General

As one of the "troikas" driving the development of the national economy, foreign trade maintained a rapid growth in the first half of the year. Looking forward to the trend of foreign trade throughout the year, the development of foreign trade faces opportunities and challenges, but the opportunities outweigh the challenges.

Recently, Assistant Minister of Commerce Ren Hongbin stated at the State Council’s regular policy briefing that since this year, the scale of imports and exports has reached a record high over the same period in history, the trade structure has been continuously optimized, innovation and development have been steadily promoted, and foreign trade has supported the stable recovery of the national economy and has also promoted the world economy. And trade recovery.

According to data released by the General Administration of Customs on July 13, my country’s import and export scale of 18.07 trillion yuan in the first half of the year reached the best level in the same period in history, and it has also increased by 22.8% compared with the same period in 2019. The monthly import and export has been 13 consecutive months. The year-on-year positive growth was achieved in the previous month, and the steady growth of foreign trade was further consolidated.

Zhou Shijian, a senior researcher at the Center for Research on Sino-US Relations at Tsinghua University, told China Business News that the level of imports and exports will continue to grow in the second half of the year, but the rate of increase will shrink. Under the influence of a higher base in the second half of last year, the year-on-year growth rate of imports and exports may slow down in the second half of this year.

What is driving the growth of foreign trade in the post-epidemic period?

Ren Hongbin introduced that compared with previous years, four phased factors have played an important role in driving the development of foreign trade this year. First, the "home economy" products and the return of orders have increased the export growth rate by about 18%. Luo He, category director of Dunhuang.com, a cross-border e-commerce platform, told CBN reporters that in the first half of 2021, the platform observed multiple "home economy" categories such as lighting, toys, gifts, health and beauty, household appliances, and home gardens. Sales have seen rapid growth. Among them, portable lamps and lanterns increased by more than 7 times year-on-year, household appliances such as purifiers and vacuum cleaners increased by nearly 3 times, and sales of toy categories even increased by more than 13 times year-on-year.

Second, rising prices of bulk commodities have pushed up the growth rate of imports by more than 6 percentage points. Among them, only the increase in the prices of six bulk commodities including iron ore, copper, steel, and crude oil pushed up the overall import growth rate by 5.7 percentage points.

Zhou Shijian told CBN reporters that the appreciation of the renminbi and the rise in the price of bulk mineral resources have had a greater impact on my country's imports. "The appreciation of the renminbi is suitable for expanding imports, and the increase in the price of bulk mineral resources has also led to a substantial increase in China's imports. Moreover, China is heavily dependent on imports of crude oil, iron ore, copper, zinc and other products. The national oil consumption dependence on foreign sources is 74%. Natural gas. The dependence on imports of copper is 45%, and the dependence on copper imports is 80%, so a substantial increase in the price of these resources will have an impact.” Zhou Shijian cited as an example, at the beginning of the year, New York light crude oil was US$47.6 per barrel, and it was US$73.47 on June 30. , An increase of 54%.

The two factors of "Chinese New Year in situ" and last year's low base also increased the growth rate of imports and exports by about 4 and 6.6 percentage points respectively. Ren Hongbin said that in addition, factors such as the ability of my country's foreign trade companies to open up markets and the resilience of competition have also contributed to the development of my country's foreign trade.

Zhou Shijian emphasized that China's foreign trade export companies are resilient, that is, they are adaptable. “The key here is private enterprises. Private enterprises operate in a flexible manner and are good at tapping potential and reducing costs. According to the General Administration of Customs, the import and export growth rate of private enterprises is 35.1%, accounting for 47.8% of my country’s total foreign trade value, which is an increase over the same period last year. With 2.8 percentage points, it continues to be the largest foreign trade operator in my country." He said.

Ren Hongbin said that China took the lead in controlling the epidemic, and the industrial chain and supply chain were stable and smooth, filling the gap in supply and demand for essential goods in other countries. In other words, the first recovery of Chinese industries has provided sufficient and various necessities for the international supply and demand gap. At the same time, China's trade activities are driving global recovery. According to the statistics of the World Trade Organization (WTO), in the first quarter, my country's import international market share was 11.8%, an increase of 1.4% year-on-year, which was also the highest level of my country's import share in the same period. Since March, the monthly import growth rate has continued to be higher than that of export, and domestic domestic demand has become more powerful in stimulating global trade.

Liu Xiangdong, deputy director of the Economic Research Department of the China International Economic Exchange Center, explained to a reporter from China Business News: “Because China’s entire production network has formed a very large-scale supporting facilities with its surrounding areas. For example, according to the original production network cycle, US orders are in China. Assembly and manufacturing, but some parts are imported from neighboring countries, such as Japan, South Korea or Europe. Although the production network has tended to be regionalized and shortened, it is still in global trade on the whole. On this basis, China has taken the lead in resuming production. It has driven the expansion of domestic related manufacturing activities, which is linked with foreign trade and reflects the situation of foreign trade."

Foreign trade faces challenges in the second half of the year

Ren Hongbin said that currently, the number of people diagnosed with new coronary pneumonia every day in the world has dropped to more than 400,000, and the recovery of world economy and trade has accelerated. In June, the World Bank predicted that the global economy will grow by 5.6% this year, 1.6 percentage points higher than the forecast at the beginning of the year. Our recent questionnaire survey shows that about 40% of foreign trade companies’ newly signed export orders have increased year-on-year. It should be said that external demand has shown signs of improvement and corporate competitiveness has increased.

Ren Hongbin pointed out that from an international perspective, the global epidemic situation is still severe, economic recovery is uncertain, industrial chain supply chain risks have increased, and trade issues have become more politicized.

Liu Xiangdong told a reporter from China Business News: “If global demand cannot continue to expand in the second half of the year, especially if the demand for epidemic-related materials weakens, my country’s exports will face a structural adjustment pressure. From the supply side, if overseas epidemics occur For the better, for example, some countries engaged in low-end manufacturing can restart production, and their products will also have a certain squeezing effect on similar products in my country in the international market."

Zheng Houcheng, director of the Yingda Securities Research Institute, told CBN reporters that in terms of the fundamentals of external demand, although the US ISM manufacturing PMI is facing slowdown pressure, it is still in the high boom range. As the world will not withdraw from economic support policies prematurely, JPMorgan Chase's global manufacturing PMI will also face support, and it will most likely run on the line of prosperity and decline. In terms of prices, the upward movement of international oil prices and international copper prices can still exist. Therefore, looking forward to the second half of the year, it believes that the export growth rate will be under pressure in the second half of the year, but it will not stall. Among them, the performance in the third quarter is better than that in the fourth quarter, and the cumulative annual export value is expected to record double-digit growth year-on-year.

Ren Hongbin said that from a domestic perspective, my country's foreign trade companies are facing four major difficulties. The first is the low efficiency and high prices of international shipping; the second is the increased fluctuations in the RMB exchange rate, and the phenomenon of "being unwilling to accept orders and unprofitable exports" has appeared; the third is the increase in raw material prices, which raises corporate costs. For example, from January to May, the average import prices of iron ore and copper concentrates rose by 75% and 45% respectively; fourth, it is difficult and expensive to hire labor in some areas.

Liu Xiangdong said that there are still some obstructions in the customs clearance of foreign trade logistics. For example, although the “difficult to find one container” situation has eased, the linkage and cooperation between various ports is still inconvenient due to the epidemic, which will cause foreign trade logistics companies to Increase the cost and time in the process of transporting goods. In the second half of the year, if these conditions cannot be effectively improved, the overall foreign trade situation will certainly be under certain pressure.

In terms of imports, Zheng Houcheng said that with the global economic recovery and the background of "carbon peak and carbon neutrality", the price of bulk commodities will likely face support. In addition, the probability of a substantial appreciation of the RMB exchange rate in the second half of the year is low, and the growth rate of imports is expected to be limited. Therefore, the probability of import growth in the second half of the year being better than that in the first half of the year is low, but the cumulative annual import value is also expected to record a double-digit growth year-on-year.

New business forms and new models become new growth points for foreign trade

In the second half of the year, the development of foreign trade is under pressure. How to find new growth points?

Recently, the "Opinions of the General Office of the State Council on Accelerating the Development of New Types and Models of Foreign Trade" was officially issued. Ren Hongbin said that the new format and model of foreign trade can well stimulate the vitality of foreign trade entities, expand the space for foreign trade development, improve the efficiency of foreign trade operations, stabilize the supply chain of the foreign trade industry chain, and realize the integration of industrial digitization and trade digitization. Accelerating the development of new business forms and models of foreign trade is conducive to promoting high-quality trade development, fostering new advantages in international economic cooperation and competition, and plays an important role in building a new development pattern for services.

Li Xingqian, Director of the Department of Foreign Trade of the Ministry of Commerce, introduced that in recent years, under the guidance of new development concepts, China's foreign trade innovation capabilities have continued to increase, with new forms and new models of foreign trade energetic and diverse. Accelerate the development of new business forms and new models, further expand the scope of foreign trade entities, greatly reduce the threshold for international trade specialization, and a large number of small and micro entities who "cannot do, can't afford, and cannot do" become operators of new types of trade.

Wan Song, head of the DHLink business department of Dunhuang.com, told China Business News that during the epidemic, Dunhuang.com has increased the construction of overseas warehouses. There are now more than 10 overseas warehouses, including the Polish warehouse.

"The rise of the overseas warehouse model quickly made up for the shortcomings of the traditional cross-border direct shipping model. It not only improved the timeliness and saved costs, but also expanded the cross-border e-commerce market, providing Chinese companies with opportunities to compete with sellers in the destination country. The stage, at the same time, quickly met the rapidly increasing demand for "home economy" commodities under the epidemic, and China's commodity cost-effective advantages are very obvious." Wan Song said.