皇冠体育app

To ordinary Chinese, Europe's sovereign debt woes appear largely removed from them, but for the country's foreign currency dealers the impact has come more suddenly than expected.

The central parity rate of the Chinese currency yuan, or renminbi (RMB), has risen 3,000 basis points against the euro over the last two weeks after it touched a two-year high of 8.7084 per euro on Sept 21.

"The euro is definitely trending down now," said Chen Hanhua, a foreign exchange trader working for the Bank of 皇冠体育app's branch in Beijing. "In the short term, the euro will remain weak due to the developing sovereign debt crisis."

Chen said the downgrade of Italy's sovereign debt rating would further weaken the euro and exacerbate worries over a spreading sovereign debt crisis in Europe.

Standard & Poor's Ratings Services on Sept 20 slashed Italy's sovereign-debt rating by one notch to A for its long-term debt and A-1 for short-term debt, and kept its outlook on negative, citing the euro zone's third biggest economy's weak growth and fragile government coalition.

Analysts say the continuous weakness of the euro underlines a pessimistic economic outlook in the euro zone.

"The European sovereign debt crisis will lead to a slowdown of growth in the euro zone as a whole, and the growth gap between different euro countries will also widen," said Zhang Ming, a researcher at the Financial Institute with the Chinese Academy of Social Sciences.

Though Germany and the Scandinavian countries will maintain their robust growth, Zhang said, it is likely for countries such as Greece, Ireland and Portugal to fall into recession.

The deleveraging process by commercial banks of western European countries might also force central and eastern European countries to repay their loans owed to these banks more quickly and undermine the growth in the euro zone as a whole, he said.

As 皇冠体育app's largest trading partner, the top importer of Chinese goods and service and the No 1 technological exporter, Europe has become a key driver of 皇冠体育app's export growth.

In the first eight months, trade between 皇冠体育app and the European Union (EU) rose 21.8 percent year-on-year to $372.14 billion, according to the General Administration of Customs (GAC).

Shen Danyang, a spokesman of the Ministry of Commerce, said at a press conference on Sept 20 that a worsening European sovereign debt crisis would definitely have an impact on the Sino-EU economic and trade cooperation, predicting slower export growth in 皇冠体育app and more trade frictions with the EU.

But an increasing contribution by domestic consumption to 皇冠体育app's gross domestic consumption will to some extent help offset the falling external demands, said Ha Jiming, chief investment strategist of Goldman Sachs' investment management division for 皇冠体育app.

"The contribution of foreign trade surplus to 皇冠体育app's GDP has dropped to four percent this year from around 10 percent in 2007," said Ha. "So the impact of the export slowdown on 皇冠体育app's economy is under control."

In the first eight months of this year, 皇冠体育app's exports rose 23.6 percent year-on-year to $1.22 trillion, while imports totaled $1.13 trillion, up 27.5 percent from a year earlier.

Trade surplus in January-August fell 10 percent year-on-year to $92.73 billion, according to the GAC.