China's foreign trade sees stable upgrade showing resilience and potential

China Plus Published: 2019-09-09 22:23:45
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Note: The following article is taken from the Chinese-language "Commentaries on International Affairs."

The latest data released by the General Administration of Customs of China shows that the total value of China's import and export of goods in the first eight months of this year reached 20.13 trillion yuan, an increase of 3.6% over the same period last year. Under the current complicated and severe circumstances, this represents a hard-won achievement. It shows that the long-term fundamentals of China's economy have not changed, nor has the trend of continuous and stable improvement of quality, together showing great resilience and potential.

Lingang New Area at Shanghai Free Trade Zone. [Photo: VCG]

Lingang New Area at Shanghai Free Trade Zone. [Photo: VCG]

In the face of unilateralism and protectionism, the World Trade Organization lowered its forecast for global trade growth this year to 2.6% from the previous 3.7%. Against the background of an overall downturn in global trade, China’s foreign trade has maintained steady growth and quality improvement in the first eight months of this year, which is particularly eye-catching. This has manifested itself in three principal ways.

Firstly, China's import and export structure continues to optimize itself at the higher end of the industrial chain. In the first eight months of this year, China's higher value-added imports and exports increased by 5.4% year-on-year, accounting for nearly 60% of the total value of foreign trade. At the same time, China's export-oriented industries shifted to capital and technology-intensive industries including equipment manufacturing and high- and new-tech industries. Among them, exports of mechanical and electrical products increased by 5.6% year-on-year, accounting for 57.9% of the total value of exports, indicating that the pace of transformation and upgrading has further accelerated.

Secondly, China's import and export market is increasingly diversified, and the ability of enterprises to resist risks has increased. In the first eight months of this year, China’s imports and exports to major markets including the EU, ASEAN and Japan increased by 9.7%, 11.7%, and 0.7%, respectively. The growth rate of imports and exports along the "Belt and Road" countries was 6.3 percentage points higher than the overall growth rate, which is considered to be a big highlight. Daniel Gros, the director of the Center for European Policy Studies in Brussels noted in a media interview that even if the United States, whose economy accounts for a quarter of the global total, shuts down its market to China, some industries in China will suffer, but three-quarters of the world will remain open. Therefore, he believes the United States cannot stop China's growth.

Thirdly, private enterprises continue to be an important driving force in China's foreign trade. In the first eight months of this year, the import and export of private enterprises increased rapidly by 11.2% year-on-year, accounting for 42.2% of total foreign trade, indicating that the domestic growth momentum of foreign trade has seen a continuous enhancement.

It is noteworthy that in the first eight months of this year, China's exports to the United States were 1.88 trillion yuan, down 3.7% year-on-year; imports from the United States were 540.5 billion yuan, down 23.5% year-on-year. The big gap between imports and exports shows that US exports to China are more substitutable. In the same period, China's trade surplus with the United States was 1.33 trillion yuan, an increase of 7.7%, indicating that the increase in tariffs goes no way towards solving the problem. At a recently concluded high-level autumn summit of the China Development Forum, the participants called on China and the United States to handle their differences through communication and rationality. Among them, former deputy US Treasury Secretary Neal Wolin said that there is no more important bilateral relationship in the world than US-China relations. As the world's two largest economies, cooperation between the United States and China is the only right choice for the two countries.

In the context of the current slowdown in world economic and trade growth, the monthly import and export value of China's trade exceeded 2.5 trillion yuan for five consecutive months, showing a strong tenacity, which largely resulted from China's unswerving expansion of its opening-up. A series of measures, including the construction of the Shenzhen Demonstration Pilot Zone and the Shanghai Free Trade Zone's Lingang New Area, the addition of six free trade pilot zones, the implementation of a larger tax reduction policy, and the raising of trade facilitation levels, are promoting China's opening-up. The country is turning from a flow of products and services to a higher level of institutional openness, which has injected a strong impetus into China's foreign trade development.

At the same time, the domestic power of Chinese enterprises has been continuously enhanced, providing important support for foreign trade. At present, the foreign trade value of private- and foreign-funded enterprises each accounts for about 40% of China's total import and export value. With the rapid growth of private enterprises and the continued deep penetration of foreign-funded enterprises into the Chinese market, the vitality of market players will be further enhanced, and the internal driving forces for promoting foreign trade development will also be more powerful.

Against the background of an uncertain external environment, China's foreign trade is stably rising in quality, which is conducive to the efforts by enterprises to further accelerate technological innovation, increase the added value of their products, raise labor productivity, and enhance the ability to withstand risks.

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LU Xiankun Professor LU Xiankun is Managing Director of LEDECO Geneva and Associate Partner of IDEAS Centre Geneva. He is Emeritus Professor of China Institute for WTO Studies of the University of International Business and Economics (UIBE) and Wuhan University (WHU) of China and visiting professor or senior research fellow of some other universities and think tanks in China and Europe. He also sits in management of some international business associations and companies, including as Senior Vice President of Shenzhen UEB Technology LTD., a leading e-commerce company of China. Previously, Mr. LU was senior official of Chinese Ministry of Commerce and senior diplomat posted in Europe, including in Geneva as Counsellor and Head of Division of the Permanent Mission of China to the WTO and in Brussels as Commercial Secretary of the Permanent Mission of China to the EU. Benjamin Cavender Benjamin Cavender is a Shanghai based consultant with more than 11 years of experience helping companies understand consumer behavior and develop go to market strategies for China. He is a frequent speaker on economic and consumer trends in China and is often featured on CNBC, Bloomberg, and Channel News Asia. Sara Hsu Sara Hsu is an associate professor from the State University of New York at New Paltz. She is a regular commentator on Chinese economy. Xu Qinduo Xu Qinduo is CRI's former chief correspondent to Washington DC, the United States. He works as the producer, host and commentator for TODAY, a flagship talk show on current affairs. Mr. Xu contributes regularly to English-language newspapers including Shenzhen Daily and Global Times as well as Chinese-language radio and TV services. Lin Shaowen A radio person, Mr. Lin Shaowen is strongly interested in international relations and Chinese politics. As China is quite often misunderstood in the rest of the world, he feels the need to better present the true picture of the country, the policies and meanings. So he talks a lot and is often seen debating. Then friends find a critical Lin Shaowen criticizing and criticized. George N. Tzogopoulos Dr George N. Tzogopoulos is an expert in media and politics/international relations as well as Chinese affairs. He is Senior Research Fellow at the Centre International de Européenne (CIFE) and Visiting Lecturer at the European Institute affiliated with it and is teaching international relations at the Department of Law of the Democritus University of Thrace. George is the author of two books: US Foreign Policy in the European Media: Framing the Rise and Fall of Neoconservatism (IB TAURIS) and The Greek Crisis in the Media: Stereotyping in the International Press (Ashgate) as well as the founder of, an institutional partner of CRI Greek. David Morris David Morris is the Pacific Islands Trade and Investment Commissioner in China, a former Australian diplomat and senior political adviser. Harvey Dzodin After a distinguished career in the US government and American media Dr. Harvey Dzodin is now a Beijing-based freelance columnist for several media outlets. While living in Beijing, he has published over 200 columns with an emphasis on arts, culture and the Belt & Road initiative. He is also a sought-after speaker and advisor in China and abroad. He currently serves as Nonresident Research Fellow of the think tank Center for China and Globalization and Senior Advisor of Tsinghua University National Image Research Center specializing in city branding. Dr. Dzodin was a political appointee of President Jimmy Carter and served as lawyer to a presidential commission. Upon the nomination of the White House and the US State Department he served at the United Nations Office in Vienna, Austria. He was Director and Vice President of the ABC Television in New York for more than two decades.