General Office of the State Council recently issued Opinions on Further Stabilizing Foreign Trade and Investment (hereinafter referred to as the “Opinions”). It was pointed out that, in the context of the current COVID-19 global pandemic and the serious recession of the world economy, China’s foreign trade and investment are facing complex and serious challenges. It is necessary to deeply implement the important instructions of President Xi Jinping on stabilizing the basic foreign trade and investment, as well as the decisions of the CPC Central Committee and the State Council, with special focuses placed on the “ensuring stability in six areas” and the “ensuring security in six areas” missions, further secure stable foreign trade and foreign investment, the entities of foreign trade, and industrial chains and supply chains.
In terms of stabilizing foreign trade, the Opinions put forward a number of measures: we must give better play to export credit insurance, support local replication or expansion of the “credit insurance + guarantees” financing model, and to enhance credit support for the financing of foreign trade enterprises in a variety of ways. We must further expand export credit to small, medium and micro foreign trade enterprises, support for the development of new trade patterns, guide the gradient transfer of processing trade, and increase support for labor-intensive enterprises. We must help large backbone foreign trade enterprises in their major difficulties, expand online channels for foreign trade, and further improve the convenient services of customs clearance.
Cross-border e-commerce leads the innovative development of foreign trade.
“The COVID-19 outbreak has impacted various aspects of China’s foreign trade, the most obvious being the significant reduction in export orders, which has caused supply disruptions in the affected industrial chains, increased production and trade costs, and dramatic pressure on the financial chain. In the short term, our foreign trade is facing unprecedented pressure and challenges.” Cui Zheng, deputy director of the Research Center for the Economies and Politics of Transitional Countries of Liaoning University, said in an interview with China Trade News: “the Chinese government has made successful planning for pandemic prevention and control and foreign trade development, and China has a complete industrial manufacturing structure, strong trade potential and a solid foundation for cooperation with its trading partners. In addition, the current global environment has spawned new foreign trade formats and urgent needs for the world to resume work and production. These combined factors have ensured a general trend of positive development of China’s foreign trade in the long run.
The Opinions proposed that new forms and modes of trade should be developed. Several pilots for new market procurement modes will be launched, expanding the total number to about 30. Full use will be made of existing channels such as special funds for the development of foreign trade and for innovation of services and trade to support cross-border e-commerce platforms, cross-border logistics development and the construction of overseas warehouses. Financial institutions such as the Export-Import Bank of China and Sinosure are encouraged to support the construction of overseas warehouses under the premise of risk control. Tax rebate services will be improved and accelerated for foreign trade integrated service enterprises, and more foreign trade integrated service enterprises that meet the standards will be made “Authorized Economic Operator” of customs.
Zhang Shuibo, professor of College of Management and Economics of Tianjin University, said that during the outbreak, cross-border e-commerce as a new business format has served as a leading role in the innovative development of foreign trade and made great contributions to stabilizing foreign trade. Cross-border e-commerce puts marketing and trading online, which can break through time and space barriers, avoid physical contact and reduce intermediate links, thus making it an important channel for the delivery of pandemic prevention supplies to foreign countries and regions and expanding overseas markets.
In the first half of this year, cross-border e-commerce retail import and export increased by 26.2%, and exports by market procurement increased by 28.8%. “Cross-border e-commerce logistics and overseas warehouses are important pillars for stable foreign trade.” Zhang said that the epidemic has posed a direct challenge to the logistics and distribution industry, and China’s cross-border e-commerce logistics enterprises have ensured the timely delivery of goods through a variety of methods, such as charter flights and storage and delivery using overseas warehouses. In the future, we need to further increase investment in cross-border logistics infrastructure, improve transport and distribution efficiency, and reduce the costs.
Gradient transfer of processing trade will be promoted.
The Opinions instructed to support key industries and enterprises in guiding the gradient shift of processing trade, and cultivate a number of processing trade industrial parks jointly established by the east, central and western regions and the northeast. Further support will be given to export enterprises of labor-intensive products, and we will help large backbone foreign trade enterprises solve their problems in a “one enterprise, one policy” manner.
Cui Zheng said that in the current structure of China’s foreign trade, processing trade accounts for a large proportion and is mostly found in labor-intensive industries. Therefore, an important part of stabilizing foreign trade is to increase help and support for these enterprises. The gradient transfer of processing trade can give full play to the advantages of labor resources in the central and western regions, and better ensure the stability of business and employment of enterprises in industries on the supply chains.
There are challenges, of course. Cui said, the first is the insufficient industrial supporting capacity of the receiving regions and the lagging infrastructure, making it difficult to form large-scale industrial clusters, and the living environment there is not attractive enough for talents. Secondly, the processing trade currently being transferred to the central and western regions is relatively low-end industries with narrow profit margin, has insufficient industrial upgrading capacity, and huge pressure on the environment. Finally, China mainly relies on sea transportation in foreign trade, while the labor-intensive products produced in the central and western regions have lower added value per unit but higher transportation and logistics costs and longer time costs due to geographical factors and transportation capacity, which makes many enterprises take a wait-and-see attitude towards inward migration.
Port business environment will be further improved.
The Opinions also required to improve the convenient services of customs clearance and people-to-people exchanges. Standardized services will be promoted and the compliance costs in the import and export links will be reduced. “One-stop transparent prices” for charges at ports will be launched wherever possible, and advisory services on technical trade measures will be improved. While keep strictly sticking to the pandemic prevention requirements, we will continue to negotiate with several countries to establish “fast-tracks” to facilitate people-to-people exchanges, increase the total number of international passenger flights in phases, and increase the frequency of civil aviation between our main source regions of investment.
Zhang Shimin, customs manager of Jiangxi Lixun Intelligent Manufacturing Co., Ltd., said that with the support of the customs department, the company has obtained AEO (Authorized Economic Operator) advanced certification this year, and the cost of customs clearance has dropped by 70%. In the first half of the year, the company’s foreign trade exports amounted to 14.06 billion yuan, up by 311.6%.
Cui believes that the improvement of port business environment is key in stabilizing foreign trade during the outbreak. On the one hand, it is necessary to optimize the customs clearance process, innovate the customs clearance mode, streamline the links, reduce time and costs of foreign trade enterprises, and promote the realization of the "dual circulation" development pattern (in which domestic economic cycle plays a leading role while international economic cycle remains its extension and supplement); on the other hand, we should optimize the policies, reduce the burdens of the foreign trade operators by providing accurate and timely tax and subsidy support, and actively provide them with financial and legal support; in addition, measures should be made to give full play to the public service functions, build marketing platforms and learning platforms, and help enterprises explore new markets and develop new business models.