the Centre for Economics and Business Research said. The euro's decline will accelerate because the US Federal Reserve is likely to begin raising interest rates at the end of this year while the European Central Bank will keep its benchmark lending rate on hold, the London-based group said in a report. The euro has lost 15 per cent of its value against the dollar this year on concern that Greece and other countries on the region's periphery may not be able to pay their debts.
—Bloomberg
