China looks to bring in more imports, keep exports stable

BEIJING - As developed countries' demand for goods and services is likely to remain weak next year, China will strive to keep its exports of goods and services stable while importing more, senior government officials say.

In 2012, China is expected to see a decline in its exports, which have long been a main driver of its economic growth.

Exports rose by 15.9 per cent to $157.49 billion (S$202 billion) in October compared with the same period in 2010 - the lowest growth rate seen for exports in five months, according to the General Administration of Customs.

Weak external demand, coupled with increasing labor costs, have led to the closures of various companies in Dongguan, an export hub in the southern province of Guangdong.

And the future is likely to have worse in store. Europe, China's most important market for exports, may already have entered a recession, bogged down by the debt troubles of several countries there.

Wang Tao, an economist with the financial-services firm UBS AG, expects China's exports growth rate to slow down in 2012 because of "significantly weakened external demand".

That is likely to lead to a minor shift in China's trade policies.

While at the beginning of 2011, the country had planned to look primarily at the scale and structure of imports, the country's Central Economic Work Conference may also have export stability as a subject on its agenda.

Recent remarks by policymakers have hinted that is a likelihood at the annual conference, where broad economic policies will be set for the coming year.

The government plans to provide more financial support for exporters, said Vice-Premier Wang Qishan when he met with Chinese importers and exporters during a visit to Shenyang, the capital of Liaoning province, over the weekend.

Import and export companies will also see their taxes reduced, the Xinhua News Agency quoted him as saying.

In particular, the government will pay more attention to the difficulties of small and medium-sized exporters, Wang said.

He also called on local governments to help exporters contend with trade disputes.

Zhong Shan, deputy minister of commerce, said recently that the ministry will try to sustain exports of products that have long been cheaply made in China while further promoting exports of products with high-added value.

It will also change export practices by promoting technology, branding, quality and service, said Shen Danyang, a spokesman for the commerce ministry.

The decrease in exports is in contrast to the rapid increase seen recently in the value of imports, expected to reach $360 billion this year.

The government will push to increase imports, Wang said at the meeting. It will also remove some of the "unreasonable barriers" entailed in importing and make it more convenient to bring goods and services into the country, he said.

"With policy easing under way and another investment-biased stimulus coming, we expect imports to outpace exports," Wang Tao said in the report. "The share of consumer goods imports is expected to rise gradually as China moves to promote domestic consumption."