Oil May Contribute $55 Billion Deficit To China's Trade Balance
Dow Jones News
BEIJING -(Dow Jones)- Rises in global oil prices could lead to an outflow of billions of dollars in spending for China, with oil likely to single-handedly contribute a $55 billion deficit to the country's trade balance this year, an academic with a government-backed think-tank warned.
This would be larger than the $35 billion deficit in 2004, said Niu Li, an economist with the Economic Forecasting Department of the State Information Center.
China is expected to post an overall trade surplus of $90 billion this year, nearly triple the $31.95 billion surplus recorded in 2004, based on an earlier prediction by the Ministry of Commerce.
"Oil is the single commodity that causes the biggest trade deficit (in China)," said Niu in an article carried in the official China Daily Tuesday.
Rapid economic expansion has made China the world's second-largest oil consumer after the U.S. Its oil imports account for nearly 40% of the country's total oil consumption.
Surging oil prices can affect China's economy "on a grand scale," said Niu, cautioning that they could hold back growth and add to inflation.
Niu predicted that China's 2005 oil imports will total 130 million metric tons, or 1 billion barrels.
"If each barrel costs an extra $15, it means China has to shell out an additional $15 billion from its foreign currency reserves," she said.
BEIJING -(Dow Jones)- Rises in global oil prices could lead to an outflow of billions of dollars in spending for China, with oil likely to single-handedly contribute a $55 billion deficit to the country's trade balance this year, an academic with a government-backed think-tank warned.
This would be larger than the $35 billion deficit in 2004, said Niu Li, an economist with the Economic Forecasting Department of the State Information Center.
China is expected to post an overall trade surplus of $90 billion this year, nearly triple the $31.95 billion surplus recorded in 2004, based on an earlier prediction by the Ministry of Commerce.
"Oil is the single commodity that causes the biggest trade deficit (in China)," said Niu in an article carried in the official China Daily Tuesday.
Rapid economic expansion has made China the world's second-largest oil consumer after the U.S. Its oil imports account for nearly 40% of the country's total oil consumption.
Surging oil prices can affect China's economy "on a grand scale," said Niu, cautioning that they could hold back growth and add to inflation.
Niu predicted that China's 2005 oil imports will total 130 million metric tons, or 1 billion barrels.
"If each barrel costs an extra $15, it means China has to shell out an additional $15 billion from its foreign currency reserves," she said.
posted by Marcel at 1:42 PM
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