General

On April 24th, the China Wealth Management 50 Person Forum officially released the "2023 First Quarter Macroeconomic Situation Analysis Report". The report shows that in the first quarter of this year, China's foreign trade export resilience became prominent. The significant decline in China's exports since the second half of 2022 was not due to a significant decrease in external demand. At that time, the retail growth rate of core commodities in developed economies was still as high as 6.4%, mainly due to the impact of the epidemic on domestic industrial production and logistics. In March of this year, China's production and logistics recovery, world economic growth rate exceeding expectations, and excess savings in the United States ensured that China's international trade exports remained at a high growth rate

The report believes that the 1.2 trillion yuan excess savings of US residents will still ensure that China's foreign demand environment does not stall and decline in the first half of the year. However, after the OPEC+crude oil production reduction, the Federal Reserve will continue to be bullish due to high inflation pressure. It is expected that the Federal Reserve will not turn to interest rate cuts in the second half of the year as expected, and global financial markets will still be under pressure. After the excess savings of the United States are consumed in the second half of the year, there may be significant downward pressure on China's exports, and the contribution of net exports to economic growth in the second half of the year may be significantly weakened

To this end, the report proposes to expand the export markets of the countries along the "the Belt and Road" and ease the downward pressure on US and European foreign demand. "In the second half of the year, under the downward trend of US and European foreign demand, increasing the market share of non US and European countries is the main way to stabilize foreign trade. In recent years, China's exports to countries along the 'the Belt and Road' have continued to grow at a high speed; this year marks the tenth anniversary of the 'the Belt and Road' initiative, and further measures can be taken to vigorously expand the export markets of countries along the 'the Belt and Road' to help stabilize foreign trade."

In the discussion section of the report, Bi Jiyao, Vice President of the China Institute of Macroeconomics, stated at the press conference that since last year, despite the Federal Reserve's continuous interest rate hikes, there has been no significant decline in global demand. As of February this year, the retail sales of core goods in the United States still maintained a relatively high growth rate year-on-year. This is mainly due to the excessive subsidies provided by the US government to residents, resulting in a significant amount of excess savings. The existence of excess savings to some extent delays or mitigates the impact of the Federal Reserve's tightening on external demand.

Bi Jiyao believes that the significant decline in China's exports in the fourth quarter of last year contradicted the trend of external demand at that time. Last December, the retail sales of core goods in the United States maintained a year-on-year growth rate of 7%, while China's exports experienced a 10% year-on-year decline. This is mainly due to the short-term impact of the domestic epidemic on logistics and production. In theory, the improvement of logistics will promote the replenishment of international trade exports. In March of this year, the significant rebound in China's foreign trade also reflects the resilience of China's exports.

"In the first quarter of this year, China's export growth to non developed economies was significantly higher than the overall export growth. Among them, China's export performance to Russia, ASEAN and other markets along the the Belt and Road was very impressive. The diversified distribution of export shares has improved the source of resilience of China's international trade exports. In the short term, the prospects of China's international trade exports are not pessimistic." Bi Jiyao said.