China's trade surplus to shrink further
( 2001-11-10 11:45 ) (8 )

China will face continued pressure in balancing its foreign trade next year, according to a report on China's foreign trade released here Friday by the Chinese Academy of International Trade and Economic Cooperation (CAITEC).

The CAITEC, a research and advisory arm affiliated to the Ministry of Foreign Trade and Economic Cooperation (MOFTEC), analyzed the main features of Chinese foreign trade in 2001 and studied the general international background in the report.

The report points out that China's export market is facing challenges and difficulties due to the current downturn of the world economy.

All China's foreign trade indicators are going down this year, says the report. Statistics showed that China's goods trade volume totaled US$376.2 billion worth in the first nine months, with exports of US$194.8 billion, up 6.9 percent, and imports of US$181.4 billion, up 11.2 percent.

The growth rate of imports was 4.3 percentage points higher than that of exports, and the trade surplus in the first nine months was US$13.4 billion, down 30 percent on the same period of last year, according to the report.

The report shows that exports increased faster earlier this year and then slowed down in the latter period, with the growth rate decreasing month by month. The exports of foreign-funded enterprises has grown rapidly while processing exports lack strength. Trade with new markets is booming while in major traditional markets there is an overall decrease.

This year also saw an imbalance of trade growth in different regions, a marked decrease in exports of machinery and electronic products, a downturn in other bulk goods exports and severe export problems in some key areas, according to the report.

The report says that while there are increasing limitations in China's export growth, there are good opportunities for import growth.

If China's accession to the World Trade Organization (WTO) is completed this year, China will begin to be bound by promises to reduce relevant non-tariff barriers as well as import tariffs on agricultural and some industrial products including automobiles, fertilizers, chemical products and mobile telecommunication facilities.

The most important factor to affect China's exports is the fluctuation of world market demand, rather than the opening of the domestic market to WTO members. China will not acquire many export incentives after its accession to the WTO, says the report.

Since China still lacks sufficient import control measures that are in accordance with WTO rules, imports may increase on a large scale in the short term, which will increase the pressure in balancing foreign trade, according to the report.

It points out that owing to the Chinese government's effective macro-control measures, its active financial and stable currency policy, and a series of policies encouraging export, China's exports were less affected by the downturn of the world economy than neighboring countries and regions.

The report predicts that in 2002, although China's export volume will still slightly exceed the import volume, the trade surplus will shrink by a large amount.