Mainland imports expected to top exports amid uncertainties

PUBLISHED : Saturday, 23 April, 2011, 12:00am
UPDATED : Saturday, 23 April, 2011, 12:00am


China's foreign trade growth is expected to decline slightly this year, with imports likely to exceed exports, leading to a further improvement in its trade balance, the commerce ministry says.

'In view of factors such as the continuous rise of domestic demand, the government's supportive measures to expand imports, and surging global commodity prices, imports are likely to grow faster than exports, which will lead to further improvements in the trade balance,' the Ministry of Commerce said in a report released on its website yesterday.

Foreign trade surged 29.5 per cent to US$800.3 billion in the first quarter. The mainland recorded a trade deficit of US$1.02 billion as imports rose 32.6 per cent year-on-year to US$400.66 billion, while exports increased by 26.5 per cent to US$399.64 billion.

The report, which reviewed the nation's trade situation last year and for this year's first quarter, also highlighted the uncertainties ahead.

'The outlook for exports is still complex. There are many uncertain factors that affect the stable development of [our] trade, particularly the significant surge in raw material prices and labour costs, which will lower companies' profits,' the report said.

'Small- and medium-sized enterprises will face more pressure from rising costs.'

Businesses will also need to tackle the rising funding costs arising from increases in bank reserve requirements and interest rates in the last few months as the central bank tries to tame inflation, it said.

The government did not give any exact predictions on exports and imports for this year.

The mainland's foreign trade grew 34.7 per cent last year to more than US$2.97 trillion, with its trade surplus dropping 6.4 per cent to US$183.1 billion.

Kelvin Lau Kin-hang, senior economist for Asia at Standard Chartered Bank, agreed that the mainland's exports would be clouded by a number of unfavourable factors.

These included inflation, the government's tightening monetary measures and disruption to the supply chain caused by the March 11 earthquake and tsunami in Japan.

'Despite the many uncertainties on the export side, the US and European economies, such as Germany, should not be worse than last year,' Lau said.

But he expected the mainland to record a trade surplus in the coming three quarters because exports were usually stronger in the second half of the year.