China may stumble under export burden
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Although last quarter saw China running a trade deficit for the second time in six years, many analysts believe that the nation will have a trade surplus by the end of the year.
After all, China has replaced Germany as the world's largest exporter and has maintained a trade surplus for a long time. However, it's not a good idea to encourage the export of resource-intensive products or to sell goods at a loss. China should not be afraid of running a trade deficit or becoming a big importer.
The country has been encouraging exports for many years. The Chinese government has launched many policies to boost exports, such as increasing coal export rebate rates in 1998. When the financial crisis hit in 2008, the nation also raised the export rebate rate of some commodities.
However, current national conditions restricts the space for exporting resource-intensive products. The export market for "high consumption, heavy pollution, and resource-intensive products" is already saturated, which means that the export volume in the future will definitely drop.
Take some examples. Although China produces half of the world's annual supply of coal, its per capita coal reserves are half of the global average. China has 36 percent of global rare-earth reserves, but exports 90 percent of world supply.
Over exporting has caused many coal mines in east China to close due to resource exhaustion. Between 1996 and 2009, when its rare-earth export volume increased tenfold, China's rare-earth reserves decreased by 37 percent.
In 20 years time, China may have to import rare earths. Our basic national condition is that we have more people than resources.
With 20 percent of the world population, China should become the largest importer instead of the largest exporter of resource-intensive products.
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