China's Ministry of Commerce has projected a 15-percent growth
for foreign trade in 2007, down nine percent from last year.
The figure means that the country's total imports and exports
would break the US$2 trillion mark this year.
China, the world's third largest trader after the United States
and Germany, registered US$1.76 trillion in foreign trade and an
aggregate trade surplus of US$177.47 billion last year.
The ministry has predicted a slower growth in both trade and
surplus this year in its 2006 Autumn Foreign Trade Report, without
giving specific projections.
Liu Wei, President of the Economic Institute of the Peking
University said that China's foreign trade would continue to report
a surplus for the foreseeable future unless there was a sudden
consumption boom at home.
"A drastic decline in exports would damage job opportunities and
jeopardize social stability," he said.
Justin Yifu Lin, director with the China Center for Economic
Research of Peking University, contended that the country's surplus
had been exaggerated.
"Foreign trade has been viewed by some companies as a convenient
channel to transfer overseas hot capital into China to take
advantage of the appreciating Renminbi yuan," Lin said.
He explained that the malpractice normally involved three
parties: local processing firms, their foreign trade partners and
overseas investors. The three sides would clinch under-the-table
deals requiring local processing firms to purposely understate the
prices for raw material imports and exaggerate the export prices
for finished products.
"By doing so, local processing firms would pay less and earn
more foreign currency. The invisible inflow of foreign exchange
would then be retained in China to bet on Renminbi appreciation,"
he said.
"This kind of falsification may continue until market
speculation on the appreciating yuan begins to fade," Lin said.
(Xinhua News Agency January 21, 2007)