2008 Trade Surplus Hits Record High
China’s state-owned Xinhau News Agency has reported that the country’s trade surplus for 2008 is likely to exceed US$290 billion, with total foreign trade reaching US$2.55 trillion, reflecting an increase of 18 percent over 2007. This information was released by China’s General Administration of Customs and is seen by experts as encouraging, especially in light of the economic downturn being experienced virtually on a global scale.
Customs officials have acknowledged that China has not been immune to the effects of the global economic turmoil as export demands have slowed down considerably and there is a strong likelihood of China’s exports declining even further into 2009. However, the first eleven months of 2008 saw China’s external trade reaching US$2.38 trillion and the country’s trade surplus sitting at US$255.95 billion for this period. While official figures for December are still pending, officials believe that the trade surplus and foreign trade figures released to the public through the Xinhua News Agency are realistic estimates, even though the figure is US$10 billion higher that the estimate issued two weeks ago by China’s economic planning agency, the National Development and Reform Commission.
Although analysts note that the trade surplus has also been affected by the drop in import demands as the nation’s economy slows down, this record figure is seen as an indication of China’s increasing presence as an exporting powerhouse. The World Bank confirms the likelihood of the continued slowing down of China’s economy with its forecast of only 7.5 percent economic growth for the country in 2009, a level which has not been seen in nineteen years.
A trade surplus or trade deficit, otherwise referred to as the “balance of trade” of a country, is the difference between exports and imports in an economy over a given period of time. A positive balance of trade, or trade surplus, comes about when a country exports more than it imports. Factors that can affect a country’s balance of trade figures include the prices of goods manufactured domestically, exchange rates, trade agreements, trade barriers and domestic and international business cycles, as well as tax, tariff and trade measures.
China’s hardest hit export sectors include the textile and garment industry, toys and foodstuffs. China is the world’s largest toy manufacturer and exporter, but during the first seven months of 2008 a total of 3,631 toy exporters, representing a total of 52.7 percent of the toy industry, had no other alternative but to shut down. However, these were mainly small business with an annual export figure of less than US$100,000 and according to Customs data 3,507 toy exporters are still actively trading.
At the dawn of 2009 it appears that the global economic slowdown is likely to continue for some time, however officials in China are confident that the country is in a position to weather the economic storm.