China’s trade surplus surges

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China’s trade surplus in July swelled to its highest level in more than two years on the strength of European demand and Asian emerging markets, but could decline if the global economy continues to weaken.

The country’s trade surplus rose to $31.5 billion in July, the biggest gap since January 2009, and up from the $22.3-billion surplus registered in June, China reported Wednesday.

Chinese exports grew 20.4% from a year ago, to $175.1 billion, the strongest performance since April. Meanwhile, imports rose 22.9% from a year ago, to $143.6 billion.

Growth in shipments to Europe doubled between July and June, and exports to Japan saw solid recovery. Sales of Chinese goods to developing countries in Asia, such as Vietnam and Indonesia, continued to strengthen.

Economists warned that the trade numbers could sour with this week’s battering of financial markets possibly triggering another global recession.

‘The better export and import growth from China may offer some [temporary] relief to the jittery market, though their outlooks look more uncertain as global market turmoil and expected weaker global growth prospects also point to downside risks to China’s trade and economic growth,’ wrote Jian Chang of Barclays Capital Research in a note to clients Wednesday.

The unexpectedly high trade surplus could worsen trade tension and bolster calls for China to appreciate its currency.

The yuan rose a 17-year high against the dollar Wednesday morning at 6.4170. Analysts say China may be compelled to strengthen the yuan further to help tackle the country’s highest inflation in 37 months.

-- David Pierson

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