General

Faced with changes in the international trade pattern, China's goods trade remained resilient in the first five months of this year. According to customs data, the total import and export value reached 2.4 trillion US dollars, a decrease of only 2.8% compared to the same period last year. Customs data shows that exports reached 1.4 trillion US dollars, an increase of 0.3% compared to the same period last year, and a surplus of nearly 359.5 billion US dollars, an increase of about 24% compared to the same period last year.

Since the 20th National Congress of the Communist Party of China, the Party and the government have reviewed the situation and, in the face of the changing world economic landscape, adhered to promoting high-level opening-up to the outside world. From the national to local levels, they have actively introduced new policies and measures to promote high-quality development of export trade, and worked with foreign trade enterprises to stabilize regulations, optimize structure, and improve quality, opening up new market growth space.

Due to the sustained slowdown in global economic growth and high inflation, insufficient demand has become a major challenge faced by major exporting countries in Asia. According to customs data, in May, China's goods exports amounted to $283.5 billion, a year-on-year decrease of 7.5%. Compared to the sharp decline in exports from other Asian countries, this is already a very difficult achievement. In the same month, South Korean exports decreased by 15.2% year-on-year, while Vietnamese exports decreased by 5.9% year-on-year; In April, India's exports decreased by 12.7% year-on-year, Singapore's exports decreased by 9.8% year-on-year, and Indonesia's exports decreased by 29.4% year-on-year. At the same time, some developed countries, for their political purposes and disregarding the principles of a market economy, adopt state intervention to promote targeted and exclusive manufacturing backflow, nearshore outsourcing, and friend shore outsourcing, building small courtyards and high walls in order to enhance supply chain resilience and cut off supply chain connectivity. They attempt to artificially force high knowledge and high-tech intensive enterprises and labor-intensive enterprises to adjust their production factor layout according to their anti market will.

On May 11, 2023, China and Ecuador officially signed a bilateral free trade agreement. This is the 20th free trade agreement signed between China and its 27th partner country and region, with our free trade partners covering Asia, Europe, Latin America, Oceania, and Africa. With the deepening understanding of free trade agreements among Chinese enterprises, the utilization of free trade agreements continues to improve. According to the evaluation of the Ministry of Commerce, in 2022, China's import and export volume with its free trade agreement partners reached 14.25 trillion yuan, accounting for 34% of the total import and export volume, an increase of 7.7% compared to 2021. In the first five months of this year, China's imports and exports to RCEP partner countries reached 5.11 trillion yuan, a year-on-year increase of 4.5%, accounting for over 30% of China's imports and exports.

According to customs data, in the first five months of this year, private enterprise exports still accounted for 63.3% of the total export value, a year-on-year increase of 16.2%, but their exports were constrained by export orders; Foreign invested enterprises accounted for 28.5% of their total export value, a year-on-year decrease of 6.8%. Customs data shows that their import processing trade and general trade are regulated by their parent company; State owned enterprises' exports only accounted for 7.9% of the total export value, with a year-on-year increase of 8.8%. They lack the motivation for internationalization and still focus on the domestic market, with a lower proportion in exports compared to private and foreign enterprises.

For a long time to come, Chinese enterprises should, while stabilizing the markets of developed countries, strive to provide new supply, create new demand and create new growth space for export trade based on the FTA partners and countries along the "the Belt and Road".

Based on the rules of the WTO Trade Facilitation Agreement, we need to implement and improve the level of trade liberalization and facilitation in the free trade agreement with high quality, especially optimizing the origin, animal and plant quarantine, and commodity inspection and evaluation, and actively guiding enterprises to improve the comprehensive utilization rate of the free trade agreement.

We should vigorously accelerate the process of internationalization of Chinese enterprises, rely on the market space provided by the Free Trade Agreement and the "the Belt and Road" initiative, build an industrial chain and supply chain with Chinese enterprises, especially state-owned enterprises, as the "chain owners", and achieve a virtuous circle of trade in goods that occupy the "Smiling curve" of original and sales of double high-end, export intermediate products, and import final manufactured goods.

We need to fully leverage the advantages of China's complete range of manufacturing industries and human resources, enhance the absolute international competitive advantage of Chinese enterprises, especially private enterprises and foreign-funded enterprises in China, in the processing and production processes, and achieve the goal of "orders and processing are not exclusive to China".

We need to further learn from international experience. Chinese enterprises need to strengthen integrated innovation, build a global sales network with independent control, shift from passive order taking to active supply of Chinese brand specialized new and unique products that meet international consumer preferences and are affordable and high-quality, and sustainably achieve "in China, for the world".

Be willing to adapt to the needs and regulations of developed markets. Chinese enterprises should actively "go global", expand direct investment and mergers and acquisitions with developed countries and their free trade agreement partners, achieve "real estate sales" of Chinese products, and stabilize and expand the market space of developed countries.

We should speed up relying on Hainan Free Trade Port and Yangshan Special Comprehensive Bonded Zone to connect with the Free economic zone with the highest degree of liberalization; We should actively rely on the pilot free trade zone and align with international high standard economic and trade rules; To comprehensively benchmark the World Bank's new standards for business support nationwide; With the implementation of National treatment as the core, we will truly treat domestic and foreign enterprises equally, stabilize and increase the attraction of multinational enterprises based in China to export products and services to the world.

To leverage the positive role of the high-end shipping service industry in promoting exports, we should integrate air cargo resources on the basis of stabilizing ocean freight, utilize the superior geographical location and infrastructure of the three major aviation hubs of Shanghai, Beijing, and Guangzhou, and develop the export of high value-added products in China; We should further tap the potential of Trans-Eurasia Logistics and expand China's land cargo exports; To leverage the advantages of multimodal transportation, enhance collaborative capabilities, and effectively promote the export of goods.

To strengthen the digitization and low-carbon empowerment of export trade, develop digital goods trade, and tap into the potential of cross-border e-commerce development; Develop low-carbon goods trade, clarify key areas of international low-carbon goods trade, and explore low-carbon product exports.

At present, the international trade pattern has entered an era of long-term and gradual structural transformation. For a developing country like China, the road ahead may be very winding, and the challenges it faces may continue to cluster. However, as long as Chinese enterprises are based on self-improvement and have precise countermeasures, "Made in China" is indispensable in the world market. Chinese enterprises should be confident in this. (Translated from: China Trade News)