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Xinhua Credit
Economy

Economic Watch: China faces up to trade challenges amid pandemic

May 09, 2020


Abstract : China's foreign trade started the second quarter with a surprising export rebound in April, as the resilient economy continues to take proactive measures to mitigate shockwaves from COVID-19 pandemic, which wiped out a large chunk of global trade.

BEIJING, May 8 (Xinhua) -- China's foreign trade started the second quarter with a surprising export rebound in April, as the resilient economy continues to take proactive measures to mitigate shockwaves from COVID-19 pandemic, which wiped out a large chunk of global trade.

The country's exports rose 8.2 percent year on year to 1.41 trillion yuan (about 198.8 billion U.S. dollars) in April, while imports fell 10.2 percent to 1.09 trillion yuan.

Analysts say the mixed performance pointed to the strong resilience of China's economy, but also signaled a complex external environment for foreign trade as the pandemic spreads, calling for caution and preparedness against a general decline in world trade.

Bai Ming, a researcher with the Chinese Academy of International Trade and Economic Cooperation, attributed the jump in April exports to the wider business reopening of foreign trade firms nationwide, as well as the delivery of held-up orders.

The above-expectation increase was also based on a modest reference of last April's exports figure, which rose 3.1 percent year on year compared to the 5-percent average for 2019.

April's imports data suggested more worrying difficulties. Zhou Maohua, an analyst with China Everbright Bank, said growth was weighed down by yet-to-fully-recover domestic demand, mounting industrial inventory and falling commodities prices.

Analysts warned that a trade fallout could start to surface in the coming months as the pandemic takes its toll on new orders, even as some countries are preparing to fast-track reopening parts of the economy.

Chinese policy-makers have started early in unveiling policies to support foreign trade companies, which are facing many difficulties, including order cancellations or delays, difficulty signing new orders and poor logistics.

The country has rolled out a string of measures since March including encouraging credit support to foreign trade firms, implementing export tax rebates, supporting short-term export credit insurance services and setting up 46 new cross-border e-commerce pilot zones.

More efforts will be made to support exporters to sell their goods on the domestic market and keep the global logistics chain stable and smooth, said Ministry of Commerce (MOC) spokesperson Gao Feng at a Thursday press briefing.

The MOC earlier announced it would exempt interest on tax deferred for domestic sales of processing trade enterprises from April 15 to Dec. 31 this year, and extend the pilot policy of selective tariffs on domestic sales to all comprehensive bonded zones to help lower taxes for trade firms.

Authorities will also strengthen online channels to promote trade. The 127th session of the China Import and Export Fair, also known as the Canton Fair, for instance, will be held online from June 15 to 24 due to the epidemic.

To enhance the risk-resilience of the trade sector, the General Administration of Customs (GAC) will promote industrial chain extension and cluster development, focusing on key high-end industries including integrated circuits, artificial intelligence and bio-medicine, said GAC head Ni Yuefeng.

"The measures we have taken to facilitate trade during the epidemic should be adopted as the norm in the future to improve efficiency using technology and managerial expertise," said Ni.

Local governments have also taken concrete steps to boost trade. Trade hubs including central China's Zhengzhou and south China's Dongguan delved further into cross-border e-commerce to market export products, while east China's Zhejiang Province hosted an online exhibition from April 29 to May 1 for services trade.

A pillar of China's policy maneuvers is its ultra-large domestic market that is expected to make up for tumbling external demand.

"China's massive domestic market can help cushion foreign trade firms against tepid global demand through means such as domestic sales and cross-border online retail," said Bai.

Official data showed that China's consumer market has shown signs of accelerated recovery during the five-day May Day holiday that ended Tuesday, with increases in online sales of physical commodities, as well as sales of consumer durables.

As the resumption of business and production activities continues, potential remains for China's foreign trade with warming domestic supply and demand helping stabilize global supply chains, said Zhao Ping, a researcher with the Academy of the China Council for the Promotion of International Trade. Enditem

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Keyword: China economy

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