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TRADE WARS
China trade surplus surges despite economic weakness
by Staff Writers
Beijing (AFP) Jan 10, 2013


Giant Chinese complex raises eyebrows in Mexico
Mexico City (AFP) Jan 9, 2013 - Construction of the second biggest retail complex for Chinese products outside China will begin in Mexico next month despite environmental and business concerns, a project leader said Wednesday.

The Dragon Mart will be built in a natural reserve near the beach resort of Cancun in eastern Mexico, with more than 3,000 retail spaces plus offices and 722 residences for employees within a 557 hectare (1,376 acre) area.

Pushed by Chinese businessman Hao Feng, it will be the second Dragon Mart ever built, after a similar, bigger complex opened in Dubai in 2004.

"Why Dragon Mart in (Latin) America? China is one of the countries with the largest, sustained growth in the past 10 years and Mexico and Latin America must consider east-west trade in addition to north-south trade," Juan Carlos Lopez, director general of the project, told a news conference.

Some 4,500 Chinese companies are interested in selling their products at the future complex, which could draw one million visitors and $700 million a year, Lopez said.

But environmental groups are concerned that the project will cover 418 hectares of a natural reserve.

"It contravenes the municipality's environmental protection program," Alejandro Serrano, director of the Mexican Environmental Rights Center, told AFP.

The law allows for 25 percent of vegetation to be torn from the area, but the project secured a permit to cut down 35 percent, Serrano said, denouncing a lack of transparency in the permit application process.

The company counters that the project is sustainable and was given the green light by the state of Quintana Roo, which is needed to obtain a building permit from the municipality.

Mexican businesses are also worried, with the Confederation of Industrial Chambers saying that various national economic sectors have been hit by the competition from underpriced and subsidized Chinese goods.

China's trade surplus surged in 2012, but total imports and exports grew slowly owing to weakness at home and abroad, official data showed Thursday, while analysts warned of another tough year ahead.

The trade surplus in the world's second-largest economy jumped 48.1 percent from the year before to a four-year high of $231.1 billion, the national customs bureau announced.

The increase was largely due to low growth in imports as a result of commodity prices declining last year. Total imports increased just 4.3 percent to $1.82 trillion, while exports rose 7.9 percent to $2.05 trillion.

And China's total trade grew just 6.2 percent last year, well below the government target of about 10 percent.

Customs spokesman Zheng Yuesheng told reporters that "a sharply slowing world economic recovery, weak international market demand and rather big downside pressure on the domestic economy" weighed on the results.

China's economic growth slowed for seven straight quarters to the end of September, while the broader global economy also faced weakness in 2012.

Data for the three months to the end of December are due at the weekend, while inflation figures will be released on Friday.

The European Union -- China's biggest trade partner -- continued to suffer a prolonged debt crisis, and economic recovery in the United States, Beijing's number two commercial counterpart, remained subdued.

Zheng added the negative factors hurting trade last year remain in place in 2013, though he still saw some reason for optimism, citing efforts to boost growth by China and other major economies.

"We expect trade growth in 2013 to be slightly better than 2012."

The jump in the trade surplus -- which in the past has been a source of friction with China's commerce partners -- was mostly a result of better terms of trade "due to lower commodity prices", RBS economist Louis Kuijs said in a research note.

One bright spot was that exports and imports hit new single-month highs in December, rising 14.1 percent to $199.2 billion and six percent to $167.6 billion respectively, the figures showed.

Analysts, however, attributed the strong performance largely to one-off factors including better US data in the fourth quarter and rushed shipments by Chinese exporters at the year-end.

"Economic growth in developed economies may remain slow, so we think the challenges to China's exports remain," Sun Junwei, a Beijing-based economist with HSBC, told AFP.

"China's economic recovery will depend on whether domestic demand will turn for the better."

Analysts have expressed growing optimism that China's economic growth accelerated in the final three months of last year, citing stronger recent data including retail sales, while manufacturing activity has also picked up.

Chinese authorities have said they are committed to rebalancing their economy more towards domestic demand factors such as consumer spending and away from exports.

Ren Xianfang and Alistair Thornton, economists with IHS Global Insight, said Chinese exporters could have another difficult year due to extended weakness abroad.

"With our projection for continued contraction in the eurozone and continued slowdown in the US economy, we believe China's export sector will face another uphill battle this year -- an even tougher one than 2012," they said in a research note.

Total trade with Japan, the world's third-largest economy, fell 3.9 percent to $329.45 billion in 2012, Zheng said, blaming most of the decrease on a weak Japanese economy.

But he added that a dispute between Beijing and Tokyo over small islands in the East China Sea that both claim but Japan controls "to some extent also had negative impact on the healthy development of China-Japan bilateral trade".

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