Nov. 4 (Bloomberg) -- The Canton Fair, China’s biggest trade show, received 16 percent more export orders than six months ago as overseas demand for electronic gadgets and clothes picked up ahead of the Christmas shopping season.

Contracts rose to $30.5 billion at the end of the 15-day expo in southern China’s Guangzhou, led by orders for machines, electronics and appliances, said the fair’s spokesman Chen Chaoren. European Union and U.S. buyers thronged the show, a barometer of foreign demand for local products, from Oct. 15, boosting visitor numbers by 14 percent, he said.

“There’s been a notable rebound in the number of buyers and the amount of orders especially from Europe and the U.S.,” Chen said at a Guangzhou press conference today. “That’s laying a sound foundation for next year’s export recovery.”

The higher orders add to signs the global economy is recovering after the U.S. grew last quarter for the first time in more than a year and manufacturing activity in the euro region expanded for the first time in 17 months in October. The trade revival may also call attention to friction as China restricts appreciation of its currency.

“On trade matters there are tensions building up and there are risks of various tit-for-tat measures,” Ardo Hansson, the World Bank’s chief economist on China, said in Beijing today.

Yuan Versus Dollar

Commerce Minister Chen Deming this week pledged to keep the yuan’s value stable against the U.S. dollar to help exporters. After allowing the currency to advance 21 percent against the dollar in the three years to July 2008, China’s government has since kept it virtually unchanged, stoking tension with American manufacturers. China also is supporting exporters with tax rebates and loans.

The dollar has weakened this year against all of its 16 most-traded counterparts except the yen, dropping 6.9 percent versus the South Korean won and 5.6 percent against the euro.

International Monetary Fund Managing Director Dominique Strauss-Kahn said yesterday that he anticipates China will address its “undervalued” currency.

“We still believe in the IMF that the renminbi is undervalued,” Strauss-Kahn said in an interview on Bloomberg television in Washington. The exchange rate needs to appreciate “in the coming years but I think that the process which is now at work is a process which goes in this direction.”

Group of 20

His remarks come as Group of 20 finance chiefs prepare to gather this week in Scotland to flesh out their commitments to addressing the global trade and investment imbalances that contributed to the financial crisis.

Because China needs to reduce its trade surplus and boost domestic demand, an appreciation of the yuan “is probably something that is in the pipeline,” while a depreciation of the dollar is “probably going to be part of the natural order of things,” Hansson said.

China’s growth will accelerate to 8.7 percent in 2010 from 8.4 percent this year, fueled by an export comeback and rising construction, the World Bank said today.

“Now that the toughest time is behind us and we expect overseas demand to continue to recover next year, we’re planning more investment on attending shoe exhibitions in Italy and the U.S. to boost sales,” said Kelly Wen, overseas sales manager of Yaqite Industrial Co., which exports 80 percent of the company’s products to Europe. The Guangzhou-based company sold $3 million of shoes at the Canton Fair, a fivefold jump from six months ago, she said.

Roiled by Recession

Still, this year’s transactions at the fair shrank by about 20 percent compared with 2007, before the global economy was roiled by the worst recession since the Great Depression.

About 92 percent of the orders signed were for less than six months, “a sign that buyers remain cautious on the future and may still be worried about the medium and long-term outlook,” said Wen Zhongliang, the commerce ministry’s foreign trade counselor.

Exports may make up 0.4 percent of growth in 2010 after slicing 3.4 percentage points off this year’s expansion, the Washington-based lender said in a quarterly report on the nation’s economy.

“China’s export growth is likely to resume, helped by strong fundamental competitiveness and the recent depreciation of the nominal effective exchange rate,” the World Bank said.

To contact the reporter on this story: Yanping Li in Guangzhou at yli16@bloomberg.net

Last Updated: November 4, 2009 04:56 EST