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Foreign Trade Continues to Stabilize and Improve

Submit Time:18-05-2017 | Zoom In | Zoom Out

Author:Du Haitao | Source:People's Daily

Abstract:

The General Administration of Customs held a press conference on the 13th. The press spokesman said that the first quarter of this year saw continued recovery of world economy as well as stable and sound performance of domestic economy, and that foreign trade import and export continued to stabilize and improve with more positive changes, such as that the total import and export value achieved year-on-year growth for three quarters in a row. 

Customs statistics showed that the total import and export value of trade in goods amounted to RMB 6.2 trillion in the first quarter, an increase of 21.8% over the same period in 2016; wherein, exports reached RMB 3.33 trillion, up 14.8%; imports reached RMB 2.87 trillion, up 31.1%; trade surplus reached RMB 454.94 billion, narrowing by 35.7%. 

The General Administration of Customs published the China Export Leading Indicator in March, which was 40.2, remaining unchanged as compared with last month. Huang Songping held that, although the current situation of China's foreign trade is still complex, there are still many favorable conditions for the foreign trade development, and the improving fundamentals of China's foreign trade have not changed. 

Three positive factors boost the growth of foreign trade imports and exports 

According to Huang Songping's analysis, the growth of China's imports and exports in the first quarter is attributed mainly to the following three reasons: 

The global economy continued to improve and external demand picked up. Following last December when the manufacturing PMI of the United States, the Eurozone and Japan reached a new high, this index continued to rise in the first quarter of this year. The world's major economies continued to recover and the international market demand improved. All these were favorable to China's export growth. 

The domestic economy performed stably and positively, driving the continuous increase in imports. With the deepening of supply-side structural reforms, this year the domestic economy continued to stabilize with sound performance and import demand increased. In the first quarter, China's total imports increased by 15.5%, of which imports of iron ore and crude oil increased by 12.2% and 15%, and imports of mechanical and electrical products increased by 17.6%. 

Import prices soared, promoting the growth of imports. In the first quarter, China's import prices generally rose by 13.5%, of which the average price of iron ore imports rose by 80.5% and crude oil imports 64.7%. Higher import prices not only brought about significant growth in imports, but also drove the rise in export prices through domestic production that led to higher exports. 

Customs statistics showed that the first quarter saw growth in the value and share of imports and exports of general trade. Imports from and exports to some countries situated along the "Belt and Road" increased significantly, of which imports from and exports to Russia, Pakistan, Poland, Kazakhstan and India rose by 37%, 18.7%, 19%, 69.3% and 27.7%, respectively. Imports and exports of private enterprises occupied a higher share. Mechanical and electrical products as well as traditional labor-intensive products are still main contributors to exports. 

Import and export growth may fall in the second quarter 

Is the rapid growth of imports and exports in the first quarter sustainable? 

Huang Songping said that despite the overall recovery of global economy at present, the international environment is still intricate. The development of domestic economy continued to improve, but the foundation for the stable and sound performance need to be consolidated. The continued recovery of foreign trade hinges on a number of factors as below: 

First, the recovery of global economy was weak and the market demand was not fundamentally improved. On January 16, the International Monetary Fund (IMF) released the World Economic Outlook in which the IMF maintained its expectation towards 2017's global economic growth at 3.4%, indicating that the sluggish recovery of global economy has not been fundamentally changed. Coupled with the UK's leaving the EU and the elections of major European countries, the existing economic and trade policies were highly variable. "Deglobalization" was heating up and trade protectionism got intensified, impeding China's exports. 

Second, there is uncertainty about the trend of commodity prices. Early, prices of crude oil, iron ore, copper and other commodities rose faster in the international market. But as a result of the expected increase in interest rates by the Federal Reserve, since the beginning of this March, prices of commodities represented by crude oil continued to fall, the CRB declined, and prices of some domestic raw materials were significantly lowered, leading to greater uncertainty about the future trend of commodity prices. 

Third, the scale of foreign trade expanded quarter by quarter last year, significantly raising the base value in the second quarter. In 2016, China's imports and exports stabilized and improved quarter by quarter, with import and export values of the four quarters being at RMB 5.09 trillion, RMB 5.9 trillion, RMB 6.41 trillion and RMB 6.94 trillion. Compared to the first quarter, the base value of China's foreign trade imports and exports rose by 16% in the second quarter, making it more difficult to maintain rapid growth. 

Taking into account these factors, Huang Songping believed that the growth of China's imports and exports is likely to fall in the second quarter. But at the same time we should also see that there are still many favorable conditions for China's foreign trade development. As the domestic economy is improving in stability and shifts from virtual economy to real economy, and the supply-side structural reforms continue to deepen, this year is expected to see continued stable and sound performance of China's trade imports and exports through continuous efforts, in the absence of big risks. 

The trade imbalance between China and the United States needs to be treated rationally 

Customs statistics showed that the total value of Sino-US trade in the first quarter reached RMB 870.58 billion, up 21.3%, accounting for 14% of China's total value of foreign trade. Among them, China's exports to the United States reached RMB 606.35 billion, an increase of 16.8%; imports from the United States reached RMB 264.23 billion, an increase of 33.1%; trade surplus with the United States reached RMB 342.12 billion, an increase of 6.7%. 

According to some media reports before, due to different statistical methods, the Sino-US trade data were questionable. In this regard, Huang Songping responded that, like many other countries in the world, we collected statistical data about imports and exports of trade in goods using the international standards and business practices promulgated by the United Nations Secretariat, so China and the United States adopt basically the same statistical methods, standards and calibers. 

Regarding the imbalance[CC1]  of trade in goods between China and the United States, Huang Songping said that the statistics of trade in goods record the flow of material goods among economic territories of various countries and reflect the flow direction and rate of international trade goods worldwide. Statistics showed that China had big goods trade surplus with the United States. But it is nominal trade surplus, and in fact, a considerable part of it came from the transfer of industries by other countries to China. China is currently in the mid- and low-end of the global industrial chain, and its processing and manufacturing income is not high. But the statistics of goods imports and exports in the processing trade are based on the total value, so China's actual profit in the international trade in goods is not as high as the statistical surplus. 

Huang Songping said we should hold an objective and rational view of the trade imbalance between China and the United States. But the processing trade accounts for only about one-third of the Sino-US trade, so we cannot simply explain the overall Sino-US trade with the case of processing trade. The US restrictions on the export of high-tech products to China are also a cause of China's trade surplus with the United States. The two sides should, in the spirit of equality, mutual benefit and win-win cooperation, respect each other's concerns and take active and constructive measures to solve the problem, in order to promote the more balanced development of bilateral economic and trade relations, and allow the people of the two countries to benefit more from the development of Sino-US relations.


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