China trade surplus won't be stopped

China's trade surplus with the rest of the world increased to a record level in 2007, despite the rising value of China's currency and efforts by the country's central government to curb exports.

In fact, the divide grew by more than 47 percent, with China's exports surpassing its imports by $262 billion. Exports, which totaled $1.2 trillion, were up 25 percent, while imports were up nearly 21 percent, to $955 billion, the China Daily reported Wednesday.

The sums are truly staggering, especially in light of slowing trade growth with North America and Beijing's attempts to slow export levels in 2007. Faced with political pressure over a widening imbalance between China and the United States, China's government closed loopholes in export duty rebates, raised duties on other categories and generally discouraged runaway growth in exports. Aside from outside pressure, the country's financial leaders were also concerned about an overheating economy.

But all those factors still couldn't halt sizable growth last year. Booming trade to Europe certainly offset a flat year in U.S.-China trade. Economists predict the surplus will continue to grow in 2008, but that growth will slow. And a lot of the slower growth could come in commodity sectors.

As a result of policy adjustment, exports in sectors like steel and textiles are expected to drop markedly, Zhang Yansheng, director of China's International Economic Research Institute, told China Daily.

Also key to remember is that China's trade relationships within Asia differ substantially from those with the European Union and United States. China is an importing nation to some of Asia's emerging economies, though in the past two years it has even managed to foster a growing surplus with India, its chief rival in Asia. 

Source: American Shipper