Official: Foreign investment the main reason for China's surplus

16:43, April 21, 2010      

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Minister Sheng Guangzu of General Administration of Customs (GAC) said foreign-invested enterprises dominate 55 percent of China's foreign trade, of which 60 percent is the processing trade. He pointed out that foreign-invested enterprises are the main cause of China's trade surplus, and they are also the main beneficiaries.

Sheng published an article in the newspaper Economic Information Daily on April 21 saying that foreign-invested enterprises create and transfer a lot of trade surplus to China through processing trade.

Data shows that in 2009, China's processing trade surplus under foreign-invested enterprises reached nearly 222.8 billion U.S. dollars, equivalent to 1.1 times China's total foreign trade surplus in that year.

Sheng said export expansion and import substitution caused by foreign investment is the main reason for the formation of trade surplus. In 2009, trade surplus of foreign-invested enterprises reached 127billion U.S. dollars, accounting for 65 percent of the total surplus.

Sheng said foreign-invested enterprises are the biggest beneficiaries of the trade surplus. These companies engaged in processing trade using China's cheap labor and other production factors. Foreign-invested enterprises gain the most profit and China only gets a little processing fee.

From 2000 to 2009, China exported 5 billion dolls, 45 percent of which were exports to the United States. Retail price of the famous Barbie dolls in the United States is 9.9 U.S. dollars each, and Chinese enterprises only receive shared processing fees of 0.35 U.S. dollars. The U.S. company that owns the brand gets a profit of nearly 8 U.S. dollars.

Sheng suggests China should pursue a basic balance between imports and exports, encourage strong domestic demand, promote growth of China's imports, and turn from the "world factory" into a "world market."

By People's Daily Online


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