China's imports are expected to increase by a rate outpacing exports this year because of surging demands boosted by the country's robust economic performance, experts said.

They also predicted that the country's exports will maintain rapid development this year, despite some temporary setbacks due to severe acute respiratory syndrome (SARS).

Li Yushi, vice-president of the Chinese Academy of Foreign Trade and Economic Co-operation, the think tank of the Ministry of Commerce, said a report from the study house indicated that total foreign trade volume in China is expected to reach US$680-700 billion this year, up between 10 and13 per cent year-on-year.

Exports will increase by between 8 and 11 per cent to US$350-360 billion, compared to a surging rate of 22.3 per cent last year.

"This is fast growth considering that the previous year had already achieved a significant import base," Li said.

The increase in exports will be slowed by the gloomy world economy, the SARS epidemic and rising trade protectionism, Li added.

"But if the world economic situation improves in the second half of the year and a big demand for Chinese-made products emerges, a stronger export figure is predictable," Li said.

For the imports, Li said its growth will outpace that of exports by increasing 12-15 per cent to US$330-340 billion.

Last year, imports rose by 21.2 per cent.

However, the report's forecast is conservative compared to the actual performance of foreign trade during the first six months.

Customs figures showed exports rose 34 per cent year-on-year to US$190.32 billion in the first half of this year, against a rise in imports of 44.5 per cent to US$185.82 billion.

In the first half this year, China's trade surplus narrowed significantly to US$4.5 billion compared with US$13.4 billion in in the same period in 2002.

The surge in imports will eat into China's trade surplus this year, Li said.

Zhang Feng, an expert at the State Information Centre, echoed Li's view on the increase in imports and said many factors will drive them forward.

China's continuing economic stability and rising demand will spur imports, he said.

Lower tariffs and reduced import licences will be another force for rising imports, Zhang said.

Average tariff rates have been lowered to 11.5 from 12.7 per cent this year.

Only eight categories of commodities need import licences this year, down from 12 last year.

China's solid manufacturing base will also encourage more imports for processing, Zhang said.

Imports worth US$120 billion went to the processing trade last year-up 30 per cent year-on-year. They accounted for 40 per cent of total imports.

Increased foreign investment in China is one factor that will drive higher imports in the future, Zhang said.

Li believed the import surge will not only benefit foreign economies, but also China itself.

"As long as imports maintain a healthy composition, an increase is helpful for driving China's economy in my view," said Li.

A total of 80 per cent of the nation's current imports belong to means of production, while the rest are consumer goods.

This structure will help China transform itself into a technology-intensive country from its present labour-intensive state, Li added.

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