THE yuan's appreciation has boosted China's imports, but has hurt its exports, said Bo Xilai, the Minister of Commerce, according to the ministry's official Website today.
In the first four months of this year, the country's exports grew by 25.8 percent, but lost 8.2 percentage points.
Imports rose 22.1 percent in the period, 8.8 percentage points higher than the same period last year.
He also said that in the first seven months of last year, monthly imports grew by approximately 15 percent. This figure expanded to more than 20 percent in the last five months of 2005.
Monthly exports increased by 30 percent from January to July last year, and shrank to 24.7 percent from August to December.
Bo said that the yuan has appreciated by 3.17 percent against the US dollar since China reformed the exchange mechanism in July of last year.
However, its appreciation eroded the profits of many Chinese export companies, especially labor intensive companies, he said.
The profit margin of these companies was very low, he added. The average profit margin in the textile industry was only 3 percent, and now the 3.17 percent appreciation has left many textile companies in financial trouble.
The yuan's appreciation has also affected foreign companies in China. A recent survey conducted by the Japan External Trade Organization showed that 49.8 percent of Japanese companies in China felt that the yuan's appreciation would bring negative implications to their businesses, Bo noted. Only 24.4 percent thought the appreciation would be a positive change.
Bo also said that the exchange amendment was a necessary move to propel China's financial reform, and it is conducive of a balanced trade.
China revalued its currency in July last year, by pegging it to more currencies, including the US dollar, the euro and the yen, instead of only pegging it to the US dollar.
