Government urged to legislate to help foreign trade growth
Experts are calling for more policy support as the latest figures show that China’s foreign trade grew at a slower pace than expected in May.
They blamed external factors, including the war in Ukraine and a sluggish world economy, which have suppressed global demand.
With no improvement expected in the global outlook, economic demand from overseas is expected to weaken further.
In May, China’s foreign trade grew by just 0.5% to 3.45 trillion yuan ($485 billion). Exports fell by 0.8% to 1.95 trillion yuan, while imports grew 2.3% to 1.5 trillion yuan, according to figures from the General Administration of Customs.
Zhou Maohua, an analyst at China Everbright Bank, said the country’s exports fall in May was partly due to the relatively high figure recorded in May 2022.
“Weighed down by the effects of the Russia-Ukraine conflict, stubbornly high inflation and tighter monetary policy, the world economy and global trade have been in the doldrums. Shrinking external demand will be a major drag on China’s foreign trade for some time,” Zhou said.
He added that more government support should be provided to help tackle these challenges and ensure stable growth, he added.
Xu Hongcai, deputy director of the China Association of Policy Science’s economic policy committee, said that the country should not rely on trade with the United States and Japan, which have both seen a fall-off in demand for China’s exports.
Between January and May, China’s total imports and exports grew 4.7% year-on-year to 16.77 trillion yuan, with the Association of Southeast Asian Nations (ASEAN) still the country’s largest trading partner, according to the government. China’s trade with ASEAN countries amounted to 2.59 trillion yuan, up 9.9% year-on-year.
Countries and regions involved in the Belt and Road initiative and ASEAN member states are becoming increasingly important markets for China’s foreign trade. Further steps should be taken to tap into their trade potential, Xu said, adding that the Regional Comprehensive Economic Partnership, which has been fully enforced for all its 15 members, “should be better harnessed to expand the market in Southeast Asia with preferential tax rates”.
The Belt and Road Initiative is a global infrastructure development strategy adopted by the Chinese government in 2013 to invest in more than 150 countries and international organisations.
Everbright Bank’s Zhou said the exports from high-end manufacturing industries, such as automobiles, should play a bigger role in boosting growth of China’s foreign trade. Automobile exports were up 124.1% year-on-year, reaching 266.78 billion yuan.
Between January and May, China’s mechanical and electrical product exports grew 9.5% year-on-year to 5.57 trillion yuan.
Zhou added that domestic manufacturers should respond to shifts in demand in the global market and invest more in innovation and production capacity.
And Zhang Jianping, from the Chinese Academy of International Trade and Economic Cooperation, said that policies to make it easier for organisations to trade with partners overseas should be implemented, a the focus on lowering the cost of doing business and make them more competitive.
Easier access to finance should be facilitated, along with deeper tax and fee cuts to lighten the burden on foreign trade enterprises. The coverage of export credit insurance should also be expanded, and industry associations and chambers of commerce should play a key role in helping firms secure more orders, he added.
China acts to generate fairer competition
China will strengthen supervision and law enforcement against organisations whose practices create unfair competition, according to the State Administration for Market Regulation (SAMR).
Zhu Jianqiao, director of the comprehensive planning department at SAMR, said the country will accelerate the revision of China’s Anti-Unfair Competition Law, promote the introduction of the regulations on fair competition and improve the registration system for enterprises that move from one region to another.
He added that the country will clear obstacles that hinder the construction of the unified national market and deal with behaviour that hinders the free flow of goods and resources.
