Trade Surplus Fell in H1

   By Lily Wang
   On July 10th, 2008 the General Administration of Customs of China announced China's foreign trade in June 2008. The total import and export value was US$221.71 billion, a year-on-year increase of 23.3%. The export value rose 17.6% to US$121.53 billion while the import value rose 31% to US$100.18 billion. The monthly trade surplus in June fell to US$21.35 billion, down 20.6% year-on-year or US$5.54 billion less than the same period of previous year. 'The weakening external demand is seriously impacting the export sector', experts expressed.

   In the first half of 2008, China's foreign trade amounted to US$1.23 trillion, a year-on-year increase of 25.7%, in which the export value increased 21.9% to US$666.6 billion while the import value was up 30.6% to US$567.57 billion. The total trade surplus was US$99.03 billion, a decrease of US$13.21 billion or 11.8% year-on-year.

   Obviously, the stronger RMB with respect to US dollar and a reduction of export tax rebates for energy-intensive and polluting products have squeezed Chinese exporters' profits. Some economists suggested the government to pay greater attention to such a fast deceleration in trade surplus growth and the difficulties the export sector faces. However, it is still premature to loosen export policies that help fight inflation and curb pollution.

   Some insiders argued that as inflationary pressure eases, Chinese currency's appreciation rate should be slowed and export tax rebates should be raised in order to help exporters.

   Since 2008, the import trade by general trade mode has gone up fast. In the first half of 2008, the trade by general trade mode rose 35.4% to US$596.86 billion, of which US$306.42 billion for export, up 24.8%; US$290.44 billion for import, up 48.7%. The trade by mode of processing with supplied materials was US$509.68 billion, up 15.5% year-on-year.

   In the past six months of 2008, the foreign trade by foreign-invested firms, state-owned enterprises and other companies in China achieved US$684.94 billion (up 21.5%), US$301.38 billion (up 32%, lifting 1.3 percent point from the same period of 2007) and US$247.85 billion (up 30.9%) respectively.

   The European Union continued to be China's largest trade partner in the first half of 2008, with bilateral trade of US$202.14 billion, up 27.7% year-on-year. The USA ranked the second with bilateral trade of US$158.34 billion, up 13.3%. The third was Japan with bilateral trade of US$129.66 billion, up 12.6%. The bilateral trade between China and India was US$29.0 billion, up 69%.

   The export value of mechanical and electric products was up 25.4% to US$388.78 billion in the previous six months of 2008.

    China exported 1.42 million tons of crude oil in June, representing 5.5 times from the same month of 2007 and surpassing the figure (950 thousand tons) in the past five months of 2008. Analyst says this is driven by the surging international crude price. China exported 1.39 million tons of oil products in June, and totally exported 2.37 million tons of crude oil and 7.88 million tons of oil products in the first half of 2008, up 30.6% and down 0.3% respectively.

   Import value of primary products continues to go up fast, driven by growing import prices. In the first half of 2008, the import value of primary products reached US$184.0 billion, a year-on-year increase of 69.9%. China imported 230 million tons of ferrous ore, up 22.5% year-on-year.

   China imported 14.57 million tons of crude oil and 3.67 million tons of oil products this June and totally imported 90.53 million tons of crude oil and 21.01 million of oil products in the first six months of 2008, up 11% and 12.6% respectively. China imported 212 thousand units of automobile in the previous six months, up 53.2%.

   In July, the two oil giants Sinopec Group and CNPC expect to import 720 thousand tons of oil products, up 18% from the previous month. Sinopec Group will import 210 thousand tons of gasoline and 160 thousand tons of diesel to serve the eastern China market. CNPC will import 100 thousand tons of gasoline and 250 thousand tons of diesel for Ningbo, Zhoushan, Nantong, Jiangyin and Shanghai areas.