During the first half year China's foreign trade including import and export showed a trend of rapid growth. Under the macro-controls the trade deficit, which lasted four months in a row, has been reversed since May and import and export structures grew balanced.

A pattern of large import and large export has formed in foreign trade

According to the customs China's foreign trade reached $523 billion increasing by 39 percent year on year during the first half year and has exceeded the total import and export volume in 2001. This included $258.1 billion of import and $264.9 billion of export, which increased by 36 percent and 43 percent respectively.

During the first half year China's export continued to grow rapidly mainly due to following reasons: First, China's exported products grew in competitiveness, which raised their ability to expand their shares in the international market. Second, China still had distinct advantages in utilizing foreign investment and the export expanding ability of processing trade. After 2002 and 2003 when it exceeded $50 billion two years in a row China's foreign investment in actual use reached $33.8 billion during the first half year. Export production capacity continued to grow. Third, the pace of tax refunding picked up. From January to April refunded taxes reached as high as 191.52 billion yuan up by 390.6 percent year on year. The fund turnover of exporting enterprises was enhanced. Forth, reform on foreign trade system continued. A large group of partnership and private enterprises rose suddenly and became the new growth sector of export. Fifth, the global economic situation continued to recover and furnished China's rapid export growth with good international market.

Of course, while export grew rapidly a distinct feature of China's foreign trade during the first half year was the continued expansion of import scale. From January to April monthly trade deficit occurred four months in a row. In May the structure of import and export finally began to show a turn, which led to a $2.1 billion surplus in the month. In June a monthly surplus of $1.8 was realized. By the end of June, however, import growth was still seven percentage points higher than export.

Experts analyze that the rapid import growth during the first half year was partly due to the influence of the price rises in the international market and partly due to the stimulation of the further decreases of customs tax level. But mainly it was because of the domestic demand expansion and the overheating of investment in certain industries. Under the macro-controls the excessive growth trend of investment in industries such as iron and steel was contained during the first quarter, and the macro-controls achieved the expected effect. Since May import growth of raw materials such as iron ore and steel began to fall back. By the end of June China's total iron ore import was 97.75 million tons increasing by 34.9 percent year on year - a growth 9.9 percentage points less than that at the end of April. Total steel import was 18.04 million tons decreasing by 2.5 percent (from January to April the growth was 12.6 percent), of which 2.13 million tons were imported during May decreasing by 30.2 percent year on year. The import of that month had been the smallest since 2003. By the end of June total edible vegetable oil import was 3.35 million tons increasing by 69.7 percent - a growth 34.6 percentage points less than that at the end of April. Soybean import was 8.94 million tons decreasing by 11.9 percent (from January to April the growth was 8.9 percent). Import structure tended to develop toward a more reasonable direction.

New developments that cannot be neglected

Generally speaking, China's foreign trade operates on a sound track. Certain trends and developments, however, cannot be neglected.

First, the pressure of maintaining trade balance increased. From January to April China had $10.76 billion trade deficit, of which monthly deficit in February was $7.9 billion - the largest in history. Although under the macro-controls monthly trade deficit situation has been changed the pressure of maintaining trade balance still exists due to the momentum of investment and industrial growth and strong demand for equipment, crude oil, steel and minerals.

Second, price rises of energy sources and raw materials have impact on the competitive ability of certain exported products; supply situation of coal, electricity, oil and transportation is strained, which also have impact on the normal production and agreement-keeping ability of certain exporting enterprises. Since March the international price of crude oil has stayed at around $30 per barrel and on Mary 19 it rose to $41.5 per barrel, which led to higher production cost for exporting enterprises. Because of the strained electricity supply situation exporting companies in certain regions have been forced to "operate for three days and stop for four days".

Third, international trade protectionism began to raise head. During the first quarter 11 anti-dumping and safeguard investigations have been lodged overseas against China increasing by 5 year on year, with an involved amount of 330 million yuan 15.6 times that of the corresponding period in last year. In April the US ruled to levy anti-dumping taxes of varying rates on China's color TV export to the US. The technical standards the European Union is enacting for chemical products and electrical appliances, too, will have a considerable impact on China's export. The increasingly fierce trade friction will exert a negative impact on China's effort to exploit international market.

Beginning from the second half year, to prevent fluctuation of foreign trade we should, on the one hand, give full play to the comparative advantages of advantageous industries and products, continue to implement the strategy of rejuvenating trade through science and technology and diversified export, do every thing we can to expand export while at the same time we should actively make use of the WTO rules, direct enterprises to rationally use dispute settling mechanisms, actively respond to anti-dumping suits and vigorously protect their own interests. On the other hand, we should continue to carry out the macro-control measures, vigorously optimize import goods structure and strive to realize the balance of foreign trade.

By People's Daily Online