How_Can_Foreign_Trade_Be_Stabilized

By Zhao Ailing
A t an economy-themed press
conference held on the day
of the Second Session of
the 14th National People’s Congress, Minister of Commerce Wang Wentao admitted that the situation of foreign trade situation is still “very severe” this year. When it comes to the future policies for stabilizing foreign trade, Wang Wentao said that the government will provide better financial services for foreign trade enterprises, especially for small and micro enterprises, will promote the convenience of visa application for business personnel, and will support enterprises in trade facilitation and matching supply and procurement. In addition, China will deepen its production and supply chain cooperation with willing global trading partners, to build inclusive, resilient, and sustainable industrial and supply
chains, and accelerate the construction
of supply chains and ecosystems that
adapt to the development of cross-
border e-commerce.
So how shall we view China’s
foreign trade situation? How can the
quality and stability of foreign trade be
improved?
Severe situation facing
foreign trade this year
In 2023, China’s foreign trade
was under pressure, with a total
import and export value of R MB
41.76 trillion, a year-on-year increase
of 0.2%. Exports reached RMB 23.77
trillion, an increase of 0.6%, while
imports reached RMB 17.99 trillion, a
decrease of 0.3%.
W hat is the overa l l foreign
trade situation in China this year?
Wang Wentao reiterated that the
foreign trade situation this year is still
very severe. On the one hand, many
international organizations predict
that the world economic growth rate
in 2024 will still be lower than the
historical average, and there will be
significant downward pressure on
external demand; on the other hand,
trade protectionism and unilateralism
are on the rise. According to a report
by the International Monetary Fund,
approximately 3,000 trade restrictions
were implemented globally in 2023,
far exceeding the 1,100 restrictions
in 2019. The WTO predicts that the
growth rate of global trade in goods
this year will be 3.3%, far lower
than the historical average of 4.9%.
Spillover factors such as geopolitical
con f l ic ts a nd t he globa l “super
election year” will also bring a lot of How Can Foreign Trade Be Stabilized?
32
uncertainties.
Zhang Liqing, chief economist of PwC China, stated in an interview that the situation of China’s exports in goods remains severe. In the past year, although China has achieved positive results in the exports of “the new three”, regional economic cooperation, and cross-border e-commerce trade, both exports in goods and foreign direct investment inflows have shown negative growth due to various factors (including a 4.6% decrease in exports in goods in U S dollars and a 13.7% decrease in the actual utilization of foreign investment). Moreover, since the second half of last year, the EU has successively launched or is currently launching anti-subsidy or anti-dumping investigations against electric vehicles, solar photovoltaic equipment, and lithium batteries exported from China to the EU. If these investigations are established, these products in our country will be subject to additional tariffs when entering the European market.
Wang Wentao also responded to issues related to foreign trade at the press conference. He stated that in general, the industrial foundation, factor endowments, and innovation capabilities on which foreign trade d e p e n d s h a v e b e e n c o n s t a nt l y strengthening, and exported products are moving towards the upper side of the value chain. Moreover, China is actively opening up, and opportunities in the foreign market are expanding. Both imports and exports have great potentia l, and foreign trade has shown strong resilience. “We have great conf idence in consolidating the foundation of foreign trade and investment.”
Coping with severe situations This year’s government work report proposes to achieve a stable increase in the quality and quantity of foreign trade, and to increase the utilization of foreign investment. In terms of foreign trade, the relevant departments will strengthen import and export credit support, optimize cross-border settlement, provide exchange rate risk management and other services, and support enterprises in exploring diversif ied markets.
At the same time, it proposes the
promotion of the healthy development
of new business models such as cross-
border e-commerce, optimization of
the layout of overseas warehouses,
supporting the upgrading of the
processing trade, and expanding new
growth points such as intermediate
goods trade and green trade.
In response to the difficulties
and uncertainties faced by foreign
trade, Wang Wentao stated that it is
necessary to prioritize policies and
increase support from three aspects:
f irstly, providin
g better f inancial
services for foreign trade enterprises,
especially small and medium-sized
enterprises; secondly, enhancing trade
promotion. China will continue to hold
successful events such as the Canton
Fair, China International Import
Expo, China International Fair for
Trade in Services, China International
Consumer Expo, and Digital Trade
Summit. Trade promotion information
and national trade guides will be
released, and enterprises will be
encouraged to participate in various
exhibitions both domestically and
internationally; thirdly, in terms of
personnel exchanges, flights between
China and foreign countries have been
further restored recently.
Fully implement the negative
list of cross-border service trade
T h i s y e a r’s g o v e r n m e n t
work repor t a lso proposes f u l ly
implementing the negative list of
the cross-border service trade, which
is an arrangement of opening the
market according to high standard
international free trade agreements.
This is another major institutional
opening measure of China after
promoting the negative list of foreign
investment access. It should greatly
improve the openness and convenience
level of cross-border transactions,
overseas consumption, and personnel
flow.
The negative list is one of the
main policy arrangements in cross-
border trade in services under the
current high standard free trade
agreements. Since China launched its
first negative list in the field of the
cross-border service trade in July 2021,
and is now demanding comprehensive
implementat ion, t he process of
service trade liberalization has been
significantly accelerating.
Wang Shouwen, International
Trade Negotiation Representative
and Deputy Minister of the Ministry
of Commerce, previously said that
with technological progress, the
development potential of the service
trade, especially cross-border services,
will be further stimulated and will
become a key driv ing factor for
future global trade. The negative list
of cross-border service trade, from
trial experiment to comprehensive
implementation, will effectively
enhance the overall level of openness
of China’s service industry, and will
also enable more high-level service
providers from overseas to enter the
Chinese market and gain development
opportunities.
In November 2023, the Ministry
of Commerce announced that it would
actively connect with high standard
international economic and trade
rules, accelerate the introduction and
implementation of the negative list of
cross-border trade in services for the
whole nation and also for the pilot free
trade zone. This will form a system
of openness for cross-border trade in
services.
Wang Lizong, a member of the
National Committee of the Chinese
People’s Pol it ica l Consu ltat ive
Conference and Chairman of the
Guangdong High-tech Industr y
Chamber of Commerce, suggested
that the Ministr y of Commerce
This year’s government
work report proposes
to achieve a stable
increase in the quality
and quantity of foreign
trade, and to increase
the utilization of foreign
investment.
33
a nd ot he r d e p a r t me nt s shou ld study and introduce the negative list of the cross-border trade in services nationwide and in pilot free trade zones, thereby fulfilling the commitments of openness in the field of cross-border trade in services. As there are no additional restrictions outside of the negative list, this will further facilitate the introduction of overseas investment and encourage the export of services. Furthermore, the facilitation level of cross-border movement of natural persons needs to be further improved. Wang Lizong suggested that the Ministry of Public Security and other departments should further relax restrictions on the cross-border movement of professional talents among Guangdong, Hong Kong, and Macao.
Expand new growth points such as intermediate goods trade and green trade
The government work report also points out the expansion of new growth points such as the intermediate goods trade and green trade. At the Central Economic Work Conference he ld at t he e nd of 2023, w he n deploying the work of “accelerating the cultivation of new driving forces for foreign trade”, “expanding the trade in intermediate goods” was first proposed, and ranked ahead of other tasks.
During this year’s local Two S e s sion s, s ome prov i nc e s h av e made arrangements for the trade of intermediate goods. For example, Shandong proposed to study and
introduce policies and measures to
expand its intermediate goods trade,
increasing support in production and
manufacturing, export exhibitions,
e x por t c red it insu ra nce, c red it
f inancing, the supply of ener
g y
and labor, and creating a favorable
env i ronment for t he e x por ts of
intermediate goods; Zhejiang clarified
that it would participate in the all-
round construction of the Belt and
Road, optimize the layout of overseas
economic and trade cooperation,
expand its trade in intermediate goods,
and further enhance the resilience and
security of the industrial chain and
supply chain; Guangdong will focus on
stabilizing markets in the expanding
intermediate goods trade, while also
increasing efforts to explore emerging
markets such as ASEAN, the Middle
East, Africa, and Russia.
Sang Baichuan, Dean of the
Institute of International Economics
at the U niversity of International
Bu s i ne s s a nd E c onom ic s, s a id
in an inter view that the trade in
intermediate goods is the mainstay of
China’s foreign trade, accounting for
about 70% of the total foreign trade
scale. However, under the influence
of global trade protectionism, the
restructuring of industrial and supply
chains has also led to a contraction
in the intermediate goods trade.
How to stabilize and further expand
the intermediate goods trade is an
important way to stabilize foreign
trade and promote development.
With the deepening development of
globalization and the international
d iv ision of l abor, i nter med iate
goods, as the link between upstream
and downstream industries, have
increasingly becoming the mainstay
of globa l trade. The continuous
e x p a n s ion o
f t he i nte r me d i ate
goods trade in China ref lects the
t r a n sfor m at ion a nd up g r a d i n g
of t he Ch i ne s e m a nu f a c t u r i n g
i n d u s t r y. H o w e v e r, c o m p a r e d
with developed trading countries,
there is still room for improvement
i n Ch i n a’s i nter me d i ate g o o d s
trade. In the current international
situation, tapping into the potential
of the intermediate goods trade and
expanding its trade scale will become
an important means for China to
stabilize foreign trade and become a
trading powerhouse.
Green trade is an important
vehicle for promoting the sustainable
development of foreign trade. From
product ion to management and
e x por t, it meets env i ronmenta l
standards and the requirements of
sustainable development. Increasing
the proportion of green trade products
is also an important manifestation for
satisfying sustainable development
t h rough Ch ina’s foreig n t rade.
“For example, last year, the trade
performance of China’s ‘new three’
products such as new energy vehicles,
photovoltaics, and lithium batteries
was impressive. These products
belong to the green trade and have
b e come a ne w g row t h p oi nt i n
China’s foreign trade,” Sang Baichuan
34。