Clouds of doubt darken trade outlook

Li Jian, a researcher with the Chinese Academy of International Trade and Economic Cooperation, a think tank under the Ministry of Commerce, says this attitude is likely to persist.

"Chinese exporters have no time to wait for the slow recovery of the European economy. Also, the rising trade frictions between the two regions are driving them away," he says.

Li says European countries will take steps to revitalize their manufacturing industries and increase job opportunities as they struggle to repair their economies.

"It will have a strong impact on Chinese companies there, who may be treated unfairly," he says.

In the past several months, trade friction between China and the EU has grown. As well as announcing an investigation into alleged solar panel dumping, the EU is collecting evidence relating to China's telecom equipment companies Huawei and ZTE and anti-dumping and subsidy rules.

"It seems that the European countries are making efforts to protect their own companies in industries where China is doing well in the European market, or by raising the standards of traditional industries like textiles," Li says.

"It is understandable, but harmful to the business of Chinese companies. It is smart for the companies to move their eggs to other baskets, such as the emerging markets."

According to the Ministry of Commerce, China's big traditional trade partners, the EU, the United States and Japan, now account for 56 percent of China's total trade volume. At its peak, it was about 70 percent.

In the first 10 months of this year, China's trade with Russia grew 13.4 percent year-on-year, and by 34.9 percent for South Africa and 9.4 percent for the ASEAN region.

Although China's total trade performance was better than expected, it is still a tough ask for the country to reach its 10 percent annual growth target.

"October's stronger-than-expected exports growth was probably because of the seasonal pick-up of Christmas orders and better-than-expected US demand," says Sun Junwei, an economist at HSBC.

"In fact, this trend in upside surprises is unlikely to be sustained over the coming months, considering the risks of the fiscal cliff in the US, the European crisis and still weak growth in other major economies."

Chen Demin, China's minister of commerce, also admits 10 percent growth is difficult to attain and the country is now trying to maintain its share in the global market.

yanyiqi@chinadaily.com.cn

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