China Releases Trade Stats; Pledges to "Buy More" and Increase Oversees Investment

Julia Zhao

As China released data showing that the country's trade and investment numbers rebounded significantly in 2010, PRC Minister of Commerce Chen Deming stated in two major overseas speeches that China will increase imports and boost outbound investment in the coming years. Though PRC officials have previously stated both goals, Chen offered more detail.

From Chicago to Davos
Last month, Chen accompanied PRC President Hu Jintao during a state visit to Washington, DC, and Chicago, Illinois, where Chen spoke on outcomes of the Hu visit and PRC government priorities for 2011. The following week, Chen attended the World Economic Forum meetings in Davos, Switzerland, and discussed China's progress since joining the World Trade Organization (WTO). In his speeches, Chen outlined three PRC Ministry of Commerce (MOFCOM) priorities for 2011: stimulate domestic demand, boost imports, and encourage Chinese companies to invest abroad. Chen stressed that China "will be even more open in the next 10 years."

China sees trade recovery
MOFCOM statistics show China's global trade jumped 35 percent year on year to nearly $3 trillion in 2010, rebounding from a 14 percent drop the previous year (see Table 1). Through November 2010, China's top export commodities were electrical machinery and equipment, power generation equipment, and apparel. Its top import commodities were electrical machinery and equipment, mineral fuel and oil, and power generation equipment. China was the second-largest global importer and the biggest import destination for the world's least developed countries last year.

The United States remains China's top trade partner, trading about $350 billion in 2010 (see Table 2). Chen said that Hu and US President Barack Obama agreed in their meetings last month to aim for bilateral trade to exceed $500 billion by 2015, including $200 billion in US exports to China--double the 2010 total of $100 billion. (China's reported US export numbers are higher than US-government statistics--which project US exports to China to reach at least $90 billion in 2010--because PRC statistics include US exports through Hong Kong.) Chen noted that the two sides "still have some work to do" to address the bilateral trade imbalance.

Chen said China's 12th Five-Year Plan (2011-15) will include detailed measures to further open the China market and encourage imports, but he repeated the oft-heard PRC-government claim that US companies will have significant opportunities if the US government eases or eliminates its technology export control regime. Chen noted in March 2010 that the United States lost at least $33 billion in export opportunities in 2009, an estimate much higher than US government assessments. If the requirement to lift US export control policies is central to Chen's projections for US export growth, then the projections may be overstated.

Table 1: China's Trade with the World ($ billion), 2006-10

Year 2006 2007 2008 2009 2010
Exports 968.9 1217.8 1430.7 1201.6 1577.9
    % Change 27.2 25.7 17.5 -16 31.3
Imports 791.5 956 1132.6 1005.9 1394.8
    % Change 19.9 20.8 18.5 -11.2 38.7
Total 1760.4 2173.7 2563.3 2207.5 2972.8
    % Change 23.8 23.5 17.9 -13.9 34.7
Balance 177.5 261.8 298.1 195.7 183.1

Note: Chinese exports reported on a free-on-board basis; imports on a cost, insurance, and freight basis.
Sources: PRC National Bureau of Statistics; PRC General Administration of Customs

Country/Region $ Billion % Change
United States 346.9 30.2
Japan 267.8 31.7
Hong Kong

205

33
South Korea 188.2 34.9
Taiwan 131.8 39.7
Germany 129.1 36
Australia 79.2 47.6
Malaysia 67.1 47.5
Brazil 56.7 47.4
India 55.2 44.2

*Percent change over Jan.-Nov. 2009.

Source: PRC Customs, China's Customs Statistics

Chinese companies expanding overseas, US investment in China rebounds
The PRC government will encourage more Chinese companies to invest overseas this year, Chen said. In 2010, China's overseas direct investment reached $59 billion--up from less than $1 billion a decade ago--and Chinese investment in the United States jumped 81 percent year on year to $1.4 billion. Chen noted that Chinese companies will invest more than $3.2 billion in the United States as a result of investment contracts signed during the Hu visit.

Chen sees Chinese investment in the United States increasing rapidly in the coming years. He said that though most Chinese companies still lack strong talent and legal knowledge of their destination markets, these companies must "learn by doing." During the Hu visit, the US-China Business Council (USCBC) signed a cooperative agreement with the China Council for the Promotion of International Trade to continue seminars at which USCBC member companies present US investment rules to potential Chinese investors.

Meanwhile, China's investment inflow rebounded in 2010 after a decline in 2009. China utilized $106 billion in foreign direct investment last year, the bulk of which came from wholly foreign-owned enterprises (see Table 3). US investment in China reached $4.1 billion in 2010 (about three times more than Chinese investment in the United States), up 13 percent over 2009 (see Table 4). The United States is China's fifth-largest investor and China's top investor outside of Asia.

 

Table 3: China's Non-Financial Foreign Direct Investment (FDI) Inflows, 2006-10

Year 2006 2007 2008 2009 2010
# of Projects 41,473 37.871 27,514 23,435 27,406
    % Growth -5.8 -8.7 -27.4 -14.8 16.9
Utilized FDI ($ Billion) 65.8 74.8 92.4 90 105.7
    % Growth -9.1 13.6 23.6 -2.6 17.4

Source: PRC Ministry of Commerce (MOFCOM)

Table 4: China's Top 10 Origins of Non-Financial FDI, 2009-10

Country/Region Amount Invested 2009 ($ Billion) Amount Invested 2010 ($ Billion) % Change
Hong Kong 54 67.5 25
Taiwan 6.6 6.7 2.1
Singapore 3.9 5.7 45.6
Japan 4.1 4.2 3
United States 3.6 4.1 13.3
South Korea 2.7 2.7 -.4
United Kingdom 1.5 1.6 11.8
France NA 1.2 NA
The Netherlands NA 1 NA
Germany 1.2 .9 -24

Notes: NA = not available. Amount invested includes investments sourced in these countries but made through Barbados, the British Virgin Islands, the Cayman Islands, Mauritius, and Western Samoa.
Source: MOFCOM