Opinion

2010, a year of recovery for China's foreign trade

(Xinhua)
Updated: 2010-10-05 11:44
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Conventional trade in the first half grew faster than the total by 3.4 percentage points. Its share in the total value climbed 0.5 points, while that of processing trade fell 0.8 points. The figures are an indication that measures for optimizing trade forms are taking effect. More than ever before, the Chinese are alert to the fact that by accommodating numerous processing operations, they earn a very small proportion of the profit, but take the blame for huge trading figures. A case in point was the HP computer. For every HP notebook sold for $1,000 on the US market, a survey conducted by the Shanghai Customs found, the Chinese company received 30.3 dollars as a processing fee, while the US company gained $169.6.

Rapid growth of energy-gorging and highly polluting exports was an embarrassing, dark side of trade in the first half. Exports of steel blocks and crudely forged steel pieces, for instance, surged 1,322.7 percent year-on-year. This was caused by over-capacity and an anticipation of related policy changes. Such industrial lines have since been discouraged as highly polluting, counter to the government's efforts to reduce energy consumption per unit of GDP, and endangering sustainable social development.

On July 15, the government terminated the export tax rebates on 406 items, including such steel products.

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Looking ahead, the global economy shows hope of a continued recovery. A wide spectrum of goods, from primary goods and non-durables to durable consumer goods and investment products, are being traded vigorously on the international market. Prices of bulk commodities are expected to stabilize too.

Many international institutions have revised up their expectations. A WTO report released in March predicted the global trade would have a powerful rebound of 9.5 percent in 2010, after the biggest fall in 70 years. Exports by developed countries are estimated to rise 7.5 percent collectively and from other nations by 11 percent.

The situation augurs well for China's exports. But many unpredictable elements exist. The overseas demand is threatened by lingering low employment rates in many Western countries. The early withdrawal of stimulus policies by some of those countries is also a concern. The impact of sovereign debt in some European countries gained media attention when SINOSURE Fujian Company said in August that its handling of cases involving exports to Southern Europe and the amount of claim payments grew markedly. Trade disputes are rife. The MOC announced in August the reinstatement of China International Trade Representatives Office, headed by three MOC deputy ministers. Part of its express mission is to handle international trade disputes.

China's GDP growth was targeted at 9.5 percent this year, close to the average for the past three decades. Steady demand for imports could be expected. But, in the second half, demand is likely to fall as delayed demand from stock replenishment dwindles, new investment declines, and the rush to export energy-gorging and highly-polluting products stops with the end of tax rebates.

Rising costs for China's exports seem inevitable, because of growing concerns over the environment and natural resources. Labor shortages earlier this year led 14 provincial regions to raise minimum wages by an average of 20 percent. Strikes for higher pay and better conditions gained much media attention, and the government is reportedly conceiving a new income redistribution scheme that allows all people to share the fruits of the reform and opening policy. Growing labor costs could impair exports, but more money in workers' pockets could also boost spending.

Considering that the base figures of 2009 grew in the third and fourth quarters, many analysts are expressing cautious optimism over the trade performance in the second half.