Economy

Import growth likely to slow, says Zhong

By Ding Qingfen (China Daily)
Updated: 2011-06-18 09:40

Measures to cool economy will take effect soon, comments vice-minister

WEIHAI, Shandong - China's import growth will "probably" slow down in the months ahead as the government's measures to cool the economy take off, and the prospects for exports are not optimistic, said Zhong Shan, the country's vice-minister of commerce.

Zhong also said that China's foreign-trade growth will "outperform both that of the global average and the nation's GDP growth in 2011", while the nation's exports and imports will "keep growing during the rest of the year".

Zhong made the remarks during his keynote speech on Friday at an agriculture-themed meeting held in Weihai, Shandong province.

From January to May, China's foreign trade grew by 27.4 percent from the same period a year earlier to $1.4 trillion, with imports surging by 29.4 percent to $689.41 billion.

Related readings:  Import growth narrows May trade surplus  Economists urge focus on domestic consumption  Crucial period for economy  Export engine hums along

China's import growth picked up in May after decelerating from January to April. In May, imports grew by 28.4 percent, compared with 21.8 percent in April.

But Zhong said "it is likely that China's import growth will slow down in the second half of this year, as the government's macroeconomic tightening measures are expected to gradually take off."

China's economy is expected to slow down this year. And while the consumer price index remained at around 5 percent during the first half, the central bank has raised the reserve requirement ratio for commercial banks six times this year.

"China's demand cannot always be robust, due to the slowing economy and less market liquidity, and a rise in prices pushed up the nation's imports during the first half," said Long Guoqiang, a senior researcher with the Development Research Center of the State Council.

In 2010, China's imports surged by 38.7 percent year-on-year to $1.39 trillion, while its foreign trade rose by 34.7 percent, resulting in the annual surplus dropping by 6.4 percent. From January to May, China's imports of edible oil fell by 14.2 percent in volume but surged by 19 percent in value, while imports of steel dropped by 1.9 percent in volume but rose 13.7 percent in value.

However, according to Li Wei, an economist from Standard Chartered Shanghai, there is no sign that China's imports will decline significantly. "Probably there will be some slight slowdown in the import growth during the third quarter before recovering in the fourth," he said.

Since late last year, the country has vowed to gradually stimulate imports. "China will continue to expand imports, especially advanced equipment, parts and components. This is our priority this year," said Wang Shouwen, director of the department of foreign trade at the Ministry of Commerce, on the sidelines of the meeting.

A more complex environment in the international market, rising operational costs and output overcapacity are casting a shadow over China's exports and foreign trade, said Zhong.

The World Bank predicted that this year the world economy will grow by 3.2 percent, while developed economies are expected to expand by 2.2 percent.

"Spurred up by factors such as economic recovery and the US presidential elections, developed and developing nations including the United States and India have pledged to promote exports, which will add to the possibilities of trade frictions targeting China," said Zhong.

China's export growth has narrowed from 35.8 percent in March to 19.4 percent in May.

But many experts said exports are still promising thanks to the gradual recovery of the economies of the US and the European Union (EU) and the competitiveness of China's manufacturers.

"US individual consumption is improving, and the EU debt crisis may not deteriorate," Li said.

"The nation's export growth will gain momentum after the slowdown during the second quarter."