General

Import and export data shows that in the first two months, China's total import and export value was lower than the same period last year, and the trade volume with multiple major trading partners also decreased. Analysts here believe that in the future, officials are expected to take a series of measures to crack the pressure on foreign trade.

challenge

The import and export data released by the General Administration of Customs shows that the total import and export value of China in the first two months was 6.18 trillion yuan, a slight decrease of 0.8% year-on-year, and a significant difference from the year-on-year growth rate of 13.3% in the same period last year. Import and export data shows that exports increased by 0.9% year-on-year, while imports decreased by 2.9%. In US dollars, China's total import and export value decreased by 8.3% year-on-year in the first two months.

Among the major trading partners, except for maintaining growth in trade with ASEAN, China's import and export volume with major trading partners such as the European Union, the United States, and Japan has also declined. Import and export data shows that the year-on-year decrease in trade volume between China and the United States reached 10.6%.

The decrease in import and export volume in the first two months, although due to a higher base in the same period last year, also reflects that China's foreign trade is facing significant challenges.

Influenced by the continuous fermentation of the Ukrainian crisis, unilateralism, protectionism and other factors, this year's world economic and trade prospects are bleak, and the risk of recession is rising. According to the forecast of the World Trade Organization (WTO), the global trade in goods is expected to increase by only 1% in 2023, a slowdown of about 2.5 percentage points compared to 2022.

Trade largely depends on the temperature of the international market, and a weakening of external demand will inevitably have an impact on China's foreign trade. As Minister of Commerce Wang Wentao said, the possibility of a larger global foreign trade "cake" this year is relatively small, and the pressure on China's foreign trade is "significantly increasing". Many enterprises have reported a decrease in their orders, delays in placing orders, smaller large orders, and shorter long orders.

Cheng Shi, Chief Economist of ICBC International, stated that both the WTO, the International Monetary Fund (IMF), and the World Bank are cautious about the global trade prospects for this year. The suppression of overall demand will put overall pressure on China's foreign trade growth this year.

Breakout

The Report on the Work of the Government of 2023 has made it clear that import and export should continue to play a supporting role in the economy. Analysts believe that based on recent official information, efforts will be made to stabilize foreign trade from three aspects in the future.

Firstly, cultivate new "flagship products". The epidemic prevention materials and "housing economy" related products that once supported China's export surge during the epidemic have gradually returned to normal export performance, and new trade growth points need to be found.

According to official data, the highlight of China's recent exports lies in the "new three types" of automobiles, lithium batteries, and photovoltaic products. According to import and export data, the year-on-year growth rate of China's automobile exports in the first two months reached 78.9%. It is expected that in the future, China will take more practical and effective measures to optimize its product structure and cultivate new growth points for trade.

Secondly, delve deeply into emerging markets. At a time of increasing global economic and trade uncertainty, China's trade volume with ASEAN has maintained a high growth rate of nearly 10% in the first two months, which is quite rare among China's major trading partners, indicating the strong complementarity and great potential of trade between the two sides.

With the entry into force of the Regional Comprehensive Economic Partnership Agreement (RCEP) for more ASEAN countries, the negotiations on the 3.0 version of the China ASEAN Free Trade Area have accelerated, and the trade volume between China and ASEAN is expected to reach a new high.

Countries along the "the Belt and Road" will also become the focus of expanding diversified markets. Chen Chunjiang, assistant minister of the Ministry of Commerce, said recently that while continuing to expand the trade scale of countries jointly building the "the Belt and Road", he would optimize the trade structure, expand the import of high-quality goods, and accelerate the construction of a free trade zone network covering the "the Belt and Road".

Li Zhan, chief economist of China Merchants Fund Research Department, said that ASEAN countries and countries along the "the Belt and Road" have great market potential, and deep cultivation of these markets will help stabilize China's basic foreign trade market.

Thirdly, accelerate the development of new trade formats and models. During the epidemic, cross-border e-commerce and digital trade have played a significant role in breaking through China's foreign trade, and will continue to play an important role in the future.

Wang Wentao stated that in the future, he will coordinate and promote the rapid and healthy development of new formats and models such as cross-border e-commerce, overseas warehouses, and bonded maintenance. In addition, it will also comply with the trend of industry transfer to the central and western regions and Northeast regions, improve the quality of trade in the eastern region, and increase the proportion of trade in the central and western regions and Northeast regions.

Li Zhan stated that considering the continued efforts of the official government to stabilize foreign trade and the optimistic attitude of the market towards China's economic prospects this year, it is expected that China's foreign trade will show a "low in the front and high in the back" development trend this year.