The chances of an early revaluation of the renminbi look unlikely and could happen much later than expected, considering that the nation's trade surplus may see steep erosions due to the European debt crisis and the growing trade protectionist measures against China's exports, leading economists and experts said on Tuesday.

Earlier estimates were that the nation would allow the renminbi to rise during the second quarter, with overall gains of 3 to 5 percent for the whole year.

Economists now consider such a move unlikely and expect any currency moves to be deferred till the end of the year with a smaller range and overall gains of 2 to 3 percent.

Ministry of Commerce officials had on Monday indicated that the prospects for the nation's exports were not that hopeful this year and the annual trade surplus may see a big drop.

"The improved trade balance will lay a good foundation for China to implement its macro-economic policy and the currency issue should not be too politicized," said ministry spokesman Yao Jian.

"The growth in imports will, however, far exceed that of exports due to the surging prices for imported goods, and hence the large decline in the trade surplus will not be such a big concern," said Dong Xian'an, a chief economist at Industrial Securities Shanghai.

Dong expects the trade surplus this year to drop by 30 percent to US$137.5 billion, compared with US$196.1 billion in 2009.

Stimulated by the growing demand for commodities and raw materials, the monthly growth in imports has been outperforming exports since May 2009. That in turn has led to a drop in the nation's trade surplus for seven consecutive months ending April.

In March, China posted a trade deficit of US$7.24 billion, the first such instance in the past 70 months. From January to April, trade surplus plummeted by 79 percent year-on-year.

"The monthly figures will hover near the balance point," said Yao.

"The sharp fall (in the trade surplus) is unavoidable. There are no signs of an improvement in exports as the European debt crisis is casting its shadow on the region's economic growth," said Yan Jinny, an economist with Standard Chartered Shanghai.

Yan feels that the market has lowered its expectations of a currency revaluation as the European debt crisis has hurt the region's economic growth and marred prospects for Chinese exporters. "The appreciation will not happen until there are clear signs that the European debt contagion has stopped spreading," Yan said.

According to Yan, even if the revaluation happens, the rise would be around two percentage points, the upper limit for the next 12 months.

Yao said the debt crisis is clouding the prospects for exports, as the economic outlook of the European market, the largest importer of Chinese goods, is still hazy.

The yuan has gained by over 14 percent so far this year against the euro, putting tremendous pressure on Chinese exporters and also affecting any adjustment of trade policies, he said.

Many Chinese economists are of the view that revaluation may get pushed into the next year.

"Revaluation is not in the interests of China or the United States, as this would hurt the economic growth of China and the whole world," said Li Jianwei, a senior researcher of the Development Research Center under the State Council.

"Trade protectionism measures against China have been rising, thereby putting more pressure on Chinese exporters," said Li Jian, a senior researcher with the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce.

On Tuesday, the US Commerce Department said it was imposing anti-dumping and anti-subsidy duties of up to 194 and 46 percent on steel wire rod bars used for construction imported from China.

(China Daily May 19, 2010)