China's total exports for 2004 surpassed US$1 trillion in November, surging to a new historic high. Import growth, on the other hand, continues to slow and industrial output dropped to a 10-month low of 14.8% in November.

 

Foreign trade for the first 11 months of 2004 posted year-on-year growth of 36.5% for a total of US$1.03 trillion. According to the Chinese Customs General Administration, monthly exports for November grew by 45.9% year-on-year to reach a record US$60.9 billion. While imports for the month also rose by 38.5% to total US$51 billion, China's trade surplus nevertheless expanded by US$9.9 billion to exceed US$20 billion. The trade surplus widened for the fourth month in a row on the back of faster-than-expected export growth. Some analysts speculate that the surge in exports is a result of the holiday season consumer rush.

 

The Ministry of Commerce contends that China is on track to become the world's third largest trading power this year. It was the fourth last year, behind the United States, Japan, and Germany. The State Development and Reform Commission estimates that China's GDP has grown by at least nine percent in 2004. The World Bank agrees, placing its estimate at 9.25% year-on-year growth. In addition, the Ministry of Commerce announced last month that China's foreign-exchange reserves reached an all-time high of US$540 billion at the end of October.

 

The effectiveness of the government's macroeconomic controls is starting to be called into question as certain sectors targeted by the policies continue to swell. The Politburo recently declared that the macroeconomic controls would not be lifted in 2005. The government has publicly abandoned the growth-oriented policies of the past seven years, and opted instead for a tough management policy that seeks to balance growth between various sectors and regions. 

 

Ma Kai, the head of the State Development and Reform Commission, recently announced that government control over the economy would be intensified in order to engineer a "soft landing." Specifically, Ma suggested that the government would put priority on restricting growth of fixed-asset investment and enforcing strict rules on the authorization of new bank loans and real estate transactions. Sectors such as cement, aluminum, steel, and coal will be most closely regulated.