Seeking a better balance
Updated: 2012-06-21 13:16
By Zhou Junsheng (China Daily)
Recent trade figures show newly adopted policies to realize sustainable development of foreign trade are working
The total volume of China's imports and exports in May increased to a single-month record of $343.58 billion, a rise of 14.1 percent year-on-year, according to statistics from the General Administration of Customs.
The previous single-month high was $334.11 billion in November. Of the total trade volume in May, imports were $162.44 billion, an increase of 12.7 percent on the previous year, and up 12.16 percent on April; exports were $181.14 billion, a growth of 15.3 percent year-on-year and 10.96 percent on April's figure.
Such foreign trade figures are indeed encouraging especially at a time when the Chinese government is poised to launch a new round of investment to maintain economic growth, amid signs that the world's second largest economy is slowing.
Foreign trade has long been an important component of China's gross domestic product along with investment and consumption. However, China's foreign trade has been facing harsh conditions since the onset of the global financial crisis. A continuing international market contraction has resulted in a drastic decline of international demand for China's exported products. A series of economic stimulus measures taken by the United States, European countries and other major trading partners have also produced some "squeezing effects" on China's exports. At the same time, the anti-dumping, anti-subsidy and other protectionist measures constantly wielded by Western countries have also hampered the expansion of China's exports. The combined effects of the continuing depreciation of the dollar and the appreciation of the yuan have also added huge exchange rate risks to China's export-bound enterprises and seriously crippled their export enthusiasm.
The Chinese government has made some active adjustments to its macroeconomic regulations to adapt to changed market conditions at home and abroad and shift the driving force of its economic growth to domestic demand. But that does not mean it has reduced the importance attached to foreign trade. At the end of April, the State Council published a guideline on promoting the balanced development of its foreign trade. While trying to maintain a steady export growth, the document demands the country attach more importance to imports in an effort to balance its imports and exports and realize the sustainable development of its foreign trade.
At the Sino-US Strategic and Economic Dialogue in early May, China again made a commitment to the United States that it would lower import tariffs on some imports. Such a commitment has changed China's practice of attaching more importance to exports and placed imports and exports on an equal footing. This will not only give domestic consumers greater access to foreign consumer goods at a lower price, it will also help China reduce trade frictions with other countries.
A big boost in imports has undoubtedly played a big role in the country's encouraging foreign trade volumes in May. The import increase in May has narrowed the gap between imports and exports. That is also an indication that China's newly adopted policies to balance imports and exports are having a positive effect on its foreign trade.
The narrowing of the country's imports and exports is also closely related to changes in the international market in recent months. The decline in the prices of some bulk commodities, such as iron ores and soybeans, contributed much to China's increased imports. For a long time, the drastic rise in bulk commodity prices under the manipulation of international speculators has made China pay a huge price for these imports. However, the continuous decline in the prices of oil and other bulk commodities in recent months will not only benefit the global economic recovery, it will also help expand China's imports, boost its real economy and facilitate its ongoing efforts to maintain economic growth.
The May trade volume shows that China's foreign trade landscape is not as pessimistic as previously thought and is performing better than investment and domestic consumption. Thus, China should take advantage of this favorable market opportunity and actively push for reform of its foreign trade system in a bid to sustain its foreign trade momentum. When the prices of some bulk commodities continue to decline, the country should purchase more materials from the international market to prevent a possible price bounce in the future having negative effects on its slowed economy. At the same time, imports of quality consumer goods are also expected to spur consumption and promote a steady growth of domestic demand.
The author is a Shanghai-based economics commentator.