A key commerce official has defended China's rising trade
surplus as remaining at an "acceptable level," while revealing that
the growth of foreign investment in the country is slowing
down.
Ministry of Commerce spokesman Chong Quan said on Friday that
the country's trade surplus now accounts for 7.7 percent of its
total foreign trade volume, "much lower than the internationally
recognized danger level of 10 percent."
China's trade surplus in the first half of 2006 was US$61.5
billion, reflecting a sharp increase of 54.9 percent from a year
ago, when its imports and exports totaled US$795.7 billion.
China's growing trade surplus is a natural result of
international industrial restructuring, despite the country's
efforts to keep a balance between imports and exports, the
spokesman said.
"During the course of the industrial restructuring, China not
only took over the role as a world manufacturing center, but also
took over trade surpluses from some countries," he said.
Chong said China's trade surplus resulted from multinationals
moving their investment to China from other Asian countries,
producing numerous products here and exporting them with a
"Made-in-China" label.
His remarks were echoed by Zhai Zhihong, an official with the
National Statistics Bureau (NSB), who said the country's trade
imbalance was largely the result of foreign-invested processing
operations.
According to NSB figures, nearly 90 percent of the country's
trade surplus came from processing trade since 2000 and over 70
percent of the surplus was from foreign-invested firms.
In another development, realized foreign direct investment (FDI)
to China dropped 12.23 percent last month year-on-year to US$5.44
billion, according to the spokesman.
China's total FDI inflow was some US$28.4 billion in the first
half of this year, reflecting a decline of 0.47 percent from a year
ago, while officials did not reveal the figure of contracted
foreign investment that China earned during the same period.
"I would attribute the decline to some foreign companies cutting
their investment to China, in particular to some low value-added
sectors, because of the price rises of raw materials and labor
resources in China," said Mei Xinyu, a researcher with the Chinese
Academy of International Trade and Economic Cooperation, a commerce
ministry think-tank.
Some domestic investors may have also stopped disguising
themselves as foreign companies as the government speeds up
uniformity of income taxes on foreign enterprises and domestic
companies, he said. The tax rate is now about 23 percent for
domestic firms, but 10-13 percent for foreign companies.
"But it is not a bad thing, it is even good for the economy to
some degree," Mei said. He explained this would help to wash out
fake foreign investment and push foreign investors to spend more on
research and development in China.
At the same time, the spokesman also responded to European Union
Trade Commissioner Peter Mandelson's recent comment on China.
Having noted that "for every four containers loaded at Shenzhen
for Europe, three still come back empty," Mandelson said there
would be "a big problem" if those containers stay empty, "because
the rights of European businesses are not being properly protected
in China, or because they do not have proper access to the Chinese
market."
But Chong indicated that lots of Europe's exports to China may
not be shipped in containers, "because China mainly exports
labour-intensive products and imports high value-added
technology-intensive products," he said.
(China Daily July 15, 2006)