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    Greater China
     Jan 12, 2005
China becomes No 3 trading nation

BEIJING - China has become the world's third-largest trading nation, following the United States and Germany, as its foreign trade value hit a record high of US$1 trillion in the first 11 months of 2004, and the whole year's figure was expected to reach US$1.1 trillion. Simultaneously, Shanghai reportedly has overtaken Rotterdam as the No 1 port in terms of cargo throughput, handling 382 million metric tons last year.

Figures from the General Administration of Customs (GAC) showed that the nation's foreign trade surplus reached US$21 billion, with exports soaring to US$529 billion. Media reports on Tuesday said China's exports rose 33% in December, widening the trade surplus to an all-time high. Overseas shipments reached $63.8 billion, pushing the trade gap to $11.1 billion, according to the Ministry of Commerce website that day. Imports also increased 25% from a year earlier to a record $52.7 billion.

This year's foreign trade is also expected to maintain a similar growth rate, according to experts. Zhang Hanlin, a researcher with the University of International Business and Economics in Beijing, said: "Exports will increase by 20-22%, and imports will grow 25%, increasing overall foreign trade by 20%." The global economy is likely to grow by 3.5-4% this year, according to him. China's major foreign trade partners are also expected to witness economic growth. The European Union will expand by 1.8%, Japan by 1.5-1.8%, and the US and South Korea will grow by 3.5% and 5%.

Further tariff cuts are the second factor set to boost China's foreign trade, Zhang said. IT (information technology) products, home appliances and textile products will remain the major driving forces of China's exports. Zhang holds that the IT sector, which experienced over 50% growth in exports last year, has established a solid production base in China. Fierce competition in the sector means that increasing numbers of foreign manufacturers will move their factories to China, which will stimulate trade growth. And though the textile industry faces an average export tariff of 1.3%, which was implemented by the GAC at the beginning of this year, its exports will keep growing this year, Zhang predicted.

But he pointed out that there will be no let-up in terms of trade disputes despite the Chinese government's efforts to ease them. As for imports, automobiles will experience an increase because of the country's tariff cut last year from 37.6% down to 30% this year. Automobile imports grew over 40% in recent years, with this trend set to continue in 2005, Zhang said.

Experts believe China should not over-emphasize its trade volume, noting that the trade structure is more important. The processing trade volume reached $600 billion last year, accounting for more than half the total. About 58% of exports came from the processing trade, and it accounted for 50% of imports. Zhang said: "China does not benefit dramatically from large amounts of such foreign trade. As more foreign firms move their manufacturing bases to China, they also bring materials from abroad and sell processed products overseas. We need to find out who is making money from this trade. The answer is not China, but rather the multinationals."

Zhao Jinping, an expert from the State Council Research and Development Center, said China may be a large trading nation, but it has yet to become a robust trading nation. China Economic Times quoted him as saying that China's foreign trade remains weak in three respects: its trade does not exercise a great influence on either the domestic or world economy; exporters are weak in terms of their research and development (R&D) capabilities and brand development; domestic firms do not hold the right to distribute profits in their hands.

Wang Linsheng, another expert from the University of International Business and Economics, agreed. "China lacks core technology intellectual property rights, its own brands and a complete marketing network," Wang pointed out. He suggested the country should add value to its exports by increasing investment in R&D, acquiring core departments from foreign firms and establishing joint ventures. China's exports remain low-tech, with the general trade in high-tech products accounting for very little of overall trade. The government should establish a system to support those exporting firms, he said.

Zhang Yansheng, director of the Institute of International Economic Research under the National Development and Reform Commission, said a modern industrial economy needs to be established based on mature technology and innovation. China should promote its advanced sectors and develop them into a driving force for foreign trade, he said.

xxx China's foreign trade volume has been galloping in recent years, from joining the world's top 10 in 1997, to the top 7 in 2000, and entering the top 4 in 2003. According to the General Administrationn of Customs, the price of imported products grew by 10.4% year-on-year in the first three quarters of 2004, becoming the highest figure in the past 10 years, while the volume rose by 25.2%. These two factors lifted the first three quarters' trade value by 38.2%.

Rapid global economic growth and rocketing oil prices are the reasons for this growth. Textile exports exceeded those of natural resources, such as oil, for the first time. "It is a pleasant phenomenon to see a drop in the export of natural resources," Zhang said. Exports of high-value-added products, such as machinery and IT products, started to be the driving force of trade in 2004.

The country's macro-economic adjustment measures took effect in terms of foreign trade, turning the $10 billion trade deficit into a surplus of $10 billion by the end of last October. Imports maintained a growth rate of over 40% in the first four months of 2004. Steel, cement, real estate and aluminum industries have all experienced a much-needed cooling down. Meanwhile, sectors like coal, electricity, oil and transportation have received government support. China imported 99.59 million tons of crude oil in the first 10 months of last year, up 34.3% year-on-year.

More exports to Korea than US
The volume of Chinese imports purchased by South Korea exceeded those that went into the US for the first time last year, the Korea Customs Service said Tuesday. On a customs-cleared basis, China accounted for 13.2%, or $29.6 billion, of South Korea's total imports, but only made up 12.8%, or $28.8 billion of the bulk of US imports, the office said. Last year, South Korea posted the single largest trade surplus with China at $20.2 billion, more than three times the $5.7 billion registered in 2001.

(Asia Pulse/XIC/Yonhap)

The Dragon stirs in a wary world (Dec 25, '04)

China trade laws seen as step in right direction (Jul 23, '04)

Maritime trade adds to tide of China's rise (jUL 23, '04)

Applying brakes to China's red-hot economy (May 4, '04)


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