Opinion

Rebalanced trade growth

(China Daily)
Updated: 2011-04-11 17:02

China's much improved trade growth is not only the welcome result of the country's strenuous efforts to boost domestic consumption, it is also cause for optimism that more balanced international trade will help sustain the ongoing global recovery.

Figures from the General Administration of Customs showed that, on the back of a 29.5-percent increase in the total value of imports and exports, China saw a trade deficit of $1.02 billion from January to March this year, the first quarterly trade deficit in six years.

A monthly trade surplus of $140 million in March caught many observers by surprise. Most of them expected another monthly trade deficit in billions of US dollars given that the country had witnessed a $7.3 billion deficit in February.

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Yet, the fact that the value of imports in the first quarter hit a record high of more than $400 billion, slightly outrunning export growth, represents remarkable progress for Chinese policymakers who are struggling to boost domestic consumption into a key growth engine.

Admittedly, such a small first-quarter trade deficit is no guarantee that the world's top exporter will bid farewell to a large trade surplus for the whole year.

On the one hand, the country's foreign trade usually goes through a seasonal cycle with more monthly trade surpluses later in the year.

On the other hand, a dramatic plunge in China's huge trade surplus, which was steadily falling from a record $295 billion in 2008 to $196 billion in 2009 and $183 billion last year, is both unlikely and undesirable. China can hardly lose its competitiveness in labor-intensive exports overnight. And an unexpected disruption in China's trade growth would only add to domestic economic woes while dimming the global trade growth prospect.

Fortunately, the first quarterly trade deficit in six years indicates that the world's biggest exporting nation will be better positioned to rely on domestic demands for robust growth while continuing to serve as a key driving force for world trade.

A slower accumulation of trade surplus that inflates domestic liquidity supply will ease the pressure on Chinese policymakers who are busy fighting inflation. And the accelerated growth in imports is surely correlated to strong domestic consumption.

After exports jumped 14.5 percent last year, the biggest rise recorded since 1950, the World Trade Organization predicted 6.5 percent growth for global trade this year. That means developing country trade is projected to grow by 9.5 percent while that of developed countries is set to grow 4.5 percent in 2011.

As the world's top exporter of goods with a 10 percent share of the global market, the momentum of China's trade growth certainly matters to the recovery of world trade.

More importantly, China's progress in reducing its trade surplus has laid a key foundation for the international community to prevent a widening of trade imbalances that pose a key challenge to a lasting global recovery.