China to Effect Huge Policy Changes to Promote Trade

According to the recent National People's Congress and the Chinese People's Political Consultative Conference (CPPCC) sessions, China is expected to consider serious changes in its exim policy while re-balancing its economy. Though exports will continue to remain the focal point of economic growth yet it is understood to remove some import restrictions aimed at increasing imports particularly from developing countries.

Along with changes in trade policies which would help exports from developing countries the Chinese manufacturers also will get incentives to maintain price competitiveness in the global markets. China's exports, which experienced robust growth of more than 25 percent before 2008, dropped by 16 percent last year.

Chinese Commerce Minister Chen Deming at the sidelines of the meet stated all China's financial policies, including its devalued status of yuan/renminbi, were part of China's stimulus package comprehensively designed to counter global economic meltdown. He also defended the subsidies, claiming the stimulus incentives “abide by the rule of the World Trade Organisation and bear no protectionism.”

While announcing the policy statement, China admitted that it would “eliminate unreasonable restrictions” on the import front. A re-look at this policy comes after repeated complaints from India to its Chinese counterparts at every platform they met. The policy statement said “imports from developing countries will be expanded so as to satisfy domestic demand on the one hand, and promote mutual benefits and common development on the other.”

Zhang Zhigang, a member of the CPPCC said that if the country wanted to encourage consumption, exports were "vital". Likewise, Chen said that export-related sectors provide at least 90mn jobs - about 7 percent of the national population - and therefore affect consumption.

Barring surprises, most members during the meet felt export was key to China’s economy indicating the most censured yuan’s low currency value that is tied to the Chinese export advantage would be moreover the same for the coming months until it gets even with its early 2008 export growth. Chen statement corroborates that fact as he said “although yuan faces appreciation pressure, China still plans to keep the exchange rate of yuan stable”.

By Jose Roy