The Ministry of Commerce released on October 28 the autumn report on foreign trade, which predicts China's foreign trade to exceed $1.4 trillion in 2005, growing over 20 percent. Export this year would reach about $745 billion up 26 percent while import stand at $655 billion up 18 percent, which would lead to trade surplus of about $90 billion.

An official with the ministry said, during the first three quarters of 2005 China's foreign trade achieved the volume of $1 trillion two months earlier than in last year, with monthly trade exceeding $100 billion seven months in a row. By the end of September monthly export had grown at a speed of over 20 percent for 39 consecutive months. China's foreign trade is functioning well.

Foreign trade in China since the beginning of this year has been moving in close relation to the international and domestic economic situation. Global economy grew 3.25 percent in the first half year in a steady upward period. Pulled by world economic growth demand in the international market bloomed. It is predicted that global trade would grow 7 percent for the whole year. As world stock market rebounds international capital flow once again grows active and direct investments by multinationals show a recovering growth. In the meantime, China's GDP growth of the first three quarters reached 9.4 percent, which laid firm foundation for the development of foreign trade.

Moreover, in light of the relatively heavy burden of export duty rebate over the base on local finance the central government readjusted the tax burden ratio between the central finance and local finance, thereby relieving financial pressure on local governments. It mobilized the initiative of various regions in expanding export, leading to corresponding growth in export.

China attracted actual foreign investments of $43.2 billion during the first three quarters. Although 2.1 percent less than in the same period of last year the size was still considerable. The fast growth of FDI in the last few years has constituted significant manufacturing capacity, which was another important factor in driving export growth.

Compared with rapid export growth import growth fell back, which can mainly be attributed to the slowdown of domestic investment demand brought about by the macro controls. As macro control measures are gradually put into place some unstable and unsound factors in the economy have been curbed. Investment demand levels off with import of raw materials and machinery equipment closely related to investment fell considerably.

During the first three quarters import growth was 22.1 percentage points lower than in the same period of last year and was 15.3 percentage points lower than that of export. As a result trade surplus reached a record high of $68.34 billion.

Preliminary report predicts that China's foreign trade in 2006 would probably exceed $1.6 trillion growing by 15 percent, which would be considerably slower than in 2005.

People concerned said the international and domestic environments for the development of China's foreign trade in 2006 would be stable in general, but would be somewhat tenser compared with 2005. This is related to current international and domestic environments.

The general trend of steady growth of world economy wouldn't change in 2006. However, certain potential risks should not be neglected, for example, the continuous hike of oil price in the international market, global economic imbalance, real estate bubble as well as growth of international trade protectionism. All these would affect China's foreign trade to a more or less degree.

China encountered various trade friction cases during the first three quarters with a worth of $8.9 billion. The trend would not see fundamental changes in 2006.

The Chinese economy is still growing rapidly. Nevertheless, some structural contradictions are still acute. The unbalanced growth of consumption and investment, the aggravating situation of supply in excess of demand in domestic market and structural changes taking place in forces driving the economic growth would all affect the development of the Chinese economy.

The report points out, the above analysis indicates that China's export has kept rapid growth for four consecutive years. Limited by international market space and trade protection it would be more difficult for China's export to continue the rapid growth.

By People's Daily Onlilne