The country's trade surplus remained large in the first five months of this year despite the government's efforts to reverse the situation.
The trade surplus had grown by 73 percent in May from the same period last year to US$22.45 billion, the general administration of customs said yesterday. That brings the gap for the first five months to US$85.76 billion, an 84 percent increase from the same period last year.
"This shows continuity. It shows that China will have to work on trying to contain its external account surplus," said Huang Yiping, chief Asia economist with Citigroup in Hong Kong.
The monthly trade surplus has remained on the fast track this year even though the authorities have since late last year introduced several measures to cool the situation. Cutting export tax rebates for some products and encouraging imports are a few of the measures that have been put in place.
However, experts said, some of the tax rebates that took effect this month actually expanded the surplus in May because some firms tried to export as much as possible ahead of the deadline.
Hua Xiaohong, an expert at the University of International Business and Economics, predicted that China's trade surplus would remain large this year due to the country's place in the international industrial structure and increasing global demand for made-in-China products.
As foreign trade is typically faster in the second half of the year, the trade imbalance is likely to grow in the coming months.
The Ministry of Commerce yesterday announced a cap on exports of molybdenum and indium to licensed exporters from June 18. It did not provide specific volumes.
Meanwhile, reports said the government is poised to lower tax rebates on a wider range of exports. The proposed list, which is expected to be published in July, is said to include not only polluting and resource-intensive products, such as metals, paper and chemical products, and low added-value categories like garments and footwear, but also some machinery and electronics.
The cuts, aimed at capping the trade surplus, are likely to exacerbate the situation in the short term, said an anonymous source from an industrial association. But the source added that the effect would be noticeable within a few months' time.
(China Daily June 12, 2007)