Trade sparks high hopes, cautious optimism

Updated: 2022- 01- 25

A worker tests an LED low-pressure lamp strip at a lighting technology company in Ruichang, Jiangxi province, on Jan 4. Foreign orders account for more than 70 percent of the company's total. Its products are mainly exported to countries, including the United States, Russia, Turkey and India. WEI DONGSHENG/FOR CHINA DAILY

While last year produced a stellar show, experts' views on 2022 prospects diverge

Niu Liqun, chairman and CEO of Jia Shi Da Robot Technology Co Ltd, a Taiyuan, Shanxi province-based manufacturer and exporter of service robots, has high hopes that this year will extend last year's tremendous show in trade.

Jia Shi Da focuses on design and production of robots that create greater convenience in people's daily lives. The company's products have tasted success overseas amid the COVID-19 pandemic.

For instance, its window cleaning robot has been launched in South Korea, Germany, Israel, Russia and Japan. The company has been stepping up promotions on online social networks and destinations such as Google, Facebook and Twitter.

"We plan to focus more on our home cleaner robot design and production to increase our product awareness and extend our global presence through improved brand image based on more technological improvements," Niu said.

Jia Shi Da is just one of the numerous Chinese enterprises that have been strengthening innovation to further tap their export potential.

Such firms feel China, with its resilient industrial and supply chains and an expanding domestic market, is well positioned to further increase imports and exports. In 2021, China's imports and exports hit a record high of $6.05 trillion, according to the latest data from the General Administration of Customs.

Yet, both experts and officials said increasing uncertainties are likely to add pressure to both the demand and supply sides this year, although they expect the nation's foreign trade to continue growing in 2022.

More efforts are expected from both the authorities concerned and enterprises to improve foreign trade quality and enhance the trade structure while sustaining the upbeat growth, as China is determined to improve resource allocation in domestic and foreign markets and has accelerated the implementation of the dual-circulation development pattern, they said.

A concept first mentioned by President Xi Jinping in May 2020, the new dual-circulation development pattern takes domestic market as the mainstay while letting domestic and foreign markets reinforce each other. It has become a pivot to many of China's current development policies amid the pursuit of high-quality development.

On Jan 11, China officially unveiled new guidelines to further support growth of exports and imports. The country will further expand opening-up and carry out cross-cyclical adjustments to help foreign trade companies, guarantee their orders and stabilize expectations.

Released by the General Office of the State Council, the guidelines detailed 15 measures, including strengthening fiscal and financial policy support, encouraging development of new business formats like cross-border e-commerce and overseas warehouses, and easing international logistics pressure on businesses.

Those measures also included stabilizing growth of processing trade, cultivating businesses that have strong competitiveness in both global export and import markets, and enhancing trade liberalization and facilitation.

Such measures aim to actualize the full potential of exports, secure industrial and supply chains for foreign trade, and stabilize market entities and guarantee their orders, the guidelines said.

At the annual Central Economic Work Conference in December, which outlined key tasks for 2022 in economics, the top authorities have also urged higher-level opening-up, adopting multiple measures to stabilize foreign trade, securing industrial and supply chains, and making more efforts to attract more foreign investment.

Huo Jianguo, vice-chairman of the Beijing-based China Society for World Trade Organization Studies, which is also known as the CWTO, forecast that the nation's foreign trade will grow at around 8 to 10 percent this year, much lower than the growth rate registered last year.

Whether or not the eventual growth rate will exceed 8 percent depends largely on the actual effects of policy measures the authorities are expected to take, especially in the export sector, Huo said.

According to the General Administration of Customs, exports reached 21.73 trillion yuan ($3.42 trillion) in 2021, up 21.2 percent year-on-year, while imports expanded by 21.5 percent to 17.37 trillion yuan.

With such high comparison base, the growth rate of foreign trade in 2022 is likely to slow down, said Gao Shiwang, director of the industry development department at the China Chamber of Commerce for Import and Export of Machinery and Electronic Products.

Exports of machinery and electronic products grew by 20.4 percent year-on-year to 12.83 trillion yuan last year, accounting for 59 percent of the total exports, the GAC said.

In the first 10 months of 2021, exports in the sector exceeded the whole-year value of 2020.

"Global economic growth will support overseas demand for Chinese products. However, transfers of orders from China to other countries that have resumed production and the fading advantage in prices of Chinese products due to the increase in maritime shipment costs are likely to depress the growth of exports," Gao said, adding raw material costs and changes in renminbi exchange rates will also pile pressure on foreign trade enterprises.

However, he said the contribution of machinery and electronic products to China's exports and imports has been stable and significant over the years, and the steady trend will likely continue.

Such products have taken up around 58 percent of China's yearly exports for most of the past 15 years. Their combined imports and exports often accounted for about 52 percent of the nation's total foreign trade, he said.

"With high production capacity, China's trade in machinery and electronic products has been high in world rankings for both volume and market share. Trade growth prospects of such technology-intensive and high value-added products will remain positive," he said.

Moreover, trade quality in the sector has been improving steadily, thanks to government policy measures and enterprises' technological innovations. Industry leaders have been enhancing their global layout, and "hidden champions", or small but highly successful companies in specialized markets, have been expanding their business, he said.

The scale of emerging sectors like new energy vehicles, photovoltaics, lithium batteries and integrated circuits has also been expanding rapidly, while small and medium-sized enterprises now reach the global markets directly through new foreign trade formats like cross-border e-commerce and overseas warehouses, he said.

According to Huo with the CWTO, the better-than-expected foreign trade performance last year was largely shaped by significant growth in exports, thanks to China's resilient industrial and supply chains that have been making great contributions to the world economic recovery from the impact of the COVID-19 pandemic.

"Yet, we cannot neglect challenges facing foreign trade growth this year, which include intensified global competition, weaker overseas demand and rising trade protectionism," he said.

Downward pressure on foreign trade growth is likely to increase in the second half of the year, if resumption of work and production in Southeast Asian countries accelerates and global industrial and supply chains further adjust, he said.

During the first half of this year, Chinese products are expected to be widely sought after, as the pandemic-related disruptions to global industrial and supply chains continue, he said.

Chris Cai, general manager of Four Seas (Guangzhou) Food Import and Export Trading Co, said factors like surging costs of logistics at home and abroad, prolonged time frame for Customs procedures due to strict disease prevention and control measures, and fluctuations in renminbi exchange rates still pose risks to growth of foreign trade companies.

The firm runs food factories on the Chinese mainland and in Japan. It imports prepackaged snacks, beverages and food materials from Japan and Southeast Asian countries such as Thailand and Indonesia, and exports food products to Japan.

The Chinese economy, Cai said, has returned almost to a normal development track thanks to effective control of COVID-19, and the company is positive about business prospects for this year.

Source: China Daily