BIZCHINA / Top Biz News

Trade surplus highlights overcapacity
(Xinhua)
Updated: 2006-05-05 15:23

The State Administration of Foreign Exchange (SAFE) said the excessively huge surplus in China's balance of payments indicate the country's overcapacity and other imbalance in the economy has been intensifying.

China's trade surplus reached 223.8 billion US dollars in 2005,more than three times higher than in 2001, a SAFE officials said in an interview with reporters.

China's current account surplus accounted for 7.2 percent of the country's GDP, up drastically from 1.3 percent in 2001, acknowledged the official, who declined to be named.

The current account surplus indicates that the domestic savings have exceeded domestic investment and that there was a problem of overcapacity.

China's investment rate has risen to 46 percent in 2005 from 38percent in 2001, while domestic savings rate from 40 percent to about nearly 50 percent last year, SAFE said in a report on the country's international payment.

The report noted that residents' savings, corporate savings and governmental savings, the three major component parts of domestic savings in China, have all witnessed a comparatively fast rise in the past few years.

The inflow of foreign direct investment (FDI) into China totaled more than 270 billion US dollars during the past five years from 2001 to 2005, which reflected the huge advantage of China in attracting overseas investment, it said.

Meanwhile, overseas financing by Chinese firms also increased an inflow of overseas capital into China due to the immaturity of domestic capital market, which makes it hard for those firms to raise capital at home, said the administration.


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