Alert raised on China's foreign trade dependence

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Last updated at: (Beijing Time) Tuesday, November 18, 2003

Alert raised on China's foreign trade dependence

Even as they hail China's outstanding trade performance, economic researchers are worried about the country's growing dependence on foreign trade.

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Even as they hail China's outstanding trade performance, economic researchers are worried about the country's growing dependence on foreign trade.

They warned that too fast a rise in foreign trade may leave the Chinese economy more vulnerable to external risks and pose a threat to stable and sustainable economic development.

The comments follow the General Administration of Customs' announcement last week that China's total foreign trade volume posted a year-on-year rise of 36.4 per cent to US$682.3 billion in the first 10 months of this year.

Between January and October, exports jumped 32.8 per cent year on year to US$348.6 billion while imports were US$333.7 billion, up 40.4 per cent over the previous year.

Encouraged by the robust growth, experts have predicted that the country's foreign trade may hit a record high of US$800 billion this year, with exports contributing more than 50 per cent of gross domestic product (GDP).

By then, China would become the world's fourth-biggest trading power after the United State, Japan and Germany.

Professor Tang Zhong at the Renmin University of China said that fast-developing foreign trade, especially booming exports, has served as a major engine to spur economic growth. As a result, China now boasts foreign-exchange reserves of more than US$380 billion, second only to Japan.

Meanwhile, the trade expansion has also generated millions of job opportunities to greatly ease mounting employment pressure and boosted tax revenues.

Ma Xiaohe, director of the Institute of Industrial Research at the State Development and Reform Commission, said that the growing trade signals China's wider opening-up.

"It suggests that China is enjoying a higher level of integration with the global economy, given its World Trade Organization membership," he said.

As a major sign of China's trading strength, the researcher added, more Chinese products are gaining a bigger share of the international market.

Competitively-priced Chinese exports ranging from textiles and farming goods to home appliances have swept through overseas markets in both developed and developing countries.

The bright trade prospects, however, may create potential problems to the Chinese economy, warned Yuan Gangming, a researcher with the Institute of Economic Studies at the Chinese Academy of Social Sciences.

"China should not be over-reliant on foreign trade to boost its fast-expanding economy because the stimulus from trade growth will become limited if domestic consumer demand remains poor," he noted.

"What's more, an over-reliance on foreign trade will expose the entire Chinese economy to more risks and affect stable and sustainable economic development."

China is the only country among the world's leading economic powers to have a dependence rate of over 50 per cent on foreign trade, contrasting with 10 per cent in the United States and 20 per cent in Japan.

Yuan said too fast a rise in foreign trade is set to cause more trade disputes between China and other countries.

Statistics from the WTO suggest China has become the world's biggest victim of anti-dumping and safeguard measures. Only in the first half of this year, other WTO members launched a total of 12 cases of anti-dumping investigations against Chinese commodities.

The researcher stressed that China should mainly count on domestic consumption rather than external demand to power sustainable and long-term economic development.

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