China's trade surplus to shrink this year; deficit likely

China's trade surplus would narrow this year as growth of imports is likely to soon outpace that of exports and the country may register trade deficit for the first time in several years, China's Commerce Minister, Mr Chen Deming, said here today.

Growth in China's foreign trade will slow down this year, Mr Chen told presspersons during the annual session of the National People's Congress — the country's top legislature — adding that he could not rule out the possibility that China would register trade deficit in some months.

Imports will expand rapidly this year as the country steps up efforts to restructure the economy, push forward its free trade agreements and improve import regulations, the Minister was quoted by state-run news agency Xinhua.

However, Mr Chen expects China to witness a mild increase in this year's exports due to complicated domestic and international situations, including exchange rate fluctuations, increasing protectionism, higher costs of raw materials and labour as well as a shortage of domestic labour.

“Higher standard of energy efficiency and environmental protection will further push up costs of production,” he said.

According to the Commerce Minister, the principle for this year's foreign trade policy is to “stabilise exports, boost imports while having a lower trade surplus.”

Trade surplus

Mr Chen said China's trade surplus in proportion to GDP would continue to drop this year but refused to give a specific forecast, saying it was difficult to predict.

The proportion was 3.1 per cent for last year.

The country's trade surplus fell to $183 billion last year from a record $296 billion in 2008. Despite the increasing uncertainties and difficulties, China's foreign trade outlook remains good this year, he said.

Mr Chen said the country will not “substantially” increase the imports of farm produce this year. He also hoped some western countries will remove restrictions on exports to China.

China was expected to surpass Japan to become the world's largest consumer of high-end goods by 2015, Mr Chen, said.

This shift was attributed to China's large population, rising income and inadequate supplies of home-made high-end brands, Mr Chen told reporters.

Consumption of high-end products in China rose 23 per cent in 2010, he said, adding that the number of Chinese people shopping for luxury goods overseas had increased by 30 per cent.

The government will develop the country's own brands and work out measures to let foreign brands sell their China-made products directly in China's market to benefit local consumers, he said.

The country will also improve its sales network and strengthen regulations in retail markets to reduce charges in circulation, he said.

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