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China will try to boost its imports and keep the momentum in export growth in the coming months, with an aim to reducing a rapidly growing trade surplus that has drawn fire from its major trading partners.
The State Administration of Foreign Exchange (SAFE), China's foreign exchange regulator, said on Sunday that the country is expected to continue to witness a "sizeable" surplus in its international payments during the second half of this year, which will further boost its forex reserves.
In its first report on the nation's international balance of payments (IBP) released on Sunday, the administration said the surplus in its current account, which covers mostly trade in commodities and services as well as current transfers such as remittances from overseas Chinese, ballooned by 801 per cent on a year-on-year basis to US$67.3 billion in the first half of this year.
SAFE said it will publish half-year IBP reports from this year onwards.
The current account surplus mainly comes from commodities trade, which reported a US$54.2 billion surplus in the first half of the year, surging by 823 per cent year-on-year on the back of factors such as weak domestic demand, a stronger manufacturing industry, as well as healthy global economic growth, it said.
For capital and financial accounts, the other aspect of IBP, the surplus shrank by 43 per cent year-on-year to US$38.3 billion, driven mostly by a deficit in portfolio investments, SAFE said.
In the second half of the year, as the government strived to boost spending and accelerate the development of the capital market, the administration said the current account surplus is likely to maintain its growth momentum, while the capital and financial account surplus might witness slow growth.
To balance its international payments, the nation will try to boost imports of strategically important raw materials, resources as well as advanced technologies and equipment, while reducing exports of highly-polluting and energy-consuming products, SAFE said.
It will also channel more foreign investment to central and western regions as well as to high-tech industries.
The administration expressed worries that the rapid increase in forex reserves, which rose to US$711 billion at the end of June, might have an impact on monetary policy implementation, inflation as well as the likely creation of an asset bubble.
(China Daily November 28, 2005)
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