Official: imports crucial to China's economic restructuring

17:41, December 17, 2010      

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China saw its trade surplus go down by 3.9 percent over the first 11 months of the year compared with the same period of 2009. But it is a plunge of 34 percent compared with the first 11 months of 2008, when the financial crisis began to bite the global market. It was almost exactly two years ago in November 2008 that China had its first decline of both imports and exports.

The reason, however, is not only the shrinking global markets, particularly those in Europe and the United States, which are the main destinations of Chinese exports. It is to a large extent the result of China's own new strategy of expanding its imports.

The prospects for China's exports in 2011 are not promising. Rising production costs, foreign exchange rate fluctuation and increasing international competition are all generating mounting pressure for Chinese exporters.

Despite that, while other countries, such as the United States and Germany, are trying to boost their exports, China is making efforts to increase its imports and will do more to that end next year.

"We should, and will, attach as much, if not more, importance to our imports as we do for our exports," said Yao Jian, spokesperson of the Ministry Of Commerce of China on Wednesday in Beijing. He even recognized that a trade deficit in China would not be unlikely.

He declared that increasing imports would be high on the agenda of the Chinese government's trade policy next year. More trade facilitation measures, such as streamlining import license registration process and reducing tariff and non-tariff barriers, are expected to be adopted next year.

China is apparently happy to see the downward movement of its trade surplus, regarding it as a favorable trend toward more balanced trade and more balanced international payments. China's top trading partners, including the European Union and the United States, are pressuring it to revalue its currency and so are some emerging markets, such as India. Trade frictions have been increasing in recent years because of their huge deficits in trade with China.

But there is a more important reason for China's growing appetite for foreign products now. As Yao explained, China needs tech-intensive products to power its economic restructuring and industrial upgrades, which form the main agenda of the country's next Five-Year Plan for 2011 to 2015.

Statistics by the Ministry of Commerce show that China has been increasing its investment in buying foreign technologies in the last five years. The value of the contracts grew by 36 percent annually from 2006 to 2010. And the fees paid for tech transfer accounted for 85 percent of those contracts in 2010, compared with the 67 percent in 2006.

As Yao said, the introduction of American and European technologies into China has improved the competitiveness of China's manufacturing sector. The country has high expectations for its equipment manufacturing sector. The government hopes that the sector can produce more tech-intensive products with independent intellectual property rights and domestic brands that can be highly competitive on the international market.

When countries like the United States are complaining about their trade deficit because of cheap Chinese products, they should realize that China is upgrading its own industries and will compete with them on the high-end market one day.

"When that happens, they will start to complain that they cannot find enough cheap Chinese products," Yao said.

And tech imports can help China achieve these goals. However, what China wants to buy is something that Americans are reluctant to sell. For years, China has been calling for the Unites States and the European Union to relax their restrictions on hi-tech exports. The same voice has been heard, for example, at the recent China-U.S. Joint Commission on Commerce and Trade in Washington.

As China is building an eco-friendly economy, products and technologies for saving energy and environmental protection will be very welcome. That is also the major area where the cooperation is most possible between China and its top three trading partners, the European Union, the United States and Japan.

China has adopted a roadmap for the development of what is labeled as the strategic emerging industries, in which the green technology sector is an important part. That could mean huge market potential for foreign products and technologies.

Given that, the next five years is not only crucial for China’s endeavor of industrial upgrades, but also for foreign players who are interested in benefiting from engagement into that endeavor.

By Li Jia, People’s Daily Online
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