Foreign trade scores surplus
By Dai Yan (China Daily)
Updated: 2004-06-12 22:50

Steps to cool down China's economy may be having an effect, statistics release on Friday suggest.

As foreign trade jumped to a surplus, consumers prices also rose considerably from a relatively low level in May 2003 because of the SARS outbreak.

China's foreign trade swung to a surplus of US$2.1 billion in May after four consecutive months of deficit, as government measures led to a slowdown in imports of iron ore and steel, said the General Administration of Customs.

Import growth in May slowed substantially compared to April. May imports rose 35.4 per cent to US$42.8 billion, down from April's 42.9 per cent rise.

Exports in May surged 32.8 per cent to US$44.87 billion.

The National Bureau of Statistics also said that China's consumer prices rose 4.4 per cent from a year earlier in May after climbing 3.8 per cent in April.

But the May consumer prices appear high because the SARS effect last year created a rather low base and price rises are being brought under control.

The full-year rate of inflation is expected to hover between 3 and 4 per cent.

Customs officials said domestic macro-economic control policies have had an initial effect and growth in iron ore and steel imports are falling back substantially.

The central bank has raised the amount of cash banks must set aside as reserves three times since September, while government and banking regulators have imposed a series of lending and investment curbs on fixed-asset projects in industries including autos, steel, real estate and cement.

But customs officials did not give a clear figure for the import slowdown in May.

It said China imported 7.48 million tons of soybeans in the first five months of 2004, down 2.4 per cent year-on-year.

The former data showed China imported 6.64 million tons of soybeans from January to April, a rise of 8.9 per cent from the year-earlier period.

Crude oil imports in China, the world's second largest oil consumer after the United States, rose 37.7 per cent year-on-year to 49.76 million tons in the first five months of this year.

Based on official data, China imported a total 40.14 million tons of crude in the first four months. Crude imports in May were around 9.6 million tons.

Imports of iron ore amounted to 815.4 million tons between January and May, rising 33.7 per cent, compared to the growth rate of 44.8 per cent in the first four months.

Analysts said the slowdown in import-export growth was expected but China's trade partners should not over-react to the moderate slowdown.

"The growth rate (for imports) is still very high which indicates demand in China is still big despite government control in selected industries," said Li Yushi, an expert from the Academy of International Trade and Economic Co-operation.

Most of the industries operate well and need imports to feed their growth, he said.

The dynamic export sector and growing domestic consumption can cushion the cool-down in selected industries and still buoy up trading partners' exports to China.

"But we need a balanced sheet of trade and China's current economic mode has not been ready for a huge deficit," Li said.

For the first five months, China had a trade deficit of US$8.66 billion.

Total exports in the first five months rose 33.4 per cent to US$207.59 billion and imports reached US$216.25, up 41 per cent year-on-year.