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SCMP Reporter

Mainland Trade Minister Wu Yi has warned the country's foreign trade this year will grow only half as fast as last year as a result of the Asian economic crisis.

 She predicted mainland exports and imports would reach US$345 billion this year, up 6 per cent from last year's $325 billion.

 'We should not underestimate the negative effects of the financial crisis,' Ms Wu said.

 Last year, mainland foreign trade rose 12.1 per cent year on year, with exports rising 20.9 per cent to $182 billion and imports up 2.5 per cent to $142 billion resulting in a trade surplus of $40 billion.

 Exports made up about 20 per cent of its economic growth, which rose 8.8 per cent last year and is expected by Beijing leaders to rise 8 per cent this year.

 Ms Wu cautioned that the mainland would find it hard to maintain robust export growth following the regional financial turbulence, as the Asian region accounted for about 30 per cent of Chinese exports.

 Due to the crisis, China 'will face stark challenges', Ms Wu was quoted by Xinhua news agency as saying.

 Regional countries also accounted for about 80 per cent of foreign investment in the mainland and would be prevented from extending their investment due to their domestic problems.

 Despite speculation Beijing will devalue the yuan to stimulate exports and help reflate the economy, mainland leaders have repeatedly pledged to maintain the currency's value.

 Many economists have halved their forecasts for the mainland's export growth to about 10 per cent this year due to the expected economic slowdown in the region and a possible decline in the US economy.

 Morgan Stanley Dean Witter vice-president Andy Xie estimated the mainland could suffer a 5 per cent decline in exports this year.

 'Export competition will intensify as the global economy slows and the need to export by China's competitors increases,' Mr Xie said in a report.

 As Beijing has apparently chosen exchange rate stability over domestic economic concerns, Mr Xie is lowering the country's economic growth projection to 7 per cent from 9 per cent this year.

 Ms Wu said in a bid to boost exports Beijing would adopt all practical and effective policy measures such as optimising export structures and further improving an export tax refund system.

 She also called on Beijing to devote more attention to emerging markets in Africa and Latin America, as well as to developing and effectively using resources available in the two regions.



Regional financial fallout expected to halve growth as Asia tightens belt