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Balancing trade amid grim export prospects

02-10-2012 15:08 BJT

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One of the big unknowns of 2012 is how the world’s second-largest economy will cope with shrinking trade volumes, sprawling European debt crisis and an appreciating local currency. All these factors have eaten into the profits of China’s once-profitable exporters and manufacturers. Our reporter Yin Hang travelled to eastern China’s Shandong Province, to find out why boosting imports could also be a way out for the economy.

In recent years, tens of thousands of Chinese exporters have been faced with a worsening outlook. Manufacturing and trade in the world’s second-largest economy has been gradually choked off by the sprawling European debt crisis, appreciating Renminbi, trade protectionism tussles. But there’s always a silver lining. Chinese importers are seeing a historical high in profits.

In Dongying, a city 450 kilometers away from the Chinese capital, this privately-owned company stretches out over 4,500 square meters. Inside, the factory is operating so vigorously that it seems like a fire is raging inside its smelters.

As one of the six-largest copper producers in China, Fangyuan Non-ferrous Metals imports all of its raw materials from countries like Australia, Chile and Peru.

It imported 2.5 billion U.S. dollars worth of raw materials last year, while its sales volume was almost triple that amount last year.

Guo Xuemin is the deputy general manager of the Group. Guo said: "Both our import and sales volumes last year reached to historical highs. The supply and sales chain within our company is operating smoothly. We felt almost no impact from China’s economic slowdown and the European debt crisis. But rather, the Chinese government’s encouraging policies when it comes to imports and currency have boosted our sales."

China posted GDP growth of 8.9 percent in the last quarter of 2011 compared with a year earlier. That came in higher than expected but nevertheless showed that the world’s fastest engine of growth is switching down a gear.

But China is predicting sharply slower foreign trade growth of about 10 percent year-on-year in 2012 as officials forecast "grim" export prospects.

Chinese Premier Wen Jiabao said last week that China should maintain “stable” trade policies as the global financial crisis continues to spread.

China’s top economic planner also suggests last month that the country should boost imports. Import growth was 11.8 percent in December, nearly 40 percent slower than a year earlier. The National Development and Reform Commission suggested this could be done by reducing tariffs on some energy products, raw materials, advanced technology and key components.

But Guo says, for import-reliant companies such as Fangyuan, there are three factors to consider.

Guo said: "First, the company will have to bear the risks of international price fluctuations, because the right of pricing is not in our hands. Secondly, we have to maintain a smooth sales channel. And that is based on the third condition that our products are competitive, our production methods are advanced, and our costs are lower than others."

China’s central government has ratcheted up its supporting policies in recent years to boost imports as the country’s export growth slows, and calls for a more balanced trade structure to gain momentum.


Editor:Zhang Rui |Source: CNTV.CN

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