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Chinese exports surge rapidly

City A.M. Reporter
CHINESE exports and imports grew faster than expected in February, underlining the momentum behind the world’s third-largest economy and reinforcing the case for a rise in the yuan.

Exports jumped 45.7 per cent in February from a year earlier, following a 21 per cent rise in January, while imports surged 44.7 per cent after record growth of 85.5 per cent in January, the General Administration of Customs said yesterday.

Economists cautioned against over-interpreting the figures, which were skewed by the timing of the long Lunar New Year holiday, but said the basic message was one of gathering strength that would justify a firmer exchange rate and further policy tightening measures to nip inflation in the bud.

The central bank has already started to cool demand by twice raising the proportion of deposits that banks must keep in reserve rather than lend out. Beijing wants to reduce new lending in 2010 to 7.5 trillion yuan (£735bn) from a record 9.6 trillion in 2009.

A separate report yesterday in the China Securities Journal revealed that Chinese banks only issued about 700bn yuan in new loans in February, down from January’s 1.39 trillion yuan.

Traders said the reported halving of loan growth helped allay fears of further monetary tightening that had been spawned by talk of a jump in inflation.