Foreign Trade Situation In 2019: Although There Is Pressure, There Is No Need To Be Pessimistic.

In 2018, China made a beautiful answer to its foreign trade.

According to customs statistics, in 2018, the total value of China's foreign trade imports and exports reached a record high of 4 trillion and 620 billion US dollars, an increase of 12.6%; of which, exports were US $2 trillion and 480 billion, an increase of 9.9%; imports of US $2 trillion and 140 billion, an increase of 15.8%; the trade surplus of US $351 billion 760 million, narrowing 16.2%, and achieved the best performance in recent 7 years.

However, the foreign trade data in December 2018 were much lower than expected.

From the point of view of exports, first, the weakening of global economic growth has led to sustained pressure on China's exports.

In December, JP Morgan global composite PMI index was 52.7%, down 0.5 percentage points from November. Among them, the US Markit manufacturing PMI index and the EU manufacturing PMI index were 53.8% and 51.4%, respectively, 0.5 and 0.4 percentage points lower than that in November, and the overall downward trend of the global manufacturing boom cycle, making external demand continue to narrow down.

Secondly, the "grab the export" effect of Sino US trade friction began to disappear.

According to the list of tariffs added to each other by Sino US trade frictions, there is a more obvious "grab for export" in the list before each tariff falls.

However, with the beginning of the release of trade friction between China and the United States, the phenomenon of "grab export" has obviously weakened.

Data show that China's exports to the United States have fallen by 13 percentage points in all developed countries, and mobile phones, clothing, agricultural products, textiles, footwear and integrated circuits are the main drag on export volume from the product point of view.

Finally, it is related to the high base effect in 2017.

In December 2017, the absolute volume and growth rate of China's imports and exports were higher than the same period in the past 5 years. The impact of base uplift is a great pressure on the growth rate of imports and exports in December 2018.

The decline in imports is even greater. First, the overall growth rate of domestic demand in China has been reduced by the economic downturn.

On the one hand, the pressure of industrial production led to a decrease in related imports. In December, the PMI index of China's manufacturing industry was 49.4%, the lowest in 2018.

On the other hand, the total retail sales of social consumer goods, infrastructure investment and real estate investment continued to decline, leading to a weakening of aggregate domestic demand.

Second, influenced by Sino US trade frictions, the decline in major imports continued to expand.

In December, the import volume of motor vehicles and chassis decreased by 29.9% compared to the same period last year, continuing the downward trend since September.

The import volume of high-tech products dropped 13.8% compared to the same period last year, down 10.2 percentage points from last month.

The import of mechanical and electrical products decreased by 16.1% compared with the same period last year, down about 13 percentage points from the previous month.

Third, the year-on-year growth in commodity prices has affected imports.

In December, the spot index of CRB for industrial raw materials decreased by 4.3% compared with the same period last year, continuing the downward trend since August.

As imports fell more than exports in December 2018, and the impact of the appreciation of the renminbi, the surplus of the month widened as compared with the expected and previous ones, which achieved a trade surplus of US $57 billion 60 million, an increase of US $15 billion 200 million from last month. This is actually a phenomenon of "declining surplus", which is likely to be unsustainable.

The high and low trade front in 2018 also indicates that China's trade situation is likely to face more difficulties in the context of global economic slowdown in 2019.

In the latest global economic outlook report, the world bank has lowered the forecast of global economic growth. The global economic growth is expected to decline from 3% in 2018 to 2.9% in 2019.

The Sino US trade, Britain's withdrawal from Europe, the monetary policy of the Federal Reserve, and the economic situation of the United States are all likely to have unexpected changes, which in fact will bring greater challenges to Global trade and China's foreign trade.

Although the pressure is great, the advantages of China's foreign trade still exist.

First, the proportion of China's foreign trade from outside the developed countries has gradually increased.

In 2018, China's growth in imports and exports to ASEAN increased by 11.2%, and the momentum of growth continued to maintain. The trade relations between the two sides gradually deepened, and the future will become the growth point of China's exports. The volume of trade between China and Russia has exceeded 100 billion dollars, a record high, and the two sides still have great potential for development.

In addition, China's total imports and exports to the countries along the "belt and road" increase by 8 trillion and 370 billion yuan, an increase of 13.3%, which is 3.6 percentage points higher than the national growth rate as a whole.

Along with the convening of the 2019 "one belt and one way" International Cooperation Summit Forum, the influence of "one belt and one road" on China's foreign trade will gradually increase, and it can effectively hedge the impact of economic slowdown from developed countries.

In addition, Sino US trade frictions are easing.

From 7 to 9 January 2019, China and the United States held consultations at the ministerial level on economic and trade issues in Beijing, and both sides had the desire to make positive progress.

In the medium and short term, Sino US trade frictions are likely to ease, which will surely boost global economic confidence.

Of course, in the long run, Sino US trade friction still deserves long-term attention.

In recent important central economic meetings, stable foreign trade has been mentioned frequently as one of the six factors. With the emergence of favorable factors of China's foreign trade, China's foreign trade situation in 2019 should not be pessimistic.

(Bian Yongzu, deputy director and researcher, Department of industry, Chongyang Institute of finance, Renmin University of China)