During the first six months of this year, China's foreign trade has gone well, with a better export structure and increasing import volume. The total volume of imports and exports reached $795.7 billion, a rise of 23.4 percent compared with the same period of last year. Exports totaled $428.6 billion, a year-on-year increase of 25.2 percent, while imports amounted to $367.1 billion, up 21.3 percent from a year earlier.

Compared to last year, the growth rate of exports dropped by 7.4 percentage points, while that of imports rose by 7.3 percentage points. In the second half of this year, China's foreign trade will maintain its rapid growth, reaching $1.7 trillion, an increase of more than 20 percent. The rapid foreign trade growth will promote the adjustment and upgrading of the domestic industrial structure, expand employment, increase revenue and accelerate the development of the national economy as a whole.

Four Major Characteristics

First, the export structure was optimized. The government took the regulatory measures of combining encouragement and restrictions to adjust the mix of export commodities and enhance the quality and efficiency of foreign trade development, under the precondition of maintaining the steady growth of exports. These measures have proven efficient.  During the first six months, mechanical and electrical commodity exports increased 30.5 percent and 32 percent, respectively, from the same period last year, and their proportion in the total volume of exports rose to 56.9 percent and 28.8 percent, respectively, reaching a new high. Exports of textiles and clothing increased by 24.5 percent, with the growth rate decreasing slightly and showing a steady increase in exports to the United States and Europe. Agricultural product exports increased by 9.3 percent, maintaining smooth growth despite a difficult trade situation. Exports of commodities from high-polluting and high-resources- and energy-consuming industries, such as crude oil, oil  refining, coal, raw steel, pig iron, ferroalloy, electrolytic aluminum and leather, plummeted.

Second, imports accelerated. Since 2005, China has taken effective measures to expand imports, setting up an import structure featuring government guidance, coordination between different industries and cooperation among various enterprises. The government organized enterprises to collectively purchase badly needed raw and processed materials and mechanical equipment. During the first half of 2006, imports increased by 21.3 percent from the same period last year, with the growth rate rising by 7.3 percentage points. Meanwhile, the import structure was further improved, showing a considerable increase in the imports of crude oil, iron ore, cotton and other stable raw materials badly needed at home. In addition, imports of electromechanical and high-tech products also increased rapidly, by 26.5 percent and 28.9 percent respectively.

Third, more and more private enterprises join the ranks of exporters. They are playing an ever-increasing role in China's foreign trade development, becoming a major force in driving up the growth of imports and exports. Their import and export volume showed a 34.9-percent increase year on year during the first six months of this year and accounted for 17 percent of the national total. The growth rate was 11.5 percentage points higher than that of the national total.  The total export volume reached $91.58 billion, exceeding that of state-owned enterprises.

Fourth, new markets have been explored. In recent years, China has continued to strengthen its trade and economic relations with other developing countries, while maintaining its traditional markets and exploiting new markets. Currently, the European Union is still China's biggest trading partner, and the United States is China's biggest importer. Meanwhile, China's exports to new markets have seen rapid growth. During the first six months, China's volume of trade with countries and regions outside the top 10 economies裻he EU, the United States, Japan, ASEAN countries, Hong Kong, South Korea, Taiwan, Russia, Australia and Canada褀as $163.69 billion, up 38.9 percent year on year, with the growth rate surpassing that of the national total by 15.5 percentage points.

Foreign Trade Pattern to Be Changed

In recent years, China's foreign trade has maintained the momentum of rapid development. The total import and export volume reached $1.4 trillion in 2005, ranking third in the world and accounting for 6.5 percent of the world total. However, there are still problems related to the quality, efficiency and mode of growth.

First, export benefits fail to go along with development. Some staple products for export, such as household electrical appliances, textiles, shoes and tools, having low technological level and added value, do not create higher profits along with the growth in the volume of exports. Meanwhile, the cost of imports has risen together with the expanded volume of imports. In 2005, China paid an additional $24.93 billion to purchase such products as oil, steel, iron ore, cotton and alumina because of price hikes.

Second, Chinese products are competitive on price but are weak in patent technologies. China's processing industry ranks fourth in the world, with the export volume of processed goods accounting for 91.2 percent of the national total. But, except for processing, other main links such as R&D, design and marketing are controlled by foreign companies. Last year, only 0.03 percent of Chinese enterprises had independent intellectual property rights over nuclear technologies. In fact, more than 80 percent of China's high-tech products rely on exports. China's GDP now makes up 4 percent of the global total, but its patents only 1.8 percent of the world's total.

Third, Chinese enterprises lack international marketing ability and lag behind in building name-brands. There are big gaps between multinationals and most Chinese enterprises in terms of management, marketing, comprehensive strength and competitive power. Exports of Chinese brand names make up only 10 percent of China's total export volume and 6 percent of the total exports of China's top 500 export enterprises.

Fourth, the scale of commodity trade is large, but that of service trade is small. Currently, China's total volume of commodity trade and service trade ranks third and seventh in the world respectively, with the annual growth of the latter (18.9 percent) over the past five years being 5.7 percentage points lower than the former (24.6 percent). At present, China's commodity trade is 56.3 percent that of the United States, 81.5 percent that of Germany and 127.9 percent that of Japan, but its service trade is only 24.6 percent that of the United States, 47.4 percent that of Germany and 73.1 percent that of Japan.

Measures for Sustainable Growth

China's foreign trade has sustained steady and rapid growth, due to the positive domestic and international economic environment. China will focus on the following four aspects:

First, great efforts will be made to adjust the export structure and enhance the quality and efficiency of export growth. The government will encourage exports of high-tech products, advantageous agricultural products, and environmentally friendly and energy-saving products, maintain the orderly growth in exports of labor-intensive products such as light industrial and textile products, take various measures to strictly control exports of high-energy-consuming products and adjust tax-rebate policies to promote the adjustment of product mix.

Enterprises will be given support in financial, taxation and industrial policies to develop independent nuclear technologies with an eye to enhance their competitive power. They will also be encouraged to absorb and re-invent imported technologies, and make long- and medium-term plans to develop their own brands and intensify the management and protection of their own intellectual property rights.

Relevant regulations and laws will be drafted to standardize the social responsibilities of export-oriented enterprises. Pilot projects will be launched in textile, light and chemical industries in order to find out the true costs on labor, environmental protection and resources, increase the returns from exports and control the expansion of low-cost exports.

The access mechanism for enterprises engaged in processing trade will be established and completed; the threshold for minimum wages and environmental protection standards will be raised; lists of commodities banned or limited for the processing trade will be increased; and processing enterprises are encouraged to move to regions in central and west China where conditions are available.
 Second, efficient measures will be taken continuously to expand imports and maintain the balance of foreign trade.

The measures will focus on establishing an import encouragement system to provide financing and public information services for enterprises, enhance the transparency of government policies, and create a fair, just and open trade environment; optimizing the mix of imported commodities and encouraging imports of key parts of major equipment, advanced technologies and equipment and resources-oriented products badly needed at home; and enlarging imports from other developing countries, and opening markets to the least-developed countries.

Third, energetic efforts will be pooled to develop service trade. Focus will be placed on setting up a complete service trade management system and related legal and service market system, encouraging the development of modern logistics, e-business, design consulting, information and other new service items, and developing international service contract business.

Fourth, enterprises with mature conditions are encouraged to step out of the country by investing overseas and cooperating with foreign companies on resource exploration, in order to enhance the capability to use overseas resources and diversify the channels of import resources. They are also encouraged to contract construction projects abroad and establish economic and trade cooperation zones overseas, so as to promote the export of sophisticated technologies and equipment and expand the import of products that the country needs.

(China.org.cn)