China's efforts to boost domestic consumption may not be enough to arrest the slide in exports and more steps may be necessary if the nation has to achieve this year's foreign trade target of over $2 trillion, said the Ministry of Commerce (Mofcom).
"Domestic demand alone cannot make up for the export shortfall," said Fu Ziying, vice-minister, Mofcom.
"We will continue with our efforts to stabilize Chinese exports and boost market share abroad," he said.
The measures include reducing export-related taxes, offering favorable financing policies, simplifying approval procedures, and encouraging qualified enterprises to invest overseas.
Since last August, China has raised the export tax rebate seven times, but "I am still wondering if there is a possibility to raise tax rebates further", said Song Hong, senior professor from the Chinese Academy of Social Sciences.
In July, fiscal revenue grew by 10.2 percent, the third consecutive growth since May.
Besides the sluggish global economy, rising trade protectionism is another factor that has stymied overseas demand, said Fu. He cited the US tire special safeguard case involving $2.2 billion against China and said it was "neither supported by facts nor does it have valid legal grounds", and called for a "prudent decision" by US President Barack Obama.
Despite the negative factors, "China's foreign trade should surpass $2 trillion", predicted Fu who refused to elaborate on exports.
In 2008, China's foreign trade surged by 17.8 percent to $2.56 trillion with a surplus of $295.5 billion.
According to the Customs data released on Tuesday, from January to July, China's foreign trade fell by 22.7 percent from a year earlier to $1.15 trillion, including exports and imports of $627.1 and $519.6 billion.
With the international economy still in a limbo and the Chinese economy showing signs of recovery, experts are betting on domestic consumption to help offset the sharp decline in the exports and stimulate the nations' economy.
Since June, the fall in exports and imports has started easing.
According to the Customs data released on Tuesday, the decline in China's imports was 8.1 percentage points lower in July. "The imports will be ahead of the exports in getting rid of the negative growth," said Lian Ping, chief analyst from Bank of Communications.
But a recent report by Chinese Academy of Social Sciences (CASS) said that the stimulus package could bring much more benefits to steel makers and builders rather than export-oriented manufacturers, especially small- and medium-sized ones in coastal areas. "Domestic demand is not a substitute for overseas demand," said Song Hong, senior professor, CASS.
In late May, China reemphasized the importance of stabilizing exports and said it has strengthened efforts to stimulate exports of labor-intensive and hi-tech products.
Between January and May, market share of China's exports in the US, Europe and Japan went up by 4.1, 3 and 3.6 percentage points year-on-year.
(China Daily?August 13, 2009)
