China's foreign trade to increase by some 20% this year

An increase of 20 percent is expected for China's imports and exports in 2008, showing a slight slowdown compared with that in 2007. Facing an even more challenging environment for its foreign trade in the future due to the international financial crisis, the country will adopt more trade facilitating measures.

The Ministry of Commerce released its latest report on China's foreign trade on its website on Nov.17. The Ministry forecasts in the document that China's imports and exports will reach 2.6 trillion USD in 2008 as a result of a 20 percent rise over last year.

However, that growth rate is lower than that in 2007 when China's imports and exports went up by 23.5 percent.

The report warns that the market prospect on its three major trading partners, the EU, the US and Japan, which combine to account for nearly 60 percent of China's exports, is not encouraging as demands there are sliding down. Developing and emerging economies are also slowing down.

The shrinking world trade will sharpen the competition on the world market. Countries facing declining economic growth and rising unemployment will probably be motivated to adopt more protectionist trade policies. In addition, there will be mounting risks of default in international trade.

Although Chinese enterprises may benefit from the decreasing commodity prices on the international market, the turmoil on the global financial market will make the commodity prices even more volatile. The massive capital injection in the financial markets in many countries and uncertain prospect of the USD exchange rate, as well as geographic political factors, will also underline the possibility of further turbulence on commodity prices.

China has raised export tax rebates for some products in August and early November. The third similar action has been announced and will be effective in December.

The report says more measures will be in place to boost the foreign trade, including import and export management, customs clearance facilitation, import and export taxes, forex management. More policies will be adopted to encourage exports by enterprises with competitive advantages and give small and medium sized enterprises more access to financing sources. More imports of products needed by the domestic market will also be boosted.

The report points out that there are more potential to be exploited in the developing markets. China's exports to those markets have kept growing fast in recent years. Its exports to Brazil, for example, surged 90.2 percent in the first three quarters of the year. However, their shares are still small in China's exports.

The report is confident on the stable, fast development of China's foreign trade. Chinese industries and enterprises have increased their competitiveness over the years. Demands for middle and low end Chinese products may increase when overseas consumers are not optimistic about their future income. And the robust growth of China's exports in the first three quarters of this year, against the backdrop of RMB appreciation, rising labor costs and weakening world market demand, plus cuts in export tax rebates, are evidently showing that Chinese enterprises are more capable of adapting to the market changes.

China's imports and exports rose 25.2 percent over the first three quarters of this year to 1.97 trillion USD. The trade surplus was down 2.7 percent to 181 billion USD. Export of Mechanical and electrical products kept fast growth pace while labor-intensive exports slowed down remarkably.

The European Union remains to be China's largest trading partner. China's exports to the EU rose 25.6 percent over the first three quarters of the year, 5.2 percentage points lower than the same period of last year.

Source: People's Daily Online