General

The foreign trade import and export data of the first two months of this year have finally been released. On the surface, it is good, but there are real worries, which coincides with the decline in the number of orders of many enterprises in reality.

Import and export data showed that the total import and export value in the first two months of this year was 6.18 trillion yuan, down 0.8% year on year, of which exports increased by 0.9% and imports decreased by 2.9%. Just looking at this set of data, I feel that foreign trade is not bad at all, and the export amount has increased slightly compared with the same period last year. However, the main currency of international trade is the United States dollar, and the transactions are settled in the United States dollar. The measurement of trading volume depends on the import and export data denominated in the United States dollar.

According to the import and export data, in January-February 2023, China's total import and export value was 895.72 billion US dollars, down 8.3% year on year, including an 8% decline in exports and a 10.2% decline in imports. It can be seen from this that the volume of foreign trade transactions is indeed declining, and this trend has been formed since last October and has continued to the first two months of this year.

According to the import and export data, the total import and export volume between China and ASEAN, the largest trading partner, increased by 15.4% year on year (denominated in RMB, the same below), even when converted into US dollars. The total imports from the EU, the second largest trading partner, fell by 2.6% year-on-year, while exports fell by 5%; The volume of trade with the United States decreased by 10.6% year-on-year, and exports decreased by 15.2%; If denominated in US dollars, the decline will be even greater.

The reason for this is related to two points.

First, as the main force of global consumption, the demand of European and American countries has declined due to inflation, interest rate rise and other factors. People in the United States and the European Union don't have much money to buy things. Asian countries, including China, are mainly engaged in export trade. The decline in demand in Europe and the United States makes the export data poor.

Second, the United States is reducing the number of goods it buys from China. The import and export data show that the amount of China's exports to the European Union fell by 5% year-on-year in January and February this year, and the amount of exports to the United States fell by 15.2% (both in RMB, with a greater decline in USD). If only the decline in demand in Europe and the United States led to a year-on-year decline in exports, the proportion of decline in exports between China and the United States should be the same, or not so different, but the data showed that the decline was three times greater.

This is already very illustrative. The reduction of the overall demand of the American people is one aspect, and the rest of the demand is "put out" to India, Vietnam and other countries. The combination of the dual effects has led to a sharp decline in Sino-US trade. In other words, even if the consumption capacity of the United States recovers with the gradual withdrawal of the interest rate increase policy in the future, it may be difficult for China-US trade to return to the previous state of continuous growth.

This is not good news. Although ASEAN and the EU are China's first and second largest trading partners, these two economic alliances are made up of many countries. According to country statistics, the United States is our first largest trading partner, and the volume of trade is far more than any other country.

I don't want to grow the ambition of others to destroy my prestige, but the economic data is not deceptive. The fact that the workers in manufacturing enterprises have no work to do and the wages are reduced is indisputable. These are all related to the decline of foreign trade, especially exports.

In the face of the United States, which intends to implement trade decoupling, what we can do is to strengthen cooperation with ASEAN and the EU as much as possible to minimize the adverse impact of the reduction in the number of goods exported to the United States. At the same time, it is necessary to improve domestic demand and build an economic model based on internal circulation. There is not much time and space to delay.

Every individual in the society cannot escape the influence of the economy. You are both a consumer and a producer (producing goods and services). How can the boss pay wages if no one buys the products produced by your company? Wage cuts and even unemployment may be the ultimate destination. At the same time, the reduction in the number of workers will lead to a reduction in the amount of social security contributions. The pension of retirees is paid by social security, and they are also not immune. The increasing proportion of pension increases each year will continue to decline, even if it will not rise in the future, so that retirees can not be immune from the economic impact.

The decline in foreign trade has sounded the alarm, and the pace of economic transformation should be stepped up!