China warns of 'grim situation' in foreign trade

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The Ministry of Commerce (MOC) on Wednesday warned of a "quite grim situation" for the country's foreign trade as new global uncertainties weigh on the world's second largest economy.

"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," said MOC spokesman Shen Danyang at a press conference.

He attributed the prospect 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 exports slowed to 17.1 percent year-on-year growth in September from 24.5-percent growth in August, according to customs figures.

Imports in September climbed 20.9 percent from a year earlier, compared with the 30.2 percent year-on-year expansion in August.

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

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

Trade surplus only accounted for about 4 percent of China's total foreign trade and more than 2 percent 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 predicts trade growth will retreat later this year due to such factors as rising costs, exchange rate changes and carryover effects.

The U.S. 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 global economic recovery.

The MOC will maintain the stability of policies related to export tax rebates, the yuan's exchange rate, trade conveniences and other aspects to support exports while actively expanding imports, Shen said.

Speaking of China's role in helping Europe deal with the debt crisis, Shen said the Chinese government will continue to encourage Chinese firms to invest in Europe.

"Chinese enterprises' investment in the European Union (EU) is mutually beneficial and a wholly company act," he said. "What the government does is to promote and provide public services."

The escalating EU debt crisis has partly contributed to a slowdown in Sino-EU trade, with China's exports to the bloc rising just 9.8 percent year-on-year in September, compared with a 22.3-percent rise in August.