China will face tougher challenges in foreign trade in 2005 as its three-years transitional membership of the World Trade Organization (WTO) expired late last year.

In honoring its commitments to the WTO, China will further openits market this year. In turn, Chinese commodities will have a wider overseas market access, which will create favorable conditions for a steady growth in the country's imports and exports, said Liu Haiquan, deputy head of the Planning and Financial Affairs Division of the Chinese Ministry of Commerce.

Liu made the remark during a special news conference held Thursday in Guangzhou, capital of south China's Guangdong Provincefor the release of a report on China's foreign trade situation (spring 2005).

China completed all procedures and signed an agreement for joining WTO on November 10, 2001, but all the documents took effect a month later. The country was allowed a grace period of three years toward fully opening-up of its prime industries.

According to China's commitments for joining WTO, by late this year, China will further slash its tariff level from 10.4 percent last year to 9.9 percent. All no-tariff measures will phase out, including import quotas, import permits, soliciting bids for special commodities.

For example, tariff quotas for agricultural products will be abolished. Designated dealership in import of wool will end this year. Tariff quota for vegetable oils will be gone by New Year's Day 2006.

Wang warned though China's foreign trade would grow steadily inthe months to come, the comparative benefits gained from many exported commodities would remain low because of factors such as alack of core technologies for many exported commodities, branded products and commodities with higher added value, coupled with a possible chaos following liberalization of export operation rightsin the country.

"In the post-WTO transitional period, China will fall prey moreeasily to international market fluctuation than ever before in terms of imports because many Chinese importers still lack the caliber of negotiating good prices," said Liu.

There is an increased possibility that imported commodities might produce a greater negative impact on the farmers in China and some of the manufacturing businesses as competitive power of the two sectors could hardly improve in a short period of time, according to Liu.

Service trade will develop faster, but competition between Chinese and overseas-funded businesses will be fiercer. Liu predicted that China would retain a larger deficit in service trade this year according to last year's level.

The Chinese trade official also said the tasks to fight trade disputes would remain arduous, as cases of trade protection against Chinese commodities may increase.

In accordance with the report by the Planning and Financial Affairs Division of the Chinese Ministry of Commerce and the Institute of International Trade and Economic Cooperation, China'sforeign trade will grow at a rate of 15 percent this year to exceed 1.3 trillion US dollars, as against 35.7 percent in foreigntrade growth last year.

In breakdown, exports will reach 682 billion US dollars this year, up 15 percent on a year-on-year basis, and imports will top 651 billion US dollars, up 16 percent on a year-on-year basis.

China maintained a favorable trade balance of 16.58 billion US dollars in the first quarter of 2005, with the exports totaling 155.89 billion US dollars, and imports making up 139.31 billion USdollars.

"I don't think the big favorable trade balance attained in the January-March period will last long in the months to come in the year," said Liu, who held that the country would keep last year's favorable trade balance record of 30 billion US dollars in 2005. Enditem