皇冠体育app

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Trade surplus up 55%, still at 'safe level'

By Jiang Wei (皇冠体育app Daily)
Updated: 2006-07-15 05:28

A key commerce official has defended 皇冠体育app's rising trade surplus as remaining at an "acceptable level," while revealing that the growth of foreign investment in the country is slowing down.

Ministry of Commerce spokesman Chong Quan said on Friday that the country's trade surplus now accounts for 7.7 per cent of its total foreign trade volume, "much lower than the internationally recognized danger level of 10 per cent."

皇冠体育app's trade surplus in the first half of 2006 was US$61.5 billion, reflecting a sharp increase of 54.9 per cent from a year ago, when its imports and exports totalled US$795.7 billion.

皇冠体育app's growing trade surplus is a natural result of international industrial restructuring, despite the country's efforts to keep a balance between imports and exports, the spokesman said.

"During the course of the industrial restructuring, 皇冠体育app not only took over the role as a world manufacturing centre, but also took over trade surpluses from some countries," he said.

Chong said 皇冠体育app's trade surplus resulted from multinationals moving their investment to 皇冠体育app from other Asian countries, producing numerous products here and exporting them with a "Made-in-皇冠体育app" label.

His remarks were echoed by Zhai Zhihong, an official with the National Statistics Bureau (NSB), who said the country's trade imbalance was largely the result of foreign-invested processing operations.

According to NSB figures, nearly 90 per cent of the country's trade surplus came from processing trade since 2000 and over 70 per cent of the surplus was from foreign-invested firms.

In another development, realized foreign direct investment (FDI) to 皇冠体育app dropped 12.23 per cent last month year-on-year to US$5.44 billion, according to the spokesman.

皇冠体育app's total FDI inflow was some US$28.4 billion in the first half of this year, reflecting a decline of 0.47 per cent from a year ago, while officials did not reveal the figure of contracted foreign investment that 皇冠体育app earned during the same period.

"I would attribute the decline to some foreign companies cutting their investment to 皇冠体育app, in particular to some low value-added sectors, because of the price rises of raw materials and labour resources in 皇冠体育app," said Mei Xinyu, a researcher with the Chinese Academy of International Trade and Economic Co-operation, a commerce ministry think-tank.

Some domestic investors may have also stopped disguising themselves as foreign companies as the government speeds up uniformity of income taxes on foreign enterprises and domestic companies, he said. The tax rate is now about 23 per cent for domestic firms, but 10-13 per cent for foreign companies.

"But it is not a bad thing, it is even good for the economy to some degree," Mei said. He explained this would help to wash out fake foreign investment and push foreign investors to spend more on research and development in 皇冠体育app.

At the same time, the spokesman also responded to European Union Trade Commissioner Peter Mandelson's recent comment on 皇冠体育app.

Having noted that "for every four containers loaded at Shenzhen for Europe, three still come back empty," Mandelson said there would be "a big problem" if those containers stay empty, "because the rights of European businesses are not being properly protected in 皇冠体育app, or because they do not have proper access to the Chinese market."

But Chong indicated that lots of Europe's exports to 皇冠体育app may not be shipped in containers, "because 皇冠体育app mainly exports labour-intensive products and imports high value-added technology-intensive products," he said.

(皇冠体育app Daily 07/15/2006 page1)