Wu Yi: Export credit insurance needed

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Last updated at: (Beijing Time) Friday, December 26, 2003

Wu Yi: Export credit insurance needed

Vice-Premier Wu Yi said yesterday a larger role for export credit insurance is needed to support the Chinese export sector.

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Vice-Premier Wu Yi said yesterday a larger role for export credit insurance is needed to support the Chinese export sector.

She also said she expects China will face a tougher job maintaining its high growth rate in exports next year.

The China Export and Credit Insurance Corp (Sinosure), China's only official export credit agency, will likely see its insurance business jump by 100 per cent this year to US$5.5 billion. That accounts for 3 per cent of China's general trade for the same period.

That rate, also known as the penetration rate measuring the support of export credit insurance to the growth of trade, was up 50 per cent from the 2 per cent recorded for all of 2002.

Despite the surge, it is still far below the global average penetration rate of 10 per cent.

To increase the supporting strength of export credit insurance, Wu said more co-operation between relative departments is necessary. She made the remarks while addressing a meeting between export credit insurers and firms that do foreign trade yesterday.

Wu said more measures on providing export credit insurance are expected.

The need for export credit insurance -- allowed by World Trade Organization rules is surging as China cancels other subsidies on exports as it accedes to WTO requirements, Wu said.

Wu estimates China's total foreign trade will reach US$840 billion this year, compared with US$620 last year.

But she forecasts China's exports will grow by only 8 per cent next year.

In the first 11 months, China's total exports rose 32.9 per cent.

She said three factors are behind the predicted drop, including the big base this year, rising trade frictions and the cut on tax rebate rates beginning next year.

Wu believes more export credit insurance will help Chinese exporters explore new overseas markets in Russia, Africa and Latin America.

China has always tried to weaken its dependence on markets in the United States, Europe and Japan, according to Wu. But new markets often mean more risks, and export credit insurance -- which differs from commercial insurance -- can protect exporters from losses due to importers' defaults or delayed payments.

Tang Ruoxin, general manager of Sinosure, said the firm is keen on developing new insurance products.

"More support will be offered to exports heading to Russia, Middle East, Africa and Latin America next year," Tang said.

Favourable premium rates will be given to high-tech products, Tang said.

Leading local companies will get individual insurance plans designed specially by Sinosure, Tang said.

Sinosure has set an ambitious target to raise its insurance business to US$20 billion by 2005, and it hopes its penetration rate will reach 10 per cent, Tang indicated.

Sinosure, set up in December 2001, has brought together relative businesses of the People's Bank of China and the China Export and Import Bank.

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