Chinese language - Trade surplus up 84% in 1st half, growth set to slow

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BIZCHINA / Center

Trade surplus up 84% in 1st half, growth set to slow

By Jiang Wei (China Daily)
Updated: 2007-07-12 08:40

Growth in China's trade surplus will ease in the second half of this year
as the central government's measures to curb exports begin to have an
impact, a senior trade official said yesterday.

The surplus soared to $112.5 billion in the first half of this year, up
84 percent from a year earlier. The June surplus hit a record $26.9
billion.

The remarkable increase resulted partly from enterprises rushing to
export as much as they could ahead of July 1, when the value-added tax
rebate was either scrapped or reduced as part of efforts to trim the
surplus, Ministry of Commerce spokesman Wang Xinpei said.

Related readings: Trade surplus keeps mounting June trade surplus hits
new high China's monthly trade surplus hits new high in June Income
distribution is in need of reform "This factor (the export rush) will
fade out in the second half of this year," Wang said.

In addition, other measures to curb exports will help slow the growth in
surplus, he added.

The government has adopted various methods to narrow the surplus, such as
levying export taxes and encouraging imports of high-tech products.

However, many economists predict it will take time before a significant
change can be seen.

"We have to wait at least three months to see any effect, and possibly
longer, since many firms will continue to manufacture and export given
their capacity is already in place," said Stephen Green, an economist
with Standard Chartered Bank in Shanghai. He expects the full-year
surplus to set a record this year.

"We do not expect to see any major change in the overall picture in the
near future as the dampening effect of the tax rebate adjustment is
likely to be offset by stronger global industrial production momentum,"
said Liang Hong, an economist with Goldman Sachs' Asia Economics Research
Group.

In another development, technical barriers erected by trade partners cost
China as much as $75.8 billion last year and over 15 percent of exporters
were affected, according to research by the Ministry of Commerce.

The barriers refer to regulations, standards or procedures for assessing
imports. Compared to traditional trade barriers such as tariff and import
quotas, they have been adopted more frequently in recent years.

(For more biz stories, please visit Industry Updates)

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