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In 2004 China managed to have its foreign trade top 1 trillion USD. It is an exciting milestone which makes China a big trading nation in the world. But this does not mean China is a trade power.

China's hi-tech exports accounted for 28 percent of its total exports in 2004. A remarkable progress as it is compared with 10 years ago when the figure stood at 4 percent, there is a big gap between China and developed countries or even some developing peers. Hi-tech products make up 44 percent of shipment from US, 44 percent from Holand, 39 percent from Japan and 72 percent from Singapore.

Even the existing road for exports is full of stumbling stones. Rising trade disputes are one of them. By the end of October,2004 since China joined WTO, 177 investigations of anti-dumping, anti-subsidies, safeguard measures and special safeguard measures had been launched by 26 countries and regions to target or involve Chinese products. More than 4.19 billion USD of exports had been directly affected.

Take anti-dumping actions as an example. More than one-seventh of the total anti-dumping investigations from 1995 when WTO was born until June last year had been filed against China. As a matter of fact, China faced more anti-dumping cases than any other nation in the world for 10 years in a row.

In addition, the value of individual case of trade relief probes launched by foreign trade partners to Chinese products is getting more massive and it is not rare to see a case which is worth hundreds of millions of USD.

However, all of these, warned Zhang Yuqing, Director of Regulation Department of Ministry of Commerce, are just a trial balloon. Once they made it, China's exports will be seriously dampened. He stressed special attention to anti-subsidies issue. Otherwise, the country's exports will be trapped either by anti-dumping cases before or by anti-dumping dilemma after.

The ups and downs of the balance of foreign trade also call for attention. Trade deficit was registered in each month from Jan. to Apr. The most enormous deficit appeared in February when the deficit reached nearly 8 billion USD. Although surplus was back to the books afterwards, China did not enjoy trade surplus in the total foreign trade until September. The balance was 10.97 USD by the end of October.

What is alarming is the fact that bulk goods is playing a leading role in China¡¯s imports and exports. A report by China Society of Petroleum and Chemicals shows that China places an order of around 35 billion USD for oil every year.

The procurement mechanism for bulk goods also aroused extensive concern. There is voice for China¡¯s participation into pricing of bulk goods on the world market so that the country would not "have to pay for unnecessary costs".

China has to accept what is quoted on the international market. As a buyer China is put under a vulnerable position when some speculators intentionally raise prices and seek exorbitant profits.

Officials with the State Development and Reform Commission vowed in August to take various measures to address the problem, including more futures deals and establishment of national reserves funded by fiscal revenue.

However, the scandal of China Aviation Oil may make futures contracts difficult. Administrations are concerned about possible losses of the national interest caused by speculative behaviors on the international market by Chinese businesses which are not familiar to futures transactions.

China's exports are mainly driven by processing trade for which import rose 37.5 percent and export jumped 34.7 from Jan.to October over the same period of the previous year, faster than any other ingredient.

The new tax rebates policy has given Chinese exports incentives to pin high hopes on processing trade to secure their profits. And the government departments concerned expect this to promote the upgrading of the country¡¯s industrial structure.

However, the booming processing trade does not seem to boost the development of related industries as much as what was expected. Sources even mentioned that China's foreign trade was suffering a deficit actually if processing trade was not calculated.

Even the processing trade is facing labor shortage. Guangdong Province has offered higher salaries to attract migrant workers.

In fact domestic industries will have to face mounting pressure after the end of last year when China began to accelerate its opening process to honor its WTO commitments.

It is a challenging task for any government to fulfill WTO commitments on one hand and protect its domestic industries on the other. The removal of import quotas and lower tariffs will bring tough time for some industries, for example, auto.

The Ministry of Commerce forecasts China's foreign trade would surge 15 percent next year. More trade frictions are very likely.

Zhang Yuqing insisted that the new Foreign Trade Law effective since July 1,2004 has given Chinese trade administrations the power of safeguard against foreign products. Chinese government is also ready, in accordance with the Foreign Trade Law, to counteract any unreasonable retaliatory measures taken by foreign economies.

The Ministry of Commerce is working on China's first industrial injuries pre-warning system. Formulation of guidelines for post-WTO transitional period is also under way.

For China, the prospect of a trade power relies on sustainable developed which is built on technical innovation and good quality. Hi-techs will turn out more technically intensive products with high added value. And hi-tech industry itself has great potential to exploit.

China expects to have its foreign trade doubled by 2020. 2 trillion USD is the existing scale of US trade. It is no easy task given uncertainties in the national economy, as well as international political and economic environment.

Still it is attainable. Economic globalization and tech progress always bring new possibilities. China's economy will sustain fast and healthy development. All of these lay a good foundation for making the dream true.