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Year 2005 to See Favorable Foreign Trade Balance

Despite possible slower global economic growth in 2005, China's foreign trade will continue to grow with an estimated favorable balance of US$15 billion, said a Chinese economist in Beijing Wednesday.

However, the foreign trade surplus in 2005 may be less than that in 2004. The possibility of trade deficits continues to exist for certain months, said Zhang Yansheng, an economist with the think-tank of the State Development and Reform Commission.

According to Zhang's estimates, China's export volume is expected to break the US$700 billion, marking an increase rate of 20 percent. The import volume, rising at a rate of 23 percent, will reach US$685 billion.

The price declines of global energy products is a major factor contributing to China's possible foreign trade surplus in 2005, said Zhang.

Compared with soaring oil products in 2004, there are less possibilities to see sharp rise of oil product prices in 2005, said Zhang.

According to his estimates, the price may drop from an average of US$39 per barrel to US$36 per barrel in 2005.

"It will be a piece of good news for China's oil product users, who has witnessed an import volume of 120 million tons of crude oil in 2004 and is expected to see more this year," said Zhang.

In 2005, more textiles and clothes, top favorable foreign trade balance products of China, will be exported due to the WTO Agreement on Textiles and Clothing (ATC), said Zhang.

The changing trend of the exchange rate of the US dollar is another important factor affecting China's foreign trade volume in 2005, said Zhang.

As more efforts are expected to be made by the US government to increase the interest rate of the US dollars in 2005, more international capital will be drawn to the US. As a result, other countries including China will see less foreign direct investment, which is another factor affecting China's foreign trade volume.

China's stable financial and monetary policies in 2005 might hinder the increase of import volume, Zhang said. But he held China's economy will continue the strong growth, at around 8.5 percent in 2005. The booming economy guarantees strong demands for imported raw materials such as energy and resources products.

(Xinhua News Agency January 28, 2005)

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