China' s Foreign Economic and Trade Developments

Mr. Hu Chusheng

Spokesman of the Ministry of Foreign Trade and
Economic Cooperation

August 19, 1999

Ladies and Gentlemen,

At the outset, I would like to express my sincere gratitude to the Information Office of the State Council for providing me this opportunity to meet with friends from domestic and foreign press and to share with you the developments of China' s foreign economic and trade sector since the beginning of this year. According to the statistics of the Chinese Customs, China' s import and export totalled 189.11 billion US dollars between January and July of this year, increasing by 5.4% as compared to the corresponding period of last year(similarly hereafter). In a breakdown, the export valued at 100.2 billion US dollars, down 2.8%; the import reached 88.91 billion US dollars, up 16.6%; and the trade surplus was recorded as 11 .29 billion US dollars.

What is particularly worth mentioning is that in last July alone, the trade volume amounted to 31.26 billion US dollars, growing by 1 l.4% from July of last year(same as below). In a breakdown, the export rose by 7.5% to 17.34 billion US dollars, the second monthly export growth in the latest three months and also since the beginning of this year; the import increased by 16.7% to 13.92 billion US dollars. The largest export volume of this year was recorded in July, which was 3.51 billion US dollars higher than the average monthly export of 13.83 billion US dollars in the first half of the year. The 3.42 billion US dollar trade surplus of July also makes it the month that has registered the biggest surplus since this year unfolded.

Currently, the decline in accumulated exports is being constantly reduced and the tendency of rebound is increasingly obvious. From January to July, the decline of accumulated exports has been brought down month by month, being 10.8%, 10.5%, 7.9%, 7.8%, 5.3%, 4.6% and 2.8% respectively. This evidences that our export is bottoming out and the export decline would soon be turned around fundamentally after the whole nation has made joint endeavor in adjusting the economic structure and overcoming the difficulties brought about by the Asian financial crisis.

Speaking of the foreign investment attraction between January and July, the whole country has newly approved 9368 foreign-funded enterprises, down 17.9% from the same period of last year, the contractual foreign capital stood at 22.28 billion US dollars, down 20.5%, and the actually paid-in foreign capital was 21 .49 billion US dollars, decreasing by 10%. As of last July, China has accumulatively approved the establishment of 334,000 foreign- invested companies with a total contractual foreign capital of 594.81 billion US dollars and actually utilized overseas fund worth 288.94 billion. The decline in the absorption of foreign investment during the past few months should be attributed to a variety of reasons, the most important of which was the sluggish capital outflow from the region haunted by the Asian financial crisis, the major source of our foreign investment inflows. Besides, the forms of international capital free flow have undergone tremendous changes, yet the areas where transnational merger and acquisition take place can not be opened up in China because of the lack of necessary conditions. Therefore, most of the additional cross-border investment has flown into the developed countries like the United States and EU members. In 1998, the investment that flowed into developed nations accounted for 73.3% of the global total and the capital influx that developing countries received dropped for the first time since 1985.

While actively developing import and export and promoting business and investment, we have also made fresh achievements in other foreign economic and trade areas such as foreign project- contracting, labor cooperation and outward investment, and further consolidated the multilateral and bilateral economic and trade ties . Looking ahead to the latter half of this year, China' s export still has to make headway out of adversity and other foreign economic and trade businesses will progress in an environment where chances and challenges coexist. The worst of Asian financial crisis is over and the economies once hit by the crisis are recovering. China' s export and foreign investment absorption are also facing more and more favorable conditions. Therefore, we have the resolve to ensure the rally in export and that the set target of expanding export can be attained. According to our estimation, the trade volume of the whole year would be higher than last year and it is possible for us to realize an increment in the export value of this year.

Although the utilization of foreign investment has declined to some extent, we can still maintain a considerable scale of using foreign capital for this year so long as we channel more energy into studying the new situation, intensify our efforts to solve new problems, create and safeguard sound investment environment, as well as integrate the foreign investment attraction with the reform of State-owned enterprises, the development of mid and western region, and the structural adjustment of our national economy.

Under the new circumstances, we will continue to focus on expanding foreign trade and attracting foreign investment. We shall further open up to the outside world and enhance the quality and level of attracting foreign investment. Great effort would be dedicated to adjusting the export mix to keep the momentum of export. We would improve the administration over processing trade to promote its healthy and orderly development and encourage competent Chinese enterprises to carry out overseas processing trade. To accelerate the reform of foreign project-contracting and labor cooperation and to deepen the reform of foreign assistance modalities are also things high on the agenda. Moreover, we would vigorously nurture multilateral and bilateral economic and trade relationship so as to create a favorable international environment. To sum up, we would spare no effort to move forward all foreign economic and trade undertakings.

In order to advance the economic and trade cooperation between  China and other countries or regions in the world, we shall actively push forward the negotiation process on China' s entry into the World Trade Organization on the fundamental principles of balanced rights and obligations and China's status as a developing country. We are to take part in the Asia-Pacific Economic Cooperation and the Asia-Europe Meeting with keen interest and play a constructive role in expediting the trade and investment liberalization within the Asia-Pacific region and strengthening the economic and technical cooperation within the Asia-Pacific as well as between Asia and Europe.

I believe that with the joint efforts, we can realize the objectives in foreign trade and foreign capital attraction for this year, and make due contributions to facilitating our economic and trade exchanges with various countries and regions in the world, and to promoting the growth of China' s national economy.

Now I ' m ready to take questions.