Expect China's exports to continue to expand
By Li Jian (China Daily)Updated: 2007-04-06 10:53
In the long run, China needs to change its growth pattern and stimulate domestic demand to balance its trade. It needs to help its exporters update their strategies to export more high-value-added products instead of the current low-end products.
In the short-term, policymakers must figure out solutions to the export-import gap.
China has adjusted its trade policy, lowering export tax rebates and imposing taxes on export of resource-consuming products.
Meanwhile, it has raised its requirements on foreign investors which are a major force in the manufacture of exports regarding environmental protection and social responsibility.
This has put pressure on exporters, who need time to adapt to the new situation.
As a populous developing economy, however, China still needs to develop labor-intensive industries, which are behind the current strong export economy. And as the domestic demand will not increase in the short term, it is necessary for China not to dampen exports immediately. Otherwise, its economy and employment will suffer, especially in the economically underdeveloped middle and western regions.
Given the projected slowdown of US economic growth and China's further adjustment in its export policy, the country's export growth may slacken. But China can, nevertheless, be expected to retain a growth rate of more than 20 percent for the middle and long term.
China's import growth has remained slow compared with its exports, but that does not mean it will not pick up in the coming years.
China has entered a stage of accelerated industrialization. The heavy and
chemical industries are showing strong growth, which increases demand for
advanced manufacturing equipment, raw materials and energy. Since the domestic
supply cannot satisfy demand, China can expect to see its imports of those
products increase continually in the long run.
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