Source: Xinhua

02-27-2008 16:53

China's trade surplus surged to a record 262.2 billion U.S. dollars in 2007 despite a slowdown in export growth late last year and the negative impact of the U.S. sub-mortgage crisis overshadowing the world economy.

Analysts believed the slowdown in exports was attributed to slackening demand outside China due to complex factors such as the U.S. economic decline, the combination of a weakening greenback and strengthening yuan, as well as the country's slap on export rebates to curb exports.

The General Administration of Customs said on Friday the 2007 trade surplus figure represented a 47.7 percent growth over a year earlier.

The trade surplus growth was 69.4 percent for the first three quarters of 2007 and nearly 75 percent of 2006. The country's trade surplus for 2006 stood at 177.47 billion U.S. dollars.

Trade surplus last month was 22.69 billion U.S. dollars, down 14.2 percent from November.

Total trade hit a new high of 2.17 trillion U.S. dollars last year, up 23.5 percent from a year earlier, according to the administration.

It also pointed out the country's soaring trade surplus eased a bit in the fourth quarter, with imports catching up and exports slowing down.

In 2007, exports rose 25.7 percent to 1.22 trillion U.S. dollars, and imports climbed 20.8 percent to 955.8 billion U.S. dollars, according to the administration.

The export growth was 1.5 percentage points lower than in 2006,while the import growth posted a gain of 0.9 percentage points.

"This indicated that the expanding trade gap was effectively checked as the government's policy adjustments began to pay off," said the administration in the annual report.

China had been striving to adjust the trade mix by improving policies concerning export tax rebates, tariffs and processing trade and by restricting exports of high energy consuming products.

A China Customs Statistics report said the country's foreign trade demonstrated a downward trend in October. While citing the role of government policies and the week off during the National Day holiday, it pointed out the impact of the U.S. sub-mortgage crisis should not be overlooked.

"The overhang of the U.S. sub-mortgage crisis could be a key negative factor in China's trade sector in 2008, if the impact of the mortgage crisis went further to affect U.S. consumption and employment," Zhuang Jian, an Asian Development Bank senior economist, told Xinhua.

He said the country's surplus growth would further slow to about 10 percent in theory, if export growth continues to fall against a faster pace with import growth.

"However, the final outcome would depend on a wide range of factors, including the mortgage crisis impact and the performance of the U.S. economy in 2008."

In United Nations (U.N.) and World Bank reports released on Wednesday both singled out possible export losses for exporting countries, surely including China, due to the U.S. economic decline.

The United States remained China's second largest trading partner with the bilateral trade volume standing at 302.08 billion U.S. dollars last year, up 15 percent compared with 2006, according to the customs administration.

Some U.S. critics said the Chinese currency was severely undervalued and gave Chinese exporters an unfair advantage. This had resulted in the massive trade imbalance between the two countries.

In July 2005, China discontinued the yuan's peg to the U.S. dollar to adopt a new currency regime. The yuan climbed 6.9 percent against the U.S. dollar last year, and appreciated against the greenback by about 12 percent since it was unpegged.

The currency hit a new high against the U.S. dollars on Friday, with the central parity rate at 7.2672 yuan against one U.S. dollar.

U.S. Treasury Secretary Henry Paulson recognized last month at the bilateral strategic economic dialogue held in Beijing that "the pace of appreciation has increased over the past year".

Chinese Premier Wen Jiabao said the country would improve the yuan's exchange rate mechanism in a controllable and gradual manner, let the market play a bigger role in the mechanism and enhance the currency's flexibility.

However, he said the exchange rate wasn't the only factor leading to the trade surplus. The appreciation had not forced down Chinese exports because of the world's industrial division of labor and the competitiveness of the country's products.

"Voices asking for trade protection efforts against China could get stronger this year," said Mei Xinyu, an analyst with a research institute under the Ministry of Commerce (MOC). "It is a U.S. presidential election year and we should get prepared for escalating disputes in trade concerning subsidies, intellectual property rights and financial services."

In 2007, the European Union was still China's largest trading partner, and Japan its third largest. Trade with the EU rose 27 percent year-on-year to 356.15 billion U.S. dollars, while Japan reached 236.02 billion U.S. dollars, up 13.9 percent.

A MOC official forecasted the country's trade would expand by about 15 percent this year, down from 23.5 percent in 2007, to exceed 2.4 trillion U.S. dollars.

 

Editor:Zhang Ning