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Exports buoyant as trade volume rockets
By Dai Yan (China Daily)
Updated: 2005-10-07 06:56
A report completed by the Ministry of Commerce's Department of Foreign Trade
said yesterday the country's two-way foreign trade will hit US$1.4 trillion,
according to International Business Daily, a newspaper published by the
ministry.
The ministry has forecasted a trade surplus of US$90 billion to 100 billion
for 2005, compared to a surplus of US$32 billion in 2004.
The report said the surplus will be created by a predicted 30 per cent jump
in exports to US$750 billion, compared with an 18 per cent rise in imports to
US$660 billion.
China recorded a trade surplus of US$60.2 billion in the first eight months
of 2005, far surpassing the US$32 billion logged in 2004. Exports remained
buoyant in the first eight months, rising 32 per cent year on year to US$475.7
billion, while imports grew just 15 per cent to US$415.5 billion.
The predicted trade surplus of US$90-100 billion will account for 5 per cent
of China's total trade volume, compared to 2.8 per cent in 2004, the ministry's
report said.
The ministry expressed its concern that the huge trade surplus will bring
some negative impacts to the country's economy, though it is an engine of
economic growth and increases foreign exchange reserves.
The negative impacts mainly exist in "creating new trade frictions, adding
pressure for renminbi revaluation and financial risks," the report said.
Exports have continued to surge in spite of a landmark 2.1 per cent
revaluation of the yuan on July 21 to 8.11 per dollar, despite European Union
and US quotas against China's textile exports.
China's central bank chief Zhou Xiaochuan said he expects trade friction to
worsen this year in an interview with the Chinese financial magazine Caijing.
"The trade surplus was too high, but adjusting the exchange rate alone can do
little to change the situation," Zhou said in the latest edition of the magazine
seen yesterday.
China needs to urgently boost domestic demand in order to rein in export
growth and fend off further trade friction, he said.
"Weak domestic consumption will further enlarge China's trade surplus, which
is what we are unwilling to see," Zhou said.
China launched a series of measures early last year to cool its overheating
economy, controlling investment in sectors such as automobiles, real estate,
cement, iron and steel. The policy partly resulted in a smaller investment and a
smaller demand for imports.
"In the major global economies, the influence of domestic consumption on the
trade balance is far greater than that of foreign exchange rate adjustments,"
Zhou told the magazine.
On foreign exchange rates, Zhou believed the 2.1 per cent revaluation of the
yuan against the dollar in July could achieve its objectives, although he added
that it is necessary to periodically assess what level is appropriate for the
yuan.
Zhou said China maintained an average annual trade surplus of around US$20
billion from 2000 to 2004, which is about 2 per cent of China's GDP.
"Therefore, a 2 per cent revaluation should basically achieve the expected
policy target," Zhou said.
(China Daily 10/07/2005 page1)
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