China’s trade surplus may drop to zero or even fall into negative zone in the next two years in view of declining exports and surging imports, a top official of China’s central bank has said.
China’s narrowing trade surplus is expected to reduce further to $150 billion this year, dropping to 1.5 per cent of the GDP from 8 per cent over the past few years, Mr Li Daokui, an advisor and member of the monetary policy committee of the People’s Bank of China, said.
In the first 10 months this year, the trade surplus narrowed 15.4 per cent year-on-year to $124.02 billion, with the surplus in October plunging by 36.5 per cent to $17.03 billion, data with the General Administration of Customs show.
“By then, I will be more worried about the devaluation issue of the renminbi, or yuan,” state-run Xinhua news agency quoted Mr Li as saying.
However, he said there are still reasons to remain optimistic with regard to dealing with a shrinking trade surplus, as domestic consumption was on the rise.
For example, the contribution of household consumption to GDP growth has followed an upward trend since 2008, Mr Li said, adding that household income growth is also outpacing GDP growth.
Consumption was responsible for 47.9 per cent of the country’s GDP growth in the first three quarters, up 0.4 percentage points from the first half, according to the National Statistical Bureau (NBS).
“Residents’ incomes may double in three years,” Mr Li said.
In the first nine months of the year, China’s rural residents’ incomes rose 13.6 per cent year-on-year, while urban residents’ incomes increased 7.8 per cent.
According to preliminary statistics, China’s GDP rose 9.4 per cent year-on-year during the period, NBS data show.
Mr Li said China will face the severe challenges of increasingly high expectations from the international community and the sustainability of its own economic development model in the next five to 10 years.