China warns of 'grim situation' on foreign trade front

Amid an economic slowdown and steady fall in exports that has cast a shadow over small and medium industries, China today warned of a "quite grim situation" on the country's foreign trade front in the face of new global uncertainties.

The warning came from the Ministry of Commerce (MOC) a day after data revealed that China's GDP growth rate slowed down to 9.1% in the third quarter of 2011, the slowest pace of expansion since last year.

"The import and export situation will be quite grim in the fourth quarter of this year and next year, or at least in the first quarter of next year," MOC spokesman Shen Danyang told a press conference here today.

He attributed the projection of slower growth to changes in the domestic and foreign economic environment, "especially increasing instabilities and uncertainties that have affected China's foreign trade in recent few months".

China's export growth slowed to 17.1% year-on-year in September from 24.5% growth in August, according to customs figures.

The fall in exports has apparently resulted in a number of small and medium industries, which contribute over 80% of China's cheap exports, closing down in a number of places due to dwindling exports markets amid a debt crisis in the EU and US.

China's imports climbed 20.9% in September vis-a-vis the year-ago period, compared to 30.2% year-on-year expansion in August.

In September, China's trade surplus fell for the second straight month, dropping by 12.4% year-on-year.

Shen said the declining surplus showed "the determination and forceful acts" of the Chinese government to promote balance of trade.

The trade surplus accounted for only about 4% of China's total foreign trade and more than 2% of China's gross domestic output in the first three quarters and both percentages fell, Shen said.

"It's unreasonable to question China's trade surplus and attempt to press China with that excuse," he said.

Shen said China's foreign trade maintained stable and relatively fast growth in the first three quarters and "is in good operation overall".

However, he predicted that trade growth will retreat later this year due to factors such as rising costs, exchange rate changes and carryover effects.

The US Senate passed a Bill that would pressure China to revalue its currency last week.

China strongly opposed the move, saying it may trigger a trade war and hinder the global economic recovery.