Import growth weak; exports remain strong
China's exports remained robust in the first two months of this year, while the nation's imports witnessed an unexpectedly weak momentum.
Exports rose 36.6 per cent year-on-year in the first two months of 2005 to reach US$95.28 billion and imports increased 8.3 per cent to US$84.18 billion, according to the Ministry of Commerce.
This resulted in a trade surplus of US$11.11 billion, compared to a deficit of US$8 billion in the same period last year.
In February alone, exports were up 31 per cent to US$44.53 billion, while imports slumped 5 per cent to US$39.92 billion. The month's trade surplus was US$4.6 billion.
The monthly surplus contrasted with a deficit of nearly US$7.9 billion a year earlier, and January's US$6.48 billion surplus.
China's 2004 trade surplus exceeded US$30 billion.
Goldman Sachs Asia economist Liang Hong said the strong export growth is in line with firmer global demand.
"We believe that textile exports are a major contributor to strong export growth," she said.
Global textile quotas blocking the free flow of textiles were scrapped on January 1.
Higher demand from Europe and the United States could see China's textile and apparel exports increase by 15 per cent to more than US$110 billion this year.
Foreign-funded companies are also behind the export boom. According to a report released this week by the Ministry of Commerce, foreign-funded companies' exports accounted for nearly 58 per cent of China's total exports last year.
But import growth data is much weaker than expected, Liang pointed out.
"This might reflect slowing domestic demand and particularly fixed-assets investment," she noted.
The National Bureau of Statistics is due to release retail sales and fixed-asset investment figures next week.
But last year's high base should be taken into consideration when analyzing this year's import slowdown.
China's imports have soared in recent years as the country has bought more raw materials and machinery to feed its rapidly growing economy.
Liang believed net exports have become a more important driver of GDP growth, judging from the strong trade surplus.
At the ongoing Third Session of the 10th National People's Congress, Minister of the National Development and Reform Commission Ma Kai forecast that total trade would rise 15 per cent year-on-year in 2005. Imports and exports would be roughly balanced.
Deutsche Bank economist Ma Jun anticipates export growth will decelerate to 22 per cent this year due to a slight slowdown in the global economy and new export taxes in China.
On the import side, China's reduction in tariffs, combined with high oil prices, will drive imports upwards.
This will lead to a slight narrowing of the trade surplus this year, Ma said.
(China Daily 03/11/2005 page9)