Stronger Currency Behind Sharp Drop in Chinese Exports

© AP Photo / Ng Han GuanA woman walks past a shop selling fruits at an outdoor market in Beijing
A woman walks past a shop selling fruits at an outdoor market in Beijing - Sputnik International
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An unexpected drop in last month's Chinese exports that has sent shock waves across global markets is mainly due to policymakers' efforts to bolster the yuan, financial and market analysts said on Monday.

Chinese President Xi Jinping (C) takes photos with guests of the Asian Infrastructure Investment Bank at the Great Hall of the People in Beijing on October 24, 2014. - Sputnik International
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MOSCOW (Sputnik) China's General Administration of Customs released trade figures earlier in the day showing a 14.6-percent decline in exports (to $144.6 billion) last month, despite forecasts that exports from China would grow by 12 percent. Economists also expected the trade surplus to drop to $45.4 billion from $60.6 billion in February, however real output barely exceeded $3 billion.

"The main reason behind the surprise drop in March exports is the yuan's recent strength," HSBC economist Ma Xiaoping was quoted as saying by the Wall Street Journal.

The slowdown comes amid interest rate cuts by the country's central bank over the past several months aimed at spurring economic growth, with expectations that similar measures will follow.

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"China's government will continue to ease domestic conditions, with a further cut in interest rates imminent," Bloomberg economist Tom Orlik was cited by the Financial Times as saying.

Speaking at a press conference in Beijing, the General Administration of Customs spokesman said the numbers reflect a generally slow recovery from the 2008 global financial crisis.

"The domestic economy is facing increasing downward pressure as it enters a 'new normal'," Huang Songping was quoted as saying by the Financial Times, adding that volatile exports may continue throughout the second quarter of 2015.

The latest shakeup in the world's second biggest economy came against the backdrop of Monday's World Bank report revising China's growth forecast for this year downward by one-tenth of a percentage point to 7.1 percent.

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