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Chinese Minister of Commerce Lu Fuyuan announced a shift in government policy yesterday, encouraging domestic companies to increase their imports from overseas. The policy turnaround is a result of the nation's ample foreign exchange reserves and the government's desire to promote world economic growth.

"China will import US$1 trillion in the next three years and become the world's second largest purchaser in 20 years, only after the United States,'' Lu said yesterday afternoon at a press conference marking the conclusion of the fifth Asia-Europe Economic Ministers' Meeting.

The Chinese Government encourages domestic companies to increase imports as well as expand exports because increased imports are expected to also fuel domestic economic growth and make a contribution to world economic growth, he said.

Lu indicated he is not at all worried about the 44 per cent faster-than-exports growth in imports in the first half of this year, or a probable resulting trade deficit this year, which China has not seen for years since the 1997 Asian financial crisis.

"The rapid growth in imports is mainly driven by robust domestic economic growth. It's a natural result of high economic growth,'' he said.

Big tariff cuts since China's entry to the World Trade Organization (WTO) also contributed to the high increase in imports, said the minister. This is especially true for some telecommunications products such as mobile phones, which now have zero tariffs.

Vice-Premier Wu Yi said yesterday morning at the opening of the ministerial meeting that she is confident China's gross domestic product will grow 7 per cent year-on-year despite the negative effects of the recent SARS outbreak on tourism, restaurants, hotels and transportation.

She hailed the Asia-Europe Meeting as an important bridge between the two continents and urged member economies to give strong support to the multilateral trading system.

The Chinese Government will continue to push forward reform and opening up and faithfully implement its commitments to the WTO, she said.

The next decades will see China enjoying rapid economic growth with GDP expected to quadruple to US$4 trillion.

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