China's Trade Surplus to Shrink Sharply This Year: Report

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Last updated at: (Beijing Time) Saturday, May 24, 2003

China's Trade Surplus to Shrink Sharply This Year: Report

An authoritative report Friday predicted the Chinese foreign trade surplus will shrink sharply this year, echoing the forecasts made by leading domestic economists and foreign institutions.

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An authoritative report Friday predicted the Chinese foreign trade surplus will shrink sharply this year, echoing the forecasts made by leading domestic economists and foreign institutions.

Although China turned around the first quarter's trade deficit and had a surprising US$100 million surplus in the first four months of this year, most economists hold the view that China's trade surplus will largely evaporate, but despite that, a deficit will not appear immediately this year.

The report concluded that China's exports are unlikely to equal last year's rate of increase, whereas imports will be pulled up by a number of favourable factors.

The bi-annual report is issued by the China Foreign Trade Situation Report Panel, which comprises experts from the Ministry of Commerce and the Chinese Academy of International Trade and Economic Co-operation.

It predicts that the total foreign trade volume of China will reach US$680-700 billion, up 10-13 per cent year-on-year.

Exports will increase by 8-11 per cent to US$350-360 billion, compared to a surging rate of 22.3 per cent last year.

While the growth of imports will outpace that of exports by increasing 12-15 per cent to US$330-340 billion.

Last year imports rose by 21.2 per cent.

The increase in exports will be slowed by the gloomy world economy, the SARS epidemic and rising trade protectionism, the report suggested.

The surge in imports, meanwhile, is led by the wider opening of the Chinese market and its increased demand for products needed for the country's further economic development, the paper continued.

"But if the world economic situation improves in the second half of the year and a big demand for Chinese-made products emerges, a stronger export figure is predictable,'' the report said.

The duration of the SARS crisis will be another decisive factor for export strength this year, the paper emphasised.

If it runs for a long period of time, it will have a severely negative impact on exports, the paper said.

It went on to say that the SARS crisis will have a greater impact on China's service trade than that on the export of goods.

Among the goods trade sector, labour-intensive products and farm produce will suffer more than the electronic and machinery products.

Li Yushi, vice-president of the Chinese Academy of Foreign Trade and Economic Co-operation who headed the group which drew up the bi-annual paper, said the surge in imports, which is mainly composed by high-end technology, equipment and scarce resources, is of benefit to the Chinese economy in the long run.

But the rapid rise in imports this year will put pressure on China's international balance of payments and its currency rate, said Li.

The SARS crisis battering China has triggered worries about the state of the international balance of payments this year.

The bi-annual report suggests more attention be paid by government and industry to the prevailing international protectionism.

The unpromising world economy will force the trade projectionists to speak louder and move aggressively to help their industries this year, the paper predicts.

A total of 60 anti-dumping and safeguard cases targeting China were charged last year, involving US$1 billion.

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