A report completed by the Ministry of Commerce's
Department of Foreign Trade said Thursday the country's two-way
foreign trade will hit US$1.4 trillion, according to
International Business Daily, a newspaper published by the
ministry.
The ministry has forecasted a trade surplus of US$90 billion to
100 billion for 2005, compared to a surplus of US$32 billion in
2004.
The report said the surplus will be created by a predicted 30
percent jump in exports to US$750 billion, compared with an 18
percent rise in imports to US$660 billion.
China recorded a trade surplus of US$60.2 billion in the first
eight months of 2005, far surpassing the US$32 billion logged in
2004. Exports remained buoyant in the first eight months, rising 32
percent year on year to US$475.7 billion, while imports grew just
15 percent to US$415.5 billion.
The predicted trade surplus of US$90-100 billion will account
for 5 percent of China's total trade volume, compared to 2.8
percent in 2004, the ministry's report said.
The ministry expressed its concern that the huge trade surplus
will bring some negative impacts to the country's economy, though
it is an engine of economic growth and increases foreign exchange
reserves.
The negative impacts mainly exist in "creating new trade
frictions, adding pressure for renminbi revaluation and financial
risks," the report said.
Exports have continued to surge in spite of a landmark 2.1
percent revaluation of the yuan on July 21 to 8.11 per dollar,
despite European Union and US quotas against China's textile
exports.
China's central bank chief Zhou Xiaochuan said he expects trade
friction to worsen this year in an interview with the Chinese
financial magazine Caijing.
"The trade surplus was too high, but adjusting the exchange rate
alone can do little to change the situation," Zhou said in the
latest edition of the magazine seen yesterday.
China needs to urgently boost domestic demand in order to rein
in export growth and fend off further trade friction, he said.
"Weak domestic consumption will further enlarge China's trade
surplus, which is what we are unwilling to see," Zhou said.
China launched a series of measures early last year to cool its
overheating economy, controlling investment in sectors such as
automobiles, real estate, cement, iron and steel. The policy partly
resulted in a smaller investment and a smaller demand for
imports.
"In the major global economies, the influence of domestic
consumption on the trade balance is far greater than that of
foreign exchange rate adjustments," Zhou told the magazine.
On foreign exchange rates, Zhou believed the 2.1 percent
revaluation of the yuan against the dollar in July could achieve
its objectives, although he added that it is necessary to
periodically assess what level is appropriate for the yuan.
Zhou said China maintained an average annual trade surplus of
around US$20 billion from 2000 to 2004, which is about 2 percent of
China's GDP.
"Therefore, a 2 percent revaluation should basically achieve the
expected policy target," Zhou said.
(China Daily October 7, 2005)