2009: The Danger And Opportunity Of China'S Foreign Trade

Although China's foreign trade may decline sharply in 2009, China's trade surplus

To maintain a high level, the trade surplus will reach about US $330 billion a year, which will be higher than the trade surplus level of around us $300 billion in 2008.

Bi Fu (Beijing)

Echoing with the domestic economy in the past 30 years, China's foreign trade has also been refreshed with its beautiful report card year after year.

However, a rare global financial crisis has not only slowed down China's export cart, but also made China's import power dim.

What is more worrying is China's external

It may also be subjected to severe tests and suffering in the harsh environment of the global economic recession.

Winter will continue

Facing the worsening financial crisis of the developed countries, undertaking the sharp slowdown of the global economic train, bearing the huge pain of shrinking external demand and increasing the cost of enterprises, China's foreign trade has achieved a good harvest in the past year.

In 2008, the total value of China's imports and exports was US $2 trillion and 561 billion 630 million, an increase of 17.8% over the previous year and a trade surplus of US $295 billion 460 million, an increase of 12.7% over the same period last year.

However, there are more hidden worries behind prosperity.

Although the absolute growth rate of China's import and export achieved a positive growth in 2008, it dropped by nearly 6 percentage points compared with 2007. Not only that, however, the import and export in the last two months of 2008 also decreased by 9% and 11.1% compared with the same period last year, and the first consecutive two month negative growth since July 2001.

It is not optimistic that many authoritative organizations and people will make pessimistic anticipation about the future trend of foreign trade.

According to the China National Information Center report, China's foreign trade will continue to show a downward trend in 2009, of which export growth will drop to around 14.5%, and import growth will be about 19.5%.

There is no way out. The analysis report of the General Administration of Customs predicts that the growth rate of China's imports and exports may slow down to less than 5% in the coming year.

Coincidentally, the commerce ministry officials also made clear that China's foreign trade situation in 2009 was rather grim.

Indeed, as long as we scan the internal and external environment a little bit, we must not sweat the fate of China's foreign trade in the coming year.

The sharp deceleration of the world economy, especially the developed economies, has led to further weakening of external demand.

According to the International Monetary Fund (IMF) forecast, the world economic growth in 2009 was 2.2%, of which the US decreased by 0.7%, the euro area decreased by 0.5%, and Japan decreased by 0.2%.

Slowing economic growth will inevitably drag China's trade growth.

According to the statistics of the international trade organization, if the GDP growth rate in developed countries is reduced to 0.3%, the GDP growth rate in developing countries will be reduced to about 3%, and the growth rate of China's exports should be around 8%.

In particular, the direct and indirect exports to the three largest economies of the United States, Europe and Japan account for nearly 60% of China's total exports. The reduction of the three countries' economy has a huge impact on China's merchandise exports.

According to the relevant estimates, the US GDP growth rate dropped by 1 percentage points, the growth rate of China's exports will decline by 4.75 percentage points, the EU's economic growth rate dropped by 1 percentage points, the electronic products of China's exports to the EU will drop by 15/1000, and the textile and garment industry will drop by 5/1000.

Competition in the international market is more intense, trade protectionism is rising again and threatens to increase.

According to the IMF study, 2009 will be the most dramatic year of international trade since World War II.

The contraction of international trade will aggravate the competition in the international market. At the same time, due to the slowdown in economic growth and the increase in unemployment rate in Europe and the United States, its government departments have clearly indicated that they will take effective measures to maintain market stability in the region, and the threat of global protectionism will increase accordingly.

However, compared with past trade remedy measures such as tariff sanctions, the developed countries will set up more technical barriers to trade in terms of commodity standards, technical regulations and technical certification systems. In particular, the differences among various certification systems, the difficulty of certification and the high cost of production are becoming the main obstacles for Chinese enterprises to expand their exports.

The correction cost of China's trade policy.

Because China has implemented the foreign trade oriented strategy for a long time and encouraged enterprises to actively expand exports, the corresponding production capacity has basically formed. However, with the reduction of demand in the international market, it is difficult for the supply capability to be quickly contracted, resulting in the limited bargaining power of the enterprises.

Especially in the last two years, the Chinese government is worried about excessive international payments.

It will cause foreign retaliation and aggravate China's trade environment. Therefore, a series of policies and measures, such as lowering export tax rebate rate, issuing new labor laws, and gradual appreciation of RMB, have been adopted, which has made a relatively rapid impact on export enterprises.

In this process, the financial crisis led to drastic changes in trade demand, and enterprises encountered unexpected pressure.

Therefore, from the perspective of supply economics, China's foreign trade exports are unlikely to recover quickly in the short term.

Based on the above three main factors, we believe that in 2009, China's foreign trade will show the following characteristics: (1) the number of exports may continue to grow year after year.

It is estimated that the actual export fall will be around 5% in the whole year.

(2) the overall price level of exports has declined by a certain margin.

It is estimated that the overall average price of China's exports will fall by 8%-10% in 2009.

(3) the number of actual imports will decline and the decline may be around 6%.

(4) the overall price of imports will drop sharply.

Considering that the proportion of primary commodities in China's imports is more than 30%, the average price of primary products in 2009 will probably drop by 40% compared with 2008. Combined with the decline in the prices of other imported commodities, the overall average price of imports will fall by about 15% in 2009.

(5) the total monthly import and export volume will continue to grow negatively.

During the financial crisis in Southeast Asia, the total import and export volume of foreign trade in China has been increasing for the past 8 months since July. The negative growth has been negative. Considering the fact that the current financial crisis has penetrated into the world and the internationalization of China's economy has increased, the monthly negative growth of Chinese enterprises will only be prolonged and not shortened.

Spring is not far away.

In a sense, the decline of China's foreign trade in the year-end market in 2008 is inevitable. However, considering that the international economy is likely to stabilize in the second half of this year, and with the help of its structural and policy factors, China's foreign trade will improve in the second half of 2009. It is possible to maintain positive growth throughout the year.

Under the condition of international economic downturn, China's export products have obvious competitive advantages.

The weakening of international market demand will first affect the demand of high-end products, while China's exports mainly belong to medium and low grade, and 60% of them are daily consumer goods.

Generally speaking, the export of these products will not only reduce consumption demand due to economic recession, but may increase the consumption of such products because of the wealth effect and the increase of low income groups.

This is also true.

In the case of weakening external demand, China's general trade export price increase is basically stable, and its monthly export prices rose steadily from 16%-19% to December in the year to year, and there was a good momentum of contrarian growth in June 2008.

Emerging markets and developing countries have huge market potential.

With the in-depth implementation of the export market diversification strategy, China's exports to developing emerging markets such as Brazil and India have continued to grow rapidly in recent years. However, the proportion of these countries' exports to China's total exports is still not high, and there is potential for further opening up the market.

The terms of foreign trade have been greatly improved.

On the one hand, with the continued interest rate cuts in Europe and the United States, major currencies such as the US dollar and the euro will fall into a downward channel. The renminbi will probably follow the devaluation, and the pressure of appreciation of Chinese currencies will be greatly reduced.

On the other hand, the price of energy, resources, raw materials and other products in the international market will be further reduced in the case of weaker demand, and the cost of foreign exchange earnings by Chinese enterprises will be reduced at the same time.

An obvious sign is that China's import price index has dropped sharply to 88 in recent years as the price of international energy raw materials has dropped sharply. The export price index has risen to around 110 during the same period, indicating that China's terms of trade have been remarkably improved.

Trade and investment are becoming more active.

Because of the decline of Western economies and the weakening of investment returns, the stability of China's economic growth will further increase foreign direct investment in China (FDI). At the same time, considering the fact that the financial crisis in developed countries has bottomed out, the overseas financial and financial investments of Chinese enterprises may increase.

The improvement of these two indicators can create an optimistic expectation of the Chinese market to a certain extent, thus directly or indirectly promoting the activity of China's foreign trade.

The incentive role of trade policy.

In response to the impact of changes in the international economic situation on China's import and export and alleviating the pressure on business operations, China has increased the export tax rebate rate for three times in a row, involving 30%~40%'s export products.

These policies have played a significant role.

According to the operational report released by the General Administration of customs, the total exports of commodities involved in the policy adjustment in December 2008 amounted to US $54 billion 450 million, an increase of 4.8% over the same period last year. The proportion of China's total exports has increased from 45.8% in the first 11 months to 49% in December.

It should be noted that China will further adjust policies on import and export tax and foreign exchange management, so as to support the export of dominant enterprises and products.

Generally speaking, the lag time of foreign trade policy is about 3-6 months. It is easy to imagine its activation effect on future import and export.

Fiscal and monetary policies.

On the one hand, monetary policy will be further relaxed.

Under the premise that the state continues to lower the loan interest rate and reserve ratio of financial institutions, the central bank will introduce credit measures to encourage enterprises to export, especially to improve the financing conditions of small enterprises and help labor-intensive enterprises to enhance their competitiveness.

On the other hand, the fiscal stimulus package of up to 4 trillion yuan and the "ten industry revitalization plan" for automobiles and steel and more stimulus measures to be introduced will directly affect China's import demand.

A comprehensive analysis of the above conditions indicates that although China's foreign trade may decline sharply in 2009, the scale of China's trade surplus will remain at a high level. The trade surplus of the whole year will probably be as high as 330 billion US dollars, which will be higher than the trade surplus level of around us $300 billion in 2008.

Extended ascending space

The advent of the western economic recession cycle has become a reality. At the same time, the high degree of dependence on foreign trade of Chinese enterprises has created a cruel reality of the ups and downs of import and export and the global economy, especially the developed economies.

Therefore, in this trade ecosystem, China's foreign trade has experienced many years of rapid growth, and in 2009, a brief callback may be a necessity.

To some extent, China's foreign trade is likely to take another opportunity to take off as long as it takes advantage of the global economic recession to face the challenges of China's trade challenges, through immediate policy innovation and long-term product structure and institutional innovation.

Targeted trade policy innovation.

Considering that China's export products are mostly labor-intensive features, export tax rebates and other trade policies need to create a stable environment for them to relax and tighten the tight policies established in the previous external market.

Especially in the current severe international context, the squeeze of the external demand market will objectively promote the pformation and upgrading of the labor-intensive industries. Therefore, the policy can not be overused.

On the other hand, we should selectively increase the export tax rebate rate of some products.

In the future, the export tax rebate policy should focus on the electromechanical and high-tech products that are conducive to upgrading the industrial structure. At the same time, we should also support the export tax rebate policy for the related products with long-term potential for development in China.

In addition, considering feeding

With the fact that imports account for about 50% of China's total imports, the focus of China's expansion of imports should be on the needs of large-scale industrial upgrading or industrial upgrading caused by stimulating domestic demand.

Flexible and prudent monetary policy innovation.

On the one hand, the Chinese government can encourage the banking sector to further provide export and import credit support for the export of Chinese products under the condition that credit risks are basically controllable.

On the other hand, we should prudently and flexibly grasp the fluctuation of RMB exchange rate.

The basic requirements are: improving the exchange rate formation mechanism and improving the downward floating rate of exchange rate, so as to prevent the developed countries from passing the exchange rate to the crisis.