Foreign trade growth tipped to slow

PUBLISHED : Tuesday, 20 September, 2005, 12:00am
UPDATED : Tuesday, 20 September, 2005, 12:00am

Slowdown attributed to economic controls and prospects of yuan appreciation, but total still forecast to hit US$1.4 trillion

The mainland's robust foreign trade growth will slow sharply for the rest of the year, says a senior Ministry of Commerce official who predicts total trade for the year will hit US$1.4 trillion.

Assistant Commerce Minister Fu Ziying was quoted by state media as saying he expected external trade would grow by 15 per cent year on year in the final four months of 2005.

That is more than 8 percentage points lower than the 23.5 per cent recorded in the first eight months of the year, according to statistics released by the General Administration of Customs last Tuesday. It said trade in the first eight months hit US$891.1 billion.

The mainland was the world's third-biggest trading nation last year, with exports hitting US$593.4 billion, up 35.4 per cent on 2003, and imports of US$561.4 billion, up 36 per cent.

Mr Fu said imports for the first eight months of this year expanded 14.9 per cent from the same period a year ago, while exports grew 32 per cent.

Last month, the Macroeconomic Institute of the National Development and Reform Commission warnedthat the mainland's extraordinarily rapid export growth would be hard to maintain and a downturn was expected in the latter half of this year or the first half of next year.

The mainland's main trading partners have complained that Chinese exports have grown at a much faster pace than its imports, leading to a growing imbalance in trade.

In the first half of this year, the mainland had a trade surplus of US$39.65 billion, surpassing the US$31.98 billion total for all of last year.

Acknowledging the fact, Mr Fu attributed the sharp slowdown in imports to the central government's macroeconomic control measures, designed to rein in overheating investment in some sectors, and expectations of an appreciating yuan.

'Some importers expected in the first quarter that the yuan exchange rate would appreciate, which also resulted in a lower import growth rate than the export growth rate,' he said.

Zhao Xijun , an economics professor at Renmin University, said the yuan revaluation and the expectation of a further appreciation would have a negative impact on trade and gross domestic product growth.

Chinese experts also have warned that excessive reliance on foreign trade for economic growth will bring more potential risk to China's economy.

The proportion of foreign trade to the mainland's gross domestic product has risen year by year from 51 per cent in 2002, to 60 per cent in 2003 and 70 per cent last year.