Fourth, exports in fields where China traditionally has a comparative advantage, mechanical and electrical products and labor-intensive products, have grown at a higher rate than the overall growth in exports. In 2012, China's mechanical and electrical products grew 8.7 percent, 0.8 percentage points higher than the overall export growth rate over the same period. Its total exports of labor-intensive products grew 8.6 percent, 0.7 percentage points higher than the overall export growth rate over the same period. This shows that China's manufacturers have the potential to offset the rise in production costs and appreciation of the yuan.

Fifth, China's resources and energy imports have grown steadily. In implementing the new policy to increase imports and to promote the rebalancing of foreign trade, China's imports of energy and resources have continued to increase. However, due to the global economic downturn, the price of iron ore, copper, aluminum and other commodities have fallen markedly, which has clearly helped China expand its imports. In fact, even though the value of China's imports grew by 4.3 percent in 2012, the real increase in import volumes is larger because of the lower purchasing costs.

Finally, and more importantly, China's new leadership will promote a new round of economic reforms and these will further remove the fetters of the old economic mechanism. Meanwhile, over the next decade China will accelerate its urbanization, releasing further economic growth momentum. In the future, the construction of affordable housing and investment in railways and other infrastructure will lead to a further rebound in import demand, especially high-tech imports from developed countries. At the same time, Chinese foreign direct investment and exports are expected to increase as it implements its "go global" strategy.

Overall, China's growth in imports slowed in 2012, but as a result of government policies to rebalance its trade structure, its growth in exports is expected to be around 8.5 percent this year, and with the recovery of domestic demand and the promotion of policies to rebalance foreign trade, China's imports are expected to significantly expand to about 10 percent.

The author is professor and deputy director of China Center for International Economic Exchanges.

(China Daily 01/28/2013 page8)