The turmoil in global financial market has drugged the world's economy down. The changes of external economic environment has affect China's two-way trade. Gao Hucheng (thereafter referred to as Gao), vice commerce minister, accepted an interview on Oct. 28, during which he talked freely on latest development of China's foreign trade.
A 25.2 percent year-on-year increase in foreign trade during first three quarters this year
Reporter：How is the current development of China's foreign trade going?
Gao: China's foreign trade maintains a good momentum of fast development since early this year, with imports and exports structure further improved and quality further raised. A new step forward is made in the change of economic growth pattern. In first three quarters, the two-way trade volume hit 1967.1 billion US dollars, a year-on-year increase of 25.2 percent. Exports achieved 1074.1 billion US dollars, up 22.3 percent, falling 4.8 percent than that in the same period last year; while import registered a total of 893.1 billion US dollars, up 29 percent, a yearly increase of 9.9 percent. Foreign trade surplus recorded 181 billion US dollars, down 4.7 billion from last year's level.
The exports of mechanical and electrical products continue to keep the fast development, while the exports of grain and some products that caused serious environmental pollution, high energy consumption as well as low efficiency in resources utilization have fallen down, namely, corn fell by 95.9 percent, steel billet 81 percent and steel 2.1 percent. The fast growth of export to the emerging market countries has offset the losses occurred in exports to European and American countries. Imports of resource products continue to rise.
Generally speaking, the fundamental development of China's foreign trade is positive. When facing heavy losses caused by the biggest global economic downturn, the natural disaster of low temperature, sleet and frost, as well as the catastrophic earthquake in Wenchuan, China retains stable and fast development in foreign trade, which benefits from the correct decision by CPC central committee and State Council, and effective macro-control.
Growth of some labor-intensive products falls.
Reporter: What is the negative impact of global financial crisis upon China's foreign trade?
Gao: The global financial turmoil triggered by subprime lending crisis in the US continues to spread and deteriorate. The lack of market liquidity and a blow to investment and consumption confidence have made world's economic drop further. More and more unclear and unstable factors occur in world's economic environment, which will take a toll for China's export.
Export to the US rose by 11.2 percent in the first three quarters, a year-on-year decrease of 4.6 percent. The export in HKSAR, which used to be dominated by entrepot trade, only rose by 8.9 percent, down 12.9 percent. The export growth to EU in August and September this year has also dropped to 22 percent and 20.8 percent respectively.
The export of some labor-intensive products also dropped sharply, for example, the garment rose only by 1.8 percent in first three quarters, toy 3.7 percent, falling 21.2 percent and 16.3 percent from the same period last year respectively.
The impact of US' financial crisis upon substantial economy is deteriorating. IMF has already lowered the expectation the growth of world's economy and trade. Under the circumstance of sluggish global economy, trade protectionism further worsens and the trade friction China is facing becomes more and more serious. More importantly, some overseas financial institutions suffer bankruptcy, acquisition and takeover. Some countries' and regions' credit worsens and shrinks. The credit and settlement risk in foreign trade will consequently increase.
There are more opportunities than challenges
Reporter: Will export maintain the steady growth, and how does China face the grave challenges?
Gao: The current situation shows the worsening international economic trend will have further negative impact on China's foreign trade. However, there are also some favorable conditions and positive factors for steady and rapid economic growth.
China is competitive in foreign trade. Since the policy of reform and opening up was adopted 30 years ago, China has fostered a number of enterprises that have distinct advantage in terms of comprehensive auxiliary performance and labor. Domestic enterprises in recent years have constantly optimized the export structure, speeded up the research and development of products with home intellectual property rights, as well as supported and developed products with home brand. All these measures could improve the comprehensive competitiveness.
China's exports are still competitive despite the global economic slowdown. The weakening of market demand internationally will first affect luxury goods. These are something that can not be found in China's exports, which are mainly consumer goods.
Export enterprises are becoming more and more experienced in handling the changes in external environment. RMB has accumulatively appreciated by 17.4 percent since 2006. Meanwhile labor cost keeps rising and export rebate rate falling. Although the demand of international market weakens, the exports in the first three quarters still maintain a good momentum of rapid growth.
There are huge potentials in the emerging market and the developing countries.
To cope with the impact from world economy and ease enterprises' pressure, China raised the export rebate rate for textile, garment, toy, furniture and some of the mechanical and electronical products that used to bear high value-added. Meanwhile, China will also take a series of actions such as to improve trade environment, to support competitive enterprises and to encourage exports, to grand more loans and to expand investment channels for SMEs.
Opportunities and challenges will exist side by side for current and future development of foreign trade. But generally speaking, there will be more opportunities than challenges. China needs to closely follow the changes in domestic situation and exclude difficulties and anxiety for enterprises, and additionally, solve trade frictions with others countries and create a sound external environment for export.
By People's Daily Online