China's Trade Surplus Predicted to Shrink Further

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Last updated at: (Beijing Time) Monday, May 13, 2002

China's Trade Surplus Predicted to Shrink Further

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China will face continued pressure in balancing its foreign trade this year, according to a report released Monday in Beijing by the Chinese Academy of International Trade and Economic Cooperation (CAITEC).

CAITEC, a research and advisory arm affiliated to the Ministry of Foreign Trade and Economic Cooperation (MOFTEC), predicted in its report that China's trade surplus would shrink considerably in 2002, with the possibility of a trade deficit in some months.

The report sees a faster increase in imports than in exports this year since China has further cut its overall tariff level and gradually opened the domestic market, along with growing domestic demand for continued rapid growth and economic restructuring.

CAITEC expected exports to rise five percent this year and imports to climb up seven percent this year, while trade surplus is predicted to reach about 20 billion U.S. dollars, dropping by 2. 5 billion U.S. dollars year-on-year.

CAITEC partly attributed the smaller trade surplus to the devaluation of the Japanese yen, which would have a big impact on China's export this year, and in the long run would result in increasing imports from Japan, putting pressure on related industries in China.

Meanwhile, CAITEC pointed out that the lack of continued drive in China's processing trade would severely hold back the growth momentum in export by means of processing trade.

The uncertainties over the future global economic recovery and non-tariff trade barriers and anti-dumping measures against China would also affect China's export, according to the CAITEC report.

Foreign Trade Expected to Grow 6 Percent in 2002

China's foreign trade is expected to grow about six percent to 540 billion U.S. dollars in 2002, according to the report released.

CAITEC predicted that China's exports would rise five percent while imports would increase seven percent in 2002.

During the January-March period this year, China's trade volume reached 122.04 billion U.S. dollars, a year-on-year growth of 7.7 percent, with exports up 9.9 percent to 64.66 billion U.S. dollars and imports up 5.2 percent to 57.38 billion U.S. dollars, according to MOFTEC.

The report says machinery and electronics plus high-tech products provided the main boost to foreign trade growth. The growth rate for ordinary exports fell while processing trade rose steadily.

Coastal provinces like Zhejiang and Guangdong maintained their fast growth in foreign trade while the growth rate for inland provinces dropped.

In contrast with exports to Japan and the European Union, China 's exports to the United States, the Association of Southeast Asian Nations and the Republic of Korea as well as Hong Kong and Taiwan grew faster than the average rate, according to CAITEC.

CAITEC President Zheng Zhihai said world and domestic conditions for China's foreign trade had improved, coupled with the U.S. economic recovery and the multilateral and unconditional most-favored-nation treatment China enjoys in export after its accession to the World Trade Organization.

Affected by the global economic downturn, the devaluation of the Japanese yen and difficulties faced by the Chinese government in managing trade, China's foreign trade growth would face obstacles, Zheng said.

"If a robust world economic recovery comes, China's foreign trade may grow faster than expected this year," he said.

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Figures: China's Top 10 Trading Provinces

Figures: China's Monthly Foreign Trade in 2002

Figures: China's Trade With Major N. American Partners

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