China'S Clothing Trade Needs To Be "Cheaply"

Although the import and export data in May exceeded expectations, China's foreign trade enterprises are still worried about the high cost. The rise of labor costs, the rise of the RMB real exchange rate and the rise in commodity prices all put pressure on the profitability of enterprises. At the same time, the pformation of the growth mode of foreign trade is also faced with the thrust of passive adjustment. Experts say that we should change the passive adjustment into active adjustment and realize the "cheap" and "structural upgrading" of foreign trade in the gradual process.

"The rise of labor costs is inevitable for China's economic development."

Wang Jinbin, a professor at the school of economics, Renmin University of China, said that the reform of the social security system in China's economy has lagged behind, and the income distribution system in China's economy is obviously insufficient. The proportion of factor income in the initial distribution has declined over the past decade.

In addition, foreign-funded enterprises have insufficient long-term compensation for the labor force of vulnerable labor groups.

Therefore, the rapid rise of labor wages can be seen as a self correcting market for those three factors that are obviously insufficient.

"Wage increase is a good thing for the Chinese economy, and it can achieve the ultimate goal of sharing the fruits of economic growth, but on the other hand, in the current economic situation, it will undoubtedly increase the cost of foreign trade enterprises, and the short term will have an impact on exports and growth."

Wang Jinbin said.

In addition to labor costs, investment costs for land, water and other resources and energy are also increasing.

"International markets such as crude oil, iron ore and other bulk products have entered the price recovery channel. As of March this year, the import price level of primary products in China has shown a two digit increase for 4 consecutive months, and the increase is rising month by month."

Bai Shuqiang, a professor at the University of foreign trade and economics, said.

In addition, China is facing the pressure of RMB appreciation.

Sun Huayu, director of China International Monetary and economic research center and professor of foreign economic and Trade University, said that according to the real effective exchange rate announced by the bank for International Settlements in June 15th, from January 2010 to May, the euro area as a whole depreciated by 7.84%, the US dollar appreciated by 2.62%, and the renminbi appreciated by 5.49%.

This means that although the bilateral nominal exchange rate between RMB and the US dollar remains unchanged, the effective appreciation of the RMB relative to the euro area is close to 13.33%, which is equivalent to a real effective appreciation of the dollar close to 2.87%.

The substantial appreciation of the RMB against the euro will slow down the resumption of China's exports to the European market and increase imports. It will also exacerbate the competitive pressures of Chinese products on the euro area products in the non euro area market.

Expert analysis, high cost will make foreign trade enterprises profit margins under pressure.

This is because the price of China's export commodities is determined by the international market, and it is difficult for manufacturers to pass on the increased cost. China's foreign trade will say goodbye to the "cheap era".

In the process, enterprises with poor strength may be eliminated, and the foreign trade structure is faced with the thrust of passive adjustment. For a long time, China's manufacturing industry will rely on low wages, high consumption and high emissions to drive growth.

Mei Xinyu, a researcher at the Ministry of Commerce, said that with the development of China's economy, the cost of labor and land will inevitably rise. This is an inevitable trend and can not be stopped by people.

It is difficult for enterprises to continue the strategy of cheap labor in the past.

Therefore, now the government, enterprises and society should form a consensus. The original mode based on low cost labor force must be reformed.

Wang Jinbin also said that since the middle of 90s, the surplus of manufacturing industry has been occupying more than 90% of the trade surplus.

In foreign trade, China's economy has chosen the path of employment and no profit.

Today, there are indeed drawbacks such as worsening trade conditions and excessive consumption of resources, which need to be corrected.

"But it should be a gradual process, and policy should not be overcorrected."

Wang Jinbin warned: "this is an opportunity for the upgrading of China's foreign trade structure. However, the trigger factor is passive. We must change the passive adjustment into the active adjustment. We must not go too far." otherwise, the policy will have a big impact: either the policy can not bear the cost or has a significant negative impact on employment. "

Bai Shuqiang also said that at present, the trade structure dominated by "foreign investment enterprises + processing trade" will still form a favorable balance of trade within a certain period. But as China's foreign trade focuses on "expanding the market, adjusting the structure and promoting the balance", the scale of the trade surplus will continue to decrease, and the development of foreign trade will tend to be basically balanced.

China's export enterprises should make early response, seize the fundamental direction of changing the mode of trade growth, and upgrade the structure of foreign trade as soon as possible, and enhance the innovation and competitiveness of enterprises.

Sun Huayu pointed out that rising costs and appreciation of the renminbi will reduce the profits of export enterprises.

When we realize that the original product and market will not be profitable for a long time, enterprises will develop new products and new markets. Some enterprises will fall down in this process, but those who survive must be upgrading enterprises.