CAITEC, a research and advisory arm affiliated to the Ministry of Foreign Trade and Economic Cooperation (MOFTEC), predicted in its report that China's trade surplus would shrink considerably in 2002, with the possibility of a trade deficit in some months.

The report sees a faster increase in imports than in exports this year since China has further cut its overall tariff level and gradually opened the domestic market, along with growing domestic demand for continued rapid growth and economic restructuring.

CAITEC expected exports to rise five percent this year and imports to climb up seven percent this year, while trade surplus is predicted to reach about 20 billion U.S. dollars, dropping by 2. 5 billion U.S. dollars year-on-year.

CAITEC partly attributed the smaller trade surplus to the devaluation of the Japanese yen, which would have a big impact on China's export this year, and in the long run would result in increasing imports from Japan, putting pressure on related industries in China.

Meanwhile, CAITEC pointed out that the lack of continued drive in China's processing trade would severely hold back the growth momentum in export by means of processing trade.

The uncertainties over the future global economic recovery and non-tariff trade barriers and anti-dumping measures against China would also affect China's export, according to the CAITEC report.

(People's Daily May 14, 2002)