China’s swollen trade surplus will shrink next year after coming in below $150 billion for the whole of 2006, a senior researcher from a Commerce Ministry think-tank said. The trade surplus would narrow as a result of government efforts to balance trade by encouraging imports and adjusting export tax rebates, said Li Yushi, vice president of the Chinese Academy of International Trade and Economic Cooperation.
“The trade surplus will narrow next year because the government has been making efforts to balance its trade position,” he told Reuters in an interview.
Although the surplus is likely to shrink, China will not experience trade deficits in the coming five to 10 years, partly because the country will continue to lure export-oriented foreign companies seeking a competitive manufacturing base. China’s recent move to adjust export tax rebates is likely to have only a limited impact as it will affect a relatively small proportion of trade, he said.
Li gave no forecast for the size of China’s trade surplus next year.
He said the country’s total trade volume would grow by more than an annual 15% in 2007, taking the value of the country’s total trade to $2 trillion.
Senior Chinese officials have predicted in recent weeks that China’s trade surplus could hit between $150 billion and $160 billion.
Such an outcome will aggravate those abroad who have long argued that China’s yuan is undervalued and is giving Chinese exports an unfair advantage in global markets.
In September, Beijing adjusted tax rebates on a wide range of export products in what it said was an effort to bring about more balanced trade.
China cut or scrapped the rebates for industries it wants to curtail, but raised them for those it wants to promote, including high technology and heavy machinery. (Reuters)