Better balance will help reduce surplus
By Wu Jiao (China Daily)
Updated: 2008-03-07 07:17

The government will promote foreign-bound investment and consumption this year while maintaining the steady growth of exports in a bid to deal with the country's record trade surplus, top commerce officials said yesterday.

Chen Deming, minister of commerce, said China's foreign reserves reached about $1.59 trillion at the end of last month.

"Simply limiting exports to balance the surplus is not a suitable solution, as China is facing huge employment pressures," Chen said.

He said, however, there will be a better balance between labor-intensive processing industries and those that provide greater added value.

"We will continue to promote exports from labor-intensive industries, but will also do more to deal with high energy-consuming, polluting and resource-reliant industries, in line with WTO agreements."

The promotion of overseas investment and consumption will be a key element of the country's efforts to reduce the trade surplus, he said.

"Helping Chinese firms to invest overseas is one of the best ways to solve the problem," Ma Xiuhong, vice-minister of commerce and member of the 11th national committee of the CPPCC, said during a group discussion yesterday.

Both Chen and Ma said the government will provide firms with more support and training on investing overseas.

Ma said the country will also stimulate imports.

"The government is considering growing its imports, but it takes time for policies to be drawn up and take effect. The problem cannot be solved in a short time," Ma said.

Zhou Xiaochuan, governor of the People's Bank of China, said yesterday that China will also remove some policy obstacles to Chinese investing abroad.

According to figures released on Friday by the General Administration of Customs, China's trade surplus was $262.2 billion last year, 47.7 percent higher than it was in 2006.

The government has taken various measures to curb the growing surplus, such as scrapping tax rebates on exports of goods from high-polluting industries and imposing export tariffs. As these measures continue to have an effect this year, experts believe the gap between exports and imports will narrow gradually.

Zhang Yansheng, director of the International Economic Research Institute affiliated to the National Development and Reform Commission, said: "As a result of policy adjustments, exports from sectors such as steel and textiles are expected to drop markedly."

However, Citigroup economist Huang Yiping had earlier argued that China's exports should continue to grow strongly, as long as the United States avoids a recession.

"We are not expecting the surplus to decline substantially," Huang said. "We expect it to rise a bit further this year."

The value of China's exports reached $1.22 trillion last year, up almost 26 percent on 2006, while imports hit $955.8 billion, up almost 21 percent.

(China Daily 03/07/2008 page6)