View the Nation's Trade through Deficits: News Analysis

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Last updated at: (Beijing Time) Tuesday, April 22, 2003

View the Nation's Trade through Deficits: News Analysis

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In the first quarter of this year China reported a total export value of 86.3 billion US dollars, an import value of 87.3 billion dollars, with the growth rate of import standing 19 percentage points higher than that of the export, bringing a trade deficit of 1.03 billion dollars.

While during the same period of previous year, the nation saw a trade surplus of 7.3 billion dollars. Therefore this year's trade deficit, which is not seen for many years, has draw attention from both home and abroad.

There are many reasons contribute to the appearance of the trade deficit. From a view of macro-economy, import was stimulated by the maintenance of fast-speed economy, vast domestic demand, China's WTO commitment to cut the tariff to 11 percent since January 1 and realization of "zero tariff" for 90 information products.

The update of consumption structure also raised demand for foreign goods. Neighboring countries and nations shifted in large scale part of their processing links of manufacturing industry to China, resulting in more import from these countries and enlarged deficit.

From a view of micro-economy, the import price of raw material and energy products rose by a large margin during the first quarter, such as crude oil and finished oil, their prices were raised by 56 percent and 40 percent respectively.

Since on last November 20 the nation formally imposed safeguards on imported steel, enterprises grabbed for tariff quotas and delivery all concentrated at the beginning of this year, resulting in a growth rate of 74.7 percent of imported steel in the first quarter.

Furthermore, early announcement of import quotas for some goods in January (two or three months earlier than previous year) also caused large growth in imports of cotton, edible vegetable oil, wool and other goods.

Although the first quarter saw a trade deficit over 1 billion dollars, the settlement and sales of exchange in trade still realized a surplus of 13.28 billion dollars. The national foreign exchange reserve reached 316 billion dollars by the end of March, nearly 29.6 billion dollars higher than that of the last yearend.

Viewing from the whole economic situation, it is normal to have deficits in certain periods, and the rapid developing import has significantly supported the 9.9 percent growth rate of national economy in the first quarter.

Although facing many opportunities and advantages, the whole year situation allows little optimism.

The nation began to see from March end the negative impacts by SARS on trade activities and international economic cooperation. Some normal trade was blocked and directly effected export. The Iraqi war also led to higher trade costs and business, investment risks. The problems brought by the "special transitional safeguard mechanism" and "non market economy" will greatly menace the nation's export growth.

Besides, to expand export we also face the problems of local economic disorders, international trade protectionism, tax refunds and import pressure. However, according to authoritative analysis, it is still hopeful to grain the 7 percent, even higher, trade growth for the year if the world economic situation doesn't deteriorate suddenly and we take proper measures and the SARS gets effectively controlled.

By PD Online Staff Li Heng

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