China's rapidly swelling trade surplus in the first two months
of this year astonished experts, who believed it was mainly
attributable to the nation's trade structure and soaring exports in
anticipation of lower tax rebates and appreciation of the RMB.
According to customs data, the processing trade accounted for 80
percent of the surplus, of which foreign-funded enterprises made up
an overwhelmingly large proportion. Given the sustained, rapid
growth in the global economy, it is difficult for China to reduce
the surplus in the short term.
"The situation will probably remain largely unchanged in the
next decade," said Yi Xianrong, a renowned economist with the
Chinese Academy of Social Sciences.
China chalked up a trade surplus of US$23.76 billion last month,
a growth of nearly 50 percent month-on-month and a record for
February.
According to customs sources, the trade surplus for the first
two months amounted to US$39.6 billion, US$27.6 billion higher than
the same period last year. It exceeded the surplus for the first
quarter of last year and amounted to 22 percent of the whole 2006
figure.
Customs data showed wide gap between growth rates for imports
and exports. Last month, China's export value stood at US$82.1
billion, up 51.7 percent over the same period last year, and the
import value was US$58.3 billion, up 13.1 percent.
Appreciation of the yuan has in the short term meant increased
revenues for exporters, while imported primary products, which were
less costly, led to a slower rise in the value of imports, said Mei
Xinyu, a research fellow with the Research Institute of
International Trade and Economic Cooperation under the Ministry of
Commerce.
Some other experts said the fast growth in exports was
attributable to strong demand for China-made products
worldwide.
In the first two months, China's sales to the United States,
Japan and the European Union, whose economies maintained their
vigor, grew more than 20 percent, and those to the EU soared more
than 50 percent.
Greater export activity by domestic enterprises in anticipation
of lower tax rebates and RMB appreciation, also contributed
significantly to the rapid growth, experts believe. Generally
speaking, the RMB's sustained appreciation will help dampen Chinese
exporters' earnings in the long run.
The government hoped to curb exports of products with high
energy consumption, high pollution and low added value. But in the
first two months, exports of rolled steel and steel billets surged
more than 100 percent, while those of textiles and garments rose
more than 30 percent.
Meanwhile, Lin Yifu, a leading economist, said the unduly fast
growth in the trade surplus was also attributable to manufacturers
fraudulently claiming tax rebates.
He said many enterprises exaggerated their export volume so as
to claim higher rebates.
Hu Huaibang, a senior official with China Banking Regulatory
Commission, noted that international hot money flowed into China's
real estate and capital markets and had its high investment returns
remitted abroad through bogus trade. This also exaggerated export
value.
In terms of imports, Li Huiyong, an analyst with Shenyin Wanguo
Securities, said many companies suspended production during the
week-long Chinese Lunar New Year holiday in February and postponed
imports of raw materials and equipment.
The relatively slow growth in arrivals was also ascribed to less
demand for imports that have been substituted by domestically-made
products.
Remedies were suggested for mitigating the huge trade surplus,
including taking tough measures to squeeze export bubbles,
increasing domestic demand, readjusting export-related taxes and
expanding imports, particularly of new and high-technology products
and energy-efficient equipment.
Zhang Jiao, a national political consultant, believed the
conditions were ready for scrapping tax rebates on exports.
Other experts said it was necessary to further ease foreign
exchange controls so as to encourage more Chinese firms to invest
abroad.
Some national legislators have suggested that monetary policy be
readjusted to curb the inrush of hot money. Interest rates on
deposits should be maintained at a low level, while interest rates
on loans and the required reserve ratio for commercial banks should
be kept high, they said.
The Shenyin Wanguo Securities predicted that this year China's
trade surplus would exceed US$210 billion, a growth of US$40
billion from the 2006 level.
(Xinhua News Agency March 14, 2007)