A record monthly trade volume worth about US$100 billion in itself is proof of the growing prowess of China as a trade power.

Latest customs statistics show that the country's exports in July amounted to US$51 billion and imports surged to US$49 billion, both notching up year-on-year increases of more than 30 per cent.

The robust growth of trade last month fairly indicates that the country's annual trade volume will not only have doubled since 2001 by the end of this year, but also is going to catch up soon with the country's gross domestic product.

That is compelling evidence of how much China has opened itself to the world and how deeply the Chinese economy has been integrated with the global market.

However, it also serves as a meaningful prism through which the Chinese Government's macroeconomic control can be examined.

The good news is that the authorities' tough measures to slow excessive investment growth, on the whole, has not yet hurt trade-related industries, one of the most dynamic sectors of the Chinese economy.

Actually, the central government's prompt payment of all outstanding tax rebates owed to exporters in the first half of this year has substantially reduced financial burdens on the export sector.

But the bad news is that, since foreign-funded enterprises now account for an increasing majority of the country's exports, strong trade growth implies that most of them have escaped the country's macroeconomic control unscathed. In other words, domestic companies, especially privately-owned ones, have borne the brunt of the nationwide credit squeeze.

Given the increasingly fierce competition between domestic and foreign companies in the home market, it is unwise to tilt the playing field against domestic businesses for too long.

Blanket credit screws are certainly effective in reining in investment growth. But they can only be a stopgap.

Some small domestic manufacturers already complained publicly that they are short of operational funds to take overseas orders.

The current strong momentum of trade growth is exciting, but it should not blind the related authorities to the real needs of domestic enterprises.

(China Daily August 16, 2004)