China "must not slacken efforts" to promote export amid a sharp decline in external demand and growing international trade protectionism, Premier Wen Jiabao said Thursday, pledging reinforced government support.

He made the remarks in a government work report delivered to lawmakers at the opening of the annual session of the National People's Congress (NPC).

"We will continue to diversify our export markets and compete on quality, enhance traditional export markets, and energetically open up new markets," said Wen.

The government is to take a series of measures to relieve the difficulties of exporters and to "ensure steady growth in foreign trade", according to Wen.

Wen vowed to use "fiscal and taxation policies" to support the country's export, a driving force for the country's economy.

The past year has seen a drastic change in the government's foreign trade policy.

As part of its bid for balanced trade, China moved to discourage exports through scrapping or cutting tax rebates at the beginning of last year.

The spread of the international financial crisis and ensuing drop in external demand forced the government to raise export rebate rates, ease credit, and lower customs in the latter half of year.

Economists said the policy changes showed the deteriorating trade situation amid the global downturn.

Wen said a central government fund for trade development will be increased, eyeing to cultivate brand-name export products and support small and medium-sized enterprises in expanding their international markets.

To improve the country's financial services for importing and exporting, the government will expand the coverage of export credit insurance, and encourage financial institutions to develop export credit, he said.

The government will adjust the prohibited or restricted commodity categories of processing trade, and encourage the relocation of export processing industries from the eastern to the central and western regions, Wen said.

Lingering pressure

China's exports are facing lingering high pressure amid the international financial crisis.

It's year-on-year growth rate of foreign trade last year recorded a seven-year low at 17.8 percent, down 5.7 percentage points from the previous year, according to the General Administration of Customs.

As the crisis bit, China's export volume decreased 17.5 percent year-on-year to 90.45 billion U.S. dollars in January.

The import volume, however, fell by a much larger degree of 43.1 percent to 51.34 billion U.S. dollars.

Foreign trade in southern Guangdong Province, the nation's key production and export base, continued to fall in January, plunging 31 percent from a year earlier, figures from the provincial customs showed.

Xie Kaihua, deputy to the NPC and director of the commerce bureau of the southwestern Sichuan Province, said: "Ensuring steady growth in foreign trade is very important for maintaining economic growth and secure jobs." He noted that the crisis has forced many labor-intensive factories closed.

Other measures

Other measures to support foreign trade put forward by Wen are as follows:

-- to actively improve policies and measures to encourage development of trade in services and develop the outsourcing of international services to China;

-- to expand imports, focusing on introducing advanced technology and equipment and increasing imports of key spare parts and components, and important energy sources, resources and raw materials;

-- to improve supervision and service in customs, quality inspections and foreign exchange and intensify the development of border ports;

-- to vigorously promote the Doha round of trade talks, accelerate implementation of the strategy of free trade zones, and properly handle trade frictions.

Determination to fight protectionism

NPC deputy Zhang Yansheng said the government's proposal of expanding imports worth attention.

"In the short term, imports will post a much bigger slowdown than exports as international commodities prices and domestic economic growth slumped," said Zhang, also head of the International Economic Research Institute under the National Development and Reform Commission, China's chief economic planning body.

The fierce competition in the international market always lead to growing international trade protectionism, but the latest buying trip led by Commerce Minister Chen Deming to the European countries showed China's determination in fighting trade protectionism, Zhang said.

He projected that the imports would increase in the second quarter this year as the country's stimulus package begin to take effect, but the exports would see further drop.

"In the long term, the government need to cultivate new growth sectors in the external market and move faster to transform growth pattern of foreign trade to cope with the crisis," Zhang said.

Innovation, technology key to export

"While stressing the importance of boosting domestic demand, we must stabilize external demand," said Cai Jiming, member of the 11th National Committee of the Chinese People's Political Consultative Conference (CPPCC), the top political advisory body.

"We should spur exports by technological innovation and developing new industries," said Cai, also director of the Center for Political Economy at Tsinghua University.

He cited the battery industry as an example. "China's battery production technology is leading in international market."

"The demand for clean energy is huge in foreign countries out of concern of environmental protection. China could make full use of the advantages to develop its battery industry," he said.

Another deputy Yin Guangjun said "We should draw lessons from the financial crisis over the over-reliance on foreign market, and build a real economy based on domestic demand."

China's economy has been driven largely by foreign trade, and has been endeavoring to rebalance growth away from a heavy reliance on exports and investment towards consumption.

"We could take the crisis as an opportunity to restructure the export sector to get prepared for future development," he said.

(Xinhua News Agency March 5, 2009)