Looking at China's foreign trade record reasonably

15:58, December 27, 2010      

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China's total foreign trade volume is expected to exceed 2.9 trillion US dollars this year, a historic high, yet the nation's exports are likely to come up against more trade barriers as the world economic struggles to stage a bullish recovery, according to Ministry of Commerce sources. Compared with 2009, the nation's foreign trade growth in 2010 will reach a rise of 31.5 percent, well above the global average level of 11.4 percentage points.

Earlier, the new "Global Economic Prospects" update notes that global economic is 4.8 percentage points in 2010, and the International Monetary Fund (IMF) in October said the developed countries' economy will grow by 2.7 percent while that for developed countries will be 7.1 percent this year. A powerful engine of global economic growth drives up the rapid growth of China's export recovery.

At the same time, China's domestic economic growth and domestic demand expansion led to a growing demand for imports, while a rapid increase in international commodity prices is a good spur for a further expansion of China's imports volume.

Meanwhile, in the wake of rapid growth in foreign trade, China's trade surplus continues its decline. According to customs statistics, China's foreign trade surplus amounted to 170.412 billion dollars from January to November, a drop of 4.2 percent as compared with the same period in 2009, and a decrease of 33.4 percent from the same 2008 period. A declining surplus is attributed mainly to a significant rise in the rate of import growth over the export growth. China's exports grew 33 percent to 1.42 trillion dollars from January to November, with imports up 40.3 percent to 1.253 trillion dollars.

In its major trading partners, in addition to the European Union (EU), the nation's import growth rate from the United States, Japan, South Korea and ASEAN are significantly higher than China's export growth rate to these countries and regions. This shows that China has taken pragmatic, substantial moves to promote the balanced growth of global trade. China's marked import growth has become a vital, important force to drive the world economy out of an impasse. In a third trade policy review of China in May, the World Trade Organization (WTO) highly appreciated its adherence to import expansion.

As a matter of cause, China's higher trade surplus "was mainly driven by a rapid import growth". In a foreseeable future, however, it is increasingly difficult to offset the processing trade surplus with the expansion of trade deficit in general. And so a large surplus or imbalance is an excuse for trade frictions against China.

Nevertheless, the distribution of China's export destination countries has not changed much. The EU remains China's largest export market from January to November 2010, and the country's exports to the three major economies, namely, the U.S., Europe and Japan markets, accounted for 45.5 percent of China's total exports. If China's export flow through Hong Kong is included, then the developed countries are still China's major export markets.

This also indicates from a side aspect the need to accelerate the pace of change in China's foreign trade development model and, only in this way, can China boost the further implementation of exports market diversification strategy in an effort to disperse or diffuse its export risks.

What especially needs alert is that a rapid recovery of foreign trade situation and export situation in particular is possibly to slow down the pace of foreign trade shift and restructuring. So, China should capitalizes on the in-depth readjustment of global economy and the new round of technological innovation and substantially press ahead changes in the foreign trade development strategy and strategic transfer of the entire economy.

By People's Daily Online and contributed by Long Chung Yang, Ph.D assistant researcher of Foreign Economic Research Institute under China's National Development and Reform Commission (NDRC)
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