China’s foreign trade outlook and forecasts for the year
Leading domestic economists and foreign institutions predict a sharp decrease in the Chinese foreign trade surplus this year. Although China turned around the first quarter's trade deficit and had a surprising $100 million surplus in the first four months of the year, most economists are of the opinion that China's trade surplus will largely diminish, but a deficit is not expected to appear immediately this year. In close relation to the SARS disease and protectionist steps taken worldwide will have an adverse impact on China's exports. The poor state of economy will add on to these facts and the increase in exports will be slowed down considerably. Most likely China's exports will not meet last year's rate of increase whereas imports will be pulled up by a number of favourable factors. The surge in imports is led by the wider opening of the Chinese market and its increased demand for products needed for the country's further economic development. It is predicted that Chinese total foreign trade volume will reach $650-700 billion, up by 10-13% year-on-year. Exports are expected to increase by 8-11% to $350-360 billion, compared to a surging rate of 22.3% last year. Meanwhile, forecast is for the growth of imports to outpace that of exports by increasing 12-15% to $330-340 billion. But the rapid rise in imports this year will put pressure on China's international balance of payments and its currency rate.