http://info.texnet.com.cn 2008-06-05 16:53:45
Shanghai Securities News
Six factors have contributed to the apparently reduced trade surplus of China: a series of macroscopic control measures have worked out effectively; appreciation of the Yuan has been accelerated which restricts exports and promotes imports; the implications of the subprime loan crisis spread so that overseas demands are down; international protectionism is intensified so that exports of products in which China enjoys advantages traditionally are hindered; booming domestic demands increase the import scale of products urgently needed in China; rocketing price of import prices of crude products substantially increases the value of imports.
China had a reduced trade surplus from January to April this year. The General Administration of Customs publicized an analytical article yesterday stating that the drop in trade surplus was a result of multiple domestic and overseas factors. In addition, these influential factors and their development trend can’t be changed in the short run. For that reason, it is expected that there will be a continuation of export slowdown and import growth generally in China this year and thus the robust growth momentum of trade surplus and the imbalance of trade will be reversed.
The article also states that China has maintained a trade surplus for 48 continuous months from May 2004 until today, with the monthly trade surplus being kept above USD 20 billion since August last year. However, such robust growth momentum of China’s trade surplus has been apparently reduced this year, with an obvious downtrend. According to statistics, China has an export of USD 424.59 billion from January to April this year, registering a growth of 21.5% that is 6 percentage points down compared with that of the same period last year (the same below). China has an import of USD 366.59 billion, registering a growth of 27.9% that is 8.7 percentage points up. As such, there is a trade surplus of USD 58 billion, registering a drop of 7.9% or USD 4.94 billion.
The article states that six factors have contributed to the apparent decrease of China’s trade surplus this year:
Firstly, a series of macroscopic control measures have worked out. Tight export policies have been introduced in large quantities to slow down export growth; expansion of the scope of restrictions and bans has apparently reduced the growth of processing trade; implementation of import expansion strategy boosts substantial growth of imports.
Secondly, accelerated appreciation of the Yuan restricts exports and promotes imports. The appreciation of the Yuan against US dollars has been apparently accelerated this year, with an accumulated appreciation of 15.9% for the Yuan against the US dollars as of April 30 and an appreciation of 4.3% just within the year. In the first four months of the year, China has a trade surplus of USD 5.07 billion, registering a sudden drop of 78.5% or a net reduction of USD 18.51 billion in trade surplus which is 307% the general trade surplus of China.
Thirdly, the spreading of the subprime loan crisis has decreased overseas demands. The subprime loan crisis has spread from the financial sector to the real economy and the US economy has shown signs of slight recession. In addition, its negative impacts continue to spread to other developed countries as EU, Japan and other major trade partners of China have a high dependence on the US. For that reason, the risk of a global economic slowdown is increased.
Fourthly, intensified international trade protectionism has hindered the export of products that China enjoys advantages traditionally. From January to April this year, the obstacles to three major categories of export products that China enjoys advantages in traditionally and are affected by the “quality and safety issue”, including vegetable, aquatic products and furniture, have collectively reduced China’s export growth rate by 0.3 percentage points.
Fifthly, booming domestic demands have increased the imports of products urgently needed in China. China is currently at the key stage of industrialization and urbanization. Considering the Olympics, World Expo and other impetuses, there is a high demand for essential industrial raw materials, resources and energies in China. As the increase of demands far outweighs the domestic supply of such raw materials, resources and energies due to the lack of resources, exports are the final means to bridge such a huge gap in demand and supply.
Sixthly, rocketing import prices of crude products have substantially increased the total import value. Global inflation has rapidly extended its impacts on China’s imports. In the first four months of the year, China’s import value of crude products increased by USD 36.7 billion due to such price hikes, accounting for 45.8% of China's total import value and increasing the overall growth rate of China’s imports by 12.8 percentage points.
