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Sino-British trade will continue increasing in the second half of the year and set a record for the full year, although its growth rate could slow down because of China's macro controls to cool down its economy, says a British industrial leader.
"It will be the best year (in terms of trade volume) in 2004," Charles Powell, the president of the China-Britain Business Council, told China Daily.
The year 2004 marks the 50th year of trade relations between the UK and China.
Two-way trade hit US$6.86 billion from January to May this year, an increase of 37 per cent year-on-year. The previous year witnessed a trade volume of US$14.4 billion.
The United Kingdom is now China's third-largest European trading partner, after Germany and the Netherlands.
Powell said the trade increase might slow down "a little bit" as China is making efforts to cool down its economy by tightening credit and intensifying land use.
"The effect of these cooling measures will be more pronounced by October," Powell said.
Because of this factor, bilateral trade growth will also slow down in the second half of the year, he said.
Commenting on China's current macroeconomic controls, Powell said it was necessary for such a large economy to adjust itself to a reasonable growth rate.
He also said China's soft-landing campaign was good for the country and foreign companies with interests in China. A hard landing would be bad for China and the world.
Furthermore, he said, China's economy would continue growing quickly, and predicted an 8.5 per cent gross domestic product increase for the full year.
Because of the robust growth of the two-way trade, Powell also expressed concerns that the trade imbalance might expand at a brisk pace.
"China's exports (to the UK) grew too fast," he said, adding the two sides were aware of the situation and were ready to work on solving it.
In the first five months, China exported a total of US$5.07 billion worth of goods to the UK, reflecting a 39.8 per cent rise year-on-year.
In contrast, British exports to China jumped 29.8 per cent for the same period to stand at US$1.79 billion.
Talking about mutual investments, Powell believes they will increase in the future as China is opening wider under its World Trade Organization (WTO) pledges.
The UK is one of the largest foreign investors in China.
Powell said the UK is rolling out a red carpet for Chinese investors, adding that stronger Chinese companies can find a wealth of business opportunities there.
WTO commitments
"Generally speaking, China performed very well in fulfilling its commitments to the WTO," Powell said.
China is doing well in continuing opening its markets and reducing import tariffs, he said.
And the country has met some of its pledges ahead of the date it committed to the world trade body.
China joined the WTO in late 2001, and its grace period will be up at the end of the year, which means most of its sectors will be almost fully opened to foreign investors.
"China is now a more opened economy after the WTO entry," Powell said.
But he wants China to improve its commitments in some areas.
Powell said he wished for stricter implementation of intellectual property rights (IPRs) protection.
"China has developed a good legal framework concerning IPR," he said. "But the implementation is not perfect."
Some foreign companies complain that piracy is eating away their profits in China.
He also hopes China could intensify the implementation of court and arbitration judgments, saying a lack here would affect China's status as a large foreign investment recipient.
In addition, Powell wants the agriculture sector to open wider to the outside world.
He said the two countries are discussing these matters, and he appreciates Chinese efforts in solving them.
"China is taking IPR seriously," he said. Progress has been made in protecting IPR and combating piracy.
He also said he understands China's situation, saying it is impossible for such a big country to solve all these problems overnight.
Market economy status
Powell said China has made great progress in its market economy, and the European Union (EU) should grant the market economy status (MES) to China in dumping and subsidy cases.
The EU, currently China's largest trading partner, rejected China's year-long appeal for such status late last month.
Powell said he understands China's eagerness for MES, but he said he believes China need not concern itself too much about it.
"The EU needs to take a few months to make further reviews," he said.
China made far-reaching concessions during its WTO entry so that other members can still regard it as a non-market economy in dumping and subsidy cases until 2016, at the latest.
This has put the country in a disadvantageous position when facing anti-dumping charges.
China currently is subject to more anti-dumping measures than any other country - 600 as of February 2004, a figure that is expected to rise.
So far, New Zealand, Singapore, Malaysia, Thailand and South Africa have given China MES.
(China Daily July 22, 2004)
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