Key Words in China’s Foreign Trade: Stability and Transition

2019-9-10 11:21:01

Foreign trade is an important indicator of economic development. “The complex international environment has posed a series of challenges, threatening the steady growth of China’s foreign trade. However, our long-term positive economic fundamentals have not changed, and restructuring and gear shifting continues,” said Li Kuiwen, spokesperson of the General Administration of Customs (GAC) and director of the GAC Department of Statistical Analysis.

GAC’s statistics show that in the first half year of 2019, China’s import and export totaled RMB14.67 trillion, up by 3.9% over last year. Specifically, export totaled RMB7.95 trillion, up by 6.1%; import RMB6.72 trillion, up by 1.4%; trade surplus RMB1.23 trillion, up by 41.6%. In addition, National Bureau of Statistics’ data show that July had the highest trade and export volumes in 2019, with both growing faster than last month. In general, China’s foreign trade is resilient.

“Stability”—Hard-Won Success

Since the founding of the People’s Republic of China, the past seven decades saw the country’s foreign trade grow from invisible to unignorable. China is becoming an important engine for world economic and trade growth.

However, China’s trade is not a smooth ride. The complex international environment has posed a series of challenges, threatening the country’s trade growth. IMF recently lowered its global trade growth forecast by 0.9 percentage points to 2.5%. This number, much lower than last year’s 3.7%, is the lowest in three years. Experts point out, against this backdrop, the steady growth of China’s trade is a hard-earned achievement—an illustration of strong resilience.

Recently, at its executive meeting, the State Council determined its measures for greater stability, which include:

  • Lowering import tariffs, improving export tax rebates, and speeding up the rebate process;
  • Developing export credit insurance, expanding coverage, reducing premiums, and creating policies in line with business demands;
  • Increasing financial institutions’ support for SMEs in trade financing, and facilitating RMB settlement;
  • Fostering new businesses forms, such as cross-border e-commerce and bonded repair and maintenance, and creating import demonstration zones; and
  • Streamlining trade regulatory documents and customs clearance, and lowering surcharges at ports, for greater convenience.

According to the Department of Foreign Trade, Ministry of Commerce (MOFCOM), in 2019, MOFCOM launched a series of policies with related authorities, to create a legal, international, and convenient business environment, further facilitate trade, and gain substantial progress in maintaining the size, improving the quality, and changing the engine of growth.

According to GAC, the Administration has five focuses for trade improvement:

  • Further streamlining trade regulatory documents and customs clearance, and lower surcharges at ports;
  • Publishing data on cross-border e-commerce, and protecting IPs and the rights and interests of business owners and customers;
  • Updating and spreading the policies in free trade zones, and spearheading reform and opening up with comprehensive bonded zones;
  • Diversifying the export market, promoting the “single-window” systems in Belt and Road (B&R) countries, and boosting the development of China Railway Express; and,
  • Stepping up taxation studies, and implementing tax cuts and preferential tax policies.

According to our sources, China’s trade facilitation network has made substantial efforts to help companies grow, especially through trade promotion platforms, commercial legal services, business trainings, and information disclosure. This year, China Council for the Promotion of International Trade (CCPIT) has publicized preferential policies for SMEs, helped companies diversify their businesses, and supported SMEs with services, to prepare SMEs for better internationalization.

“China’s foreign trade is big, resilient, and sustainable, because of its full-fledged industrial chain, big domestic market, the diversified global market, the potential of businesses, and the continued restructuring,” said Zhu Yong, Deputy Director of Department of Foreign Trade, MOFCOM. She believes, by working together, in 2019, China’s foreign trade will continue to grow with better quality.

“Transition”—a Response to Trends

Although China has established its foreign trade through economies of scale, to truly become a trade power, the country shall focus on quality improvement. Take machinery and electronic products as an example, in the first seven months of 2019, its export grew 6.1%, up by 0.8 percentage points over the first six months. Advanced and quality products with high added value, such as integrated circuits, metalworking machines, excavators, and medical equipment, enjoyed double-digit growth. Meanwhile, the import of premium consumer goods also grew fast.

Gao Shiwang, Director of the Department of Industrial Development, China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME), said: “on the one hand, China has a solid industrial foundation and a long industrial chain for machinery and electronic products, hence its leading competitive edge and advantage in the world; on the other hand, the country has stable foreign trade policies and continues to facilitate trade. Importers and exporters are increasingly integrated to the global market and resilient against external risks. These factors enable Chinese companies to consolidate and expand their markets through market diversification, products with higher added value, and value-added services. ”

In recent years, besides optimizing the product mix in export, China is also increasing its import, to balance international trade and promote quality growth. “As the Chinese market shifts to products of better quality, the import of premium foreign consumer goods is gathering steam,” said Hao Li, Chairman of Eled International Trade Co. Ltd. Such trend means business and cooperation for both foreign and Chinese companies.

In response to rising trade protectionism, Chinese companies have been exploring new markets and discovering new partners in emerging markets and along the B&R. GAC’s statistics show that in recent years, China’s trade with B&R countries has outpaced the country’s overall foreign trade, with especially rapid growth in trade with emerging markets such as ASEAN, Africa, Central Asia, and Latin America. In the first half of 2019, China’s trade with B&R countries grew 9.7%, 5.8 percentage points higher than its overall trade. The country’s trade with Latin America and Africa grew 7.4% and 9%, 3.5 and 5.1 percentage points higher than the overall growth respectively.

According to MOFCOM, starting in 2019, authorities and local governments have been boosting their policy support for new businesses and new models. Next, the bonded repair and maintenance program will be further implemented, to attract processing businesses and production service providers with more advanced technology and greater added value.

Our Leadership

Zhang Yongming Chairman ...

History and Growth

Promoting international trade, promoting utilization of foreign investment, prom...

About the CCPIT Beijing

CCPIT Beijing, a foreign economic and trade organization composed of representat...