China's total foreign trade volume may increase more than 20 per cent year-on-year to exceed 1.4 trillion US dollars this year. Exports are likely to rise more than 26 per cent this year to 745 billion USD and imports to outpace an expected 18 per cent increase to 655 billion USD. China's trade surplus will probably come up to 90 billion USD this year, according to a recent China's foreign trade situation report commissioned by the Ministry of Commerce.

Since the start of this year, the fast economic growth of the world, the booming international market demand, and the further readjustment and optimization of export tax rebate system have greatly improved the export growth, according to an official with the Department of Planning and Finance of the ministry. The comparatively evident contradictions of oversupply in the domestic market have brought pressures to the exports, strengthening the driving force and pressure on domestic enterprises to exploit overseas market. Although China has absorbed less actual foreign investment than in last year, the attraction of funds from foreign countries is still kept in a bigger scale. The rapid growth of foreign investment in China in the previous years has turned into a bigger manufacturing capacity, which became one of the important reasons for China's fast export increase.

In addition, the decline in domestic investment demand, the import-substitute efficiency formed by the domestic readjustment of the industrial structure and the anticipated reminbi's appreciation after the country exercised macro-control policy are the main reasons for the imports drop. As a result, some enterprises, especially large-sized ones specializing in producing complete sets of equipment, have slowed down their imports.

It is learned that the fast four-consecutive-year growth of exports has been hedged by the international market and trade protectionism. As a result it is hard for China to keep rapid export growth. So China should not be optimistic about its export situation and ignore potential risks in 2006. And there exist some obvious structural contradictions in the operation of China's national economy. For 2006, it is expected that the total trade volume may increase about 15 per cent to 1.6 trillion USD. The nation's economic growth may evidently slow down compared with that of 2005.

The report says during the period of the Tenth Five-Year, the country's total foreign trade volume has broken the 1 trillion USD record for the first time, achieving a significant stride in history. China has been ranked the third place, up from the sixth in 2001 in the merchandise trade volume rankings of the world, becoming a country with important contributions and impacts on the world's trade development. However, there are some problems in China's foreign trade development waiting to be solved, including the lack of capability in independent research, development and innovation.

By People's Daily Online