Mon, May 24, 2004 - Page 10 News List

Beijing's investment clampdown may slow trade growth

BLOOMBERG

China's foreign trade is expected to grow at a slower pace this year as higher raw material prices curb exports and a government clampdown on investment slows imports, the country's commerce ministry said.

The total value of China's foreign trade, which includes both imports and exports, may grow 17 percent to US$1 trillion, the ministry said in a report on its Web site. Foreign trade gained 37 percent last year, and jumped 38 percent in this year's first quarter.

Imports, which surged 42 percent in the first quarter on the back of an investment boom, may grow 20 percent this year to US$495 billion, after the government takes a series of monetary and political measures to slow down investment in fixed assets such as buildings and factories, the ministry said.

Exports, which grew 34 percent in the first quarter, may grow at a slower pace of 15 percent this year to US$505 billion, because investment-triggered price hikes in raw materials and energy have made exports more expensive, the report said.

China's trade may also be subject to other unpredictable and harmful elements, such as fluctuation in the world's main currencies, trade protectionism, high oil prices and terrorism, the ministry said.

China's trade expansion has been helping growth across the region. Asia's second-largest economy accounted for 32 percent of Japan's export growth last year, and in the first three months this year trade between the two countries grew 29 percent, according to China's state-run Xinhua agency.

The US has been urging China to revaluate its currency, complaining that China has artificially made exports cheaper by pegging its yuan against the dollar, costing millions of jobs in the US China's trade with the US grew 37 percent in the first quarter, Xinhua said.

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