A random survey of several Chinese trade experts early this month resulted in predictions that China would have a trade deficit of several billion US dollars this year.

Mei Xinyu -- a researcher with the China Academy of International Trade and Economic Co-operation, a think tank of the Ministry of Commerce -- supported San's optimism, as did officials of the National Bureau of Statistics.

China's two largest export-oriented production bases -- the Yangtze River Delta and the Pearl River Delta -- have merely been "slightly" affected by the outbreak of SARS (severe acute respiratory syndrome), said Mei.

"The key to fighting the negative effects of SARS on China's foreign trade is to properly reassure foreign clients psychologically and avoid turning irrational panic into a real crisis," he said.

Wan Donghua, a senior official with the National Bureau of Statistics, also said he is optimistic about China's foreign-trade growth on the basis of the rapid growth in exports of machinery and electronic products and the inflow of foreign direct investment during the first four months of the year.

San said the negative effects of SARS on foreign trade will be limited to general trade, which could yield a trade deficit of US$15 billion trade for the whole year.

The overall level of imports will continue to rise thanks to strong domestic demand -- especially for investment products and durable consumer goods such as cars -- and considerable increases in imports of machinery and electronic products, high-tech products, crude oil, steel, iron ore and materials to fight SARS, he said.

But general export growth is under pressure because face-to-face business negotiations have been made difficult, trade fairs have been postponed or cancelled, and foreign countries have enhanced quality supervision and inspection and quarantine measures due to SARS.

Deals worth US$4.4 billion, for example, were signed at the 93rd session of the Chinese Export Commodities Fair in Guangzhou because foreign businesses were afraid to visit the SARS-hit city in south China's Guangdong Province. The transaction volume was only one quarter that reached during the fair's spring session.

The fair, held every spring and autumn, usually accounts for 10 per cent of China's total foreign trade.

But San said the processing trade, which deals with unfinished products and makes up more than 50 per cent of China's total trade, will be unaffected by SARS. He predicted a surplus of US$60 billion this year, up from last year's US$57.7 billion. A rapid influx of foreign direct investment is expected to upgrade China's processing capacity and lead to a surplus, he said.

Taking into account other forms of trade, such as foreign-funded companies' imports of the equipment they need to do business in China, the country could still have an overall trade surplus of US$24 billion this year, San said.

(China Daily May 27, 2003)