China Faces 'Severe' Trade Situation

China Faces 'Severe' Trade Situation

China’s commerce minister said in comments published Monday that the country faces a “severe” trade situation this year, as the Asian powerhouse continues to feel the pinch of global economic woes.

But he said that “with luck”, China would still achieve 10 percent growth in foreign trade — which combines imports and exports — as per predictions made earlier this year.

The forecast growth for the year ahead is far slower than the 22.5 percent growth achieved in 2011, as the debt crisis in Europe — China’s biggest export market — rages on.

Official data released on Sunday showed exports rose 15.3 percent on-year in May to $181.1 billion and imports grew 12.7 percent to $162.4 billion, slightly widening the trade surplus for the third consecutive month to $18.7 billion.

However, the better-than-expected trade figures failed to downplay concerns that the world’s second largest economy is slowing, after China put in a poor economic performance in May.

Chinese Premier Wen Jiabao last month said greater priority should be given to growth, which slowed to 8.1 percent in the first quarter of 2012 year-on-year — its slowest pace in nearly three years.

Authorities have been easing monetary policy for some time in an effort to stimulate growth, cutting the amount of money banks are required to keep in reserve three times since December last year.

On Friday, the central bank also cut interest rates for the first time in more than three years and allowed banks more flexibility to set rates, introducing greater competition in the market.