Trade volume to top US$1 trillion in 2004
(peopledaily.com.cn)
Updated: 2004-05-03 11:24

Li Rongcan, deputy director of Planning and Finance Department of the Ministry of Commerce, released on April 29 in Guangzhou Trade Fair the 2004 Spring version of China's Foreign Trade Situation Report, which predicts that the total volume of China's import and export would approach or top US$1 trillion.

During the first quarter China's foreign trade continued to grow fast with the total volume of import and export being US$239.8 billion a 38 percent up year on year. Of it export was US$115.7 billion growing by 34 percent; import was US$124.1 billion growing by 42 percent. In general the development environment for China's foreign trade will continue to improve this year among some unfavorable factors and uncertainty.

The report points out that in terms of export the world economy is growing with increasing momentum and major international economic organizations and institutions generally hold optimistic opinions of the world economic outlook. According to IMF the world economy would grow by 4.6 percent reaching a new high since three years ago. International trade would become brisker. According to WTO the volume of world trade would grow by 7.5 percent, a 3 percentage up over last year.

The problem of export tax rebate that has inflicted export development for years has been solved. The scarcity of funds for export companies has been alleviated. During the first quarter China has finished refunding export tax of 83.8 billion yuan (US$10.1 billion), a 177 percent up year on year. During last year and the year before China attracted more than US$50 billion of foreign direct investment two years in a row, thereby acquiring a strong export production capability.

Reform of foreign trade system continues to push ahead. A large group of collective and private enterprises suddenly rose as a new export growth sector.

For these reasons China's export still has space for fast growth. However, it should be realized that the exchange rates of main currencies fluctuate frequently; oil price is running as a high level; and terrorism still cast a shadow. These have formed great threat to the steady growth of the world economy. International trade protectionism spreads worldwide, which brings damage to the orderly development of the world trade. China is particularly harmed by it. China's inland has a strong demand for investment, which continuously drives up raw material prices and the cost of export. These are disadvantageous or uncertain factors that greatly hinder China's export growth.

In terms of import China has a fast growth and expanding scale, which is partly due to the price hike on the international market and partly to the stimulus of customs duty reduction, but basically it was caused by domestic investment demand swelling and over-investment in some industries. Last year China's domestic investment grew by 26 percent and the growth was accelerated further during the first quarter, reaching 43 percent. According to past data the year in which investment grows fast is the one in which import grows rapidly. Since it is impossible to instantly ease the bottleneck effect, import this year would continue to run at a high level. As macro-control measures taken by the Chinese government are being put to effect domestic investment demand would see a slowed-down growth and import growth would gradually subside. By how much it is to subside depends on the force and effect of the macro-control measures.

To summarize the above analysis China's yearly import & export volume is expected to approach or top $1 trillion with a 17 percent increase, of which export would reach $505 billion C up by 15 percent; import would reach US$495 billion up by 20 percent. Import growth would be 5 percentages higher than export.

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