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China to Maintain Trade Stimulus After Incentives Pay off

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China on Tuesday announced it will maintain its export stimulus measures to tackle more complicated trade conditions next year after their success in offsetting the effects of the global economic crisis.

"Practice has proved that the policy mix to stabilize external demand is timely and effective. It has boosted market confidence and facilitated the steady recovery of foreign trade," the Ministry of Commerce (MOC) said in a quarterly review of trade published on its website.

The announcement came after the nation posted the best foreign trade performance in a year last month, rising 9.8 percent from a year ago after 12 monthly drops.

The decline in exports narrowed to 1.2 percent in November while imports climbed 26.7 percent.

The government would maintain the "continuity" and "stability" of the policy as overseas demand was unlikely rebound to pre-crisis level, the report said.

It warned against "blind optimism" and said a daunting task remained.

Although overseas demand for Chinese goods is gradually recovering, rampant protectionism, less prodigal western consumers and consistent calls for a stronger yuan confounded China's trade outlook, the State Information Center (SIC), a government think-tank, said in a research paper on Tuesday.

"There were increasing uncertainties in international trade with governments around the world striving to protect domestic industries and compete for global markets as the world economic recovery would be a slow and devious process," Zhou Xiaoyan, director of the fair trade bureau under the MOC, said during an online interview on Monday.

According to Zhou, as of the end of November, 19 countries and regions have launched 103 trade remedy investigations against Chinese products. Both the number of the cases and the money involved hit record high, she said.

To counter the impacts of the protectionism, both MOC and SIC reports noted the government should upgrade export structure by encouraging the exports of indigenous brands and products using Chinese technology.

To support exports, which contributed over 30 percent to the Chinese economy before the crisis happened, the government raised the tax rebate for exporters seven times, and cut premium expenses to double the export credit insurance coverage.

The government also introduced yuan settlement in five cities in a pilot program to help exporters avoid the risks of exchange rate fluctuations.

MOC report said the government incentives should be more "flexible" and "targeted" to cope with new changes.

To balance trade, it would step up imports of technology equipment, key machinery parts and strategic resources, it said.

The total value of exports and imports was US$1.96 trillion in the first 11 months, down 17.5 percent year on year.

SIC report predicted trade value would grow 8.2 percent to US$2.31 trillion in 2010. Trade surplus would fall 15.5 percent to US$184 billion.

(Xinhua News Agency December 23, 2009)