China’s exports probably declined in January after a slowdown in foreign trade in the second half of last year, commerce minister Chen Deming said as he pledged to maintain “stability” in the yuan’s exchange rate. Exports in January “cannot make us optimistic” and are “expected to have negative growth due to Chinese New Year and other factors,” Chen said on Thursday in a written response to questions from Bloomberg News. “Chinese trading companies, particularly small and micro businesses, have come under growing pressure.” Hong Kong’s Hang Seng Index (HSI) fell as much as 0.4 per cent following the comments, which came after the Chinese stock markets closed.
A trade slowdown is adding pressure for monetary loosening in China to support economic growth even with officials yet to claim victory over inflation. Consumer-price gains accelerated in January for the first time in six months, pushed up by holiday spending, a statistics bureau report showed on Thursday. Export data are due tomorrow, with analysts forecasting a 1.4 per cent decline from a year earlier.
“We will keep the overall stability of our export and import policies,” including measures on tax rebates, and “we will maintain the overall stability” of the yuan exchange rate and “relevant policies of processing trade,” Chen said in an English translation provided by the Ministry of Commerce. “Any fine-tuning” of policies “will be supportive rather than discouraging,” he said.
Foreign trade ‘essential’
Fourteen of the 31 economists in the Bloomberg survey had estimated an increase in China’s exports last month from a year earlier, with 16 predicting a decline and one forecasting no growth. Estimates ranged from a drop of 10 per cent to a rise of 8.4 per cent. A fall would be the first in more than two years.
China, the world’s largest exporter, will also boost credit support and reduce tax burdens for smaller businesses, Chen said. “Foreign trade, an integral part of the Chinese economy, is essential” for people’s lives and jobs, he said.
The commerce minister’s comments were made ahead of Vice President Xi Jinping’s visit to the US next week. Xi is seen by analysts including Chinese University of Hong Kong Adjunct Professor Willy Wo-Lap Lam as the likely successor to President Hu Jintao.
Job creation
“As the financial crisis is spreading and worsening, all countries are faced with the task of promoting economic growth and creating more jobs,” Chen said. Stronger cooperation between the US and China is in the fundamental interest of both nations, he said.
China won’t force foreign companies to transfer technology to ventures with their local partners in order to gain access to its markets, Chen said.
“The Chinese government is committed to the policy of reform and opening up and welcomes and encourages, as always, foreign investment,” he said. “Technology transfer and technology cooperation shall be decided by businesses independently and will not be used by the Chinese government as a pre-condition for market access.”
The US and other Chinese trading partners have increased criticism of the nation’s investment policies. President Barack Obama said in his State of the Union address last month that he will create a trade enforcement unit to investigate unfair trade practices in countries including China.
Laws reviewed
Restrictions and “interventionist policies” on issues such as intellectual property rights remain a concern for American companies operating in China, Claire Reade, the US trade official in charge of China affairs, said in December testimony to Congress.
Canada’s Prime Minister Stephen Harper, visiting Beijing this week, said he spoke to Premier Wen Jiabao yesterday about specific cases where Canadian investments weren’t being approved.
Chen said that China reviewed all its laws governing foreign trade and economic issues shortly after joining the World Trade Organization in 2001 and “revised those not conforming to WTO rules and its accession commitments.”
