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Trade surplus expected to fall this year (2006-04-27)

Despite a 40 per cent growth in China's trade surplus in the first quarter, it is expected to fall overall this year on the back of changes in export policy and rising domestic investment, a leading expert said yesterday.

"There is little probability that the trade surplus this year will exceed the 2005 level," said Li Yushi, vice-president of the Research Institute of Foreign Trade and Economic Co-operation under the Ministry of Commerce.

Li was speaking at the publication of the spring edition of the report on China's foreign trade at the Chinese Export Commodity Fair held in Guangzhou, capital of South China's Guangdong Province.

"If no major changes occur on international markets, China will likely limit its trade surplus to within US$50 billion this year," Li predicted.

Last year, China's foreign trade amounted to US$1,422 billion, with a surplus of US$101.88 billion. The surplus was US$69.8 billion more than the previous year.

The continuous surplus growth stemmed from a global shift in manufacturing, said Li. Processing in Asia for consumption in Europe and North America made balanced international trade difficult to realize over a short period.

Continued strong demand produced a surplus of US$23.3 billion in the first quarter this year, up 41.4 per cent over the same period last year. It also helped raise China's foreign exchange reserves to US$875.1 billion at the end of March, up US$56.2 billion from the end of last year.

However, customs data showed export growth slowed with a rapid increase in imports between January and March.

Liu Haiquan, a senior official with the Ministry of Commerce, said China exported US$197.3 billion worth of goods in the first quarter, up 26.6 per cent year-on-year, but 8.3 percentage points slower than the previous growth rate.

Meanwhile, the country imported US$174 billion worth of goods, up 24.8 per cent, an acceleration of 12.6 percentage points in the growth rate.

"The figures indicate that the government has taken measures to address the trade surplus," Liu said.

The measures included slashing or scrapping tax refunds for some export commodities and levying export duties on others.

"At the same time the government has encouraged imports," Liu said, citing the orders worth US$16.2 billion made this month in the United States.

Customs sources said China imported US$93.73 billion worth of machines and electronics and US$53.37 billion worth of new and high-tech products in the first quarter.

The China foreign trade report (spring edition) forecasts that foreign trade will reach US$1,600 billion this year, up 15 per cent on last year.

(China Daily)



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