By Sheng Bin | China Daily | Updated: 2023-08-14 09:33
China has cemented its position as a trade powerhouse, becoming the largest in terms of export volume and second in imports worldwide. The country accounts for a 14 percent share of export volume and 10 percent of imports globally.
China has transformed itself from a major exporter of low value-added final products to a key link in the global supply chain. The scale of exports of high value-added intermediate goods and capital goods has expanded, with an ever-increasing share in the international market. This has helped China move up the value chain both regionally and the world over.
Of late, China's foreign trade has been facing headwinds, induced by factors such as sluggish external demand and rising costs, as well as geopolitical tensions.
The slowdown in foreign trade remains a challenge, as evidenced by a significant decline in the growth rate of trade in the first half of this year compared to the same period in 2022. However, China's trade situation is better than many countries and regions.
To sustain foreign trade growth, the Ministry of Commerce, along with various departments and localities, has unveiled a package of supportive policy measures, in terms of credit loans, insurance, export tax rebates and trade facilitation. China's time-bound lower tariff rates have also created conditions for expanding imports.
Efforts have been made to enhance efficiency and reduce costs of Customs clearance. More exhibitions are expected to be held, and business exchanges will be made more convenient.
Diversification strategy
China is vigorously exploring emerging markets and diversifying its trade partners, against a backdrop of sluggish demand in developed economies and increased geopolitical uncertainty.
Recent statistics have shown that the relationship between China and the Association of Southeast Asian Nations has warmed up rapidly, resulting from the adjustment of foreign trade policies and the implementation of the Regional Comprehensive Economic Partnership.
In a broader sense, trade between China and the countries participating in the Belt and Road Initiative is growing rapidly, with the trade volume accounting for nearly one-third of China's total foreign trade.
This has laid the foundation for the country to better explore emerging markets and optimize the regional trade structure in future.
It is, however, imperative to place a high premium on risk prevention and control while engaging in trade and investment activities with developing countries.
Meanwhile, trade liberalization has picked up pace in China's central, western and northeastern regions over the years. The combined trade volume in these regions accounts for one-fifth of the total, a significant increase from the past.
Rapid trade growth in these regions has benefited significantly from the development of processing trade. Cross-regional relocation and transfer of processing trade to these regions have taken place in the past few years. At present, processing trade in these regions accounts for about one-third of the national total.
In addition, the trade volume of private businesses is more than half of China's total foreign trade. The country has rolled out a raft of measures and incentives to revitalize the private sector. Going forward, foreign trade carried out by private enterprises is expected to become a new growth driver.
Alongside the shifting dynamics of the trade structure, the trade quality has improved as well.
A large number of academic studies and data have shown that the prices and technological content of China's exports are becoming high value-added, with prices increasing at a steady pace.
In particular, exports of the "new three" products, namely electric vehicles, lithium batteries and solar cells, have registered notable growth, becoming a new highlight in the country's foreign trade.
With the growing importance of global supply chain security and economic resilience, China needs to further expand its commodity imports in future and increase its stockpiles to guard against potential economic risks, and the country should enhance preparedness for any possible political and diplomatic changes or shocks.
Going forward, transformation and upgrading of foreign trade should better leverage cross-border e-commerce. Meanwhile, greater emphasis should be placed on green trade to better facilitate sustainable development.
In addition, vigorous efforts should be made to boost digital trade, especially digital trade in services, which is characterized by online delivery and digital transmission.
In the negotiations on plurilateral agreements under the WTO framework, China has played an important role and benefited much.
The negotiations on Services Domestic Regulations have come to an end, providing new policy guidelines to further promote the reform and opening up of the domestic services sector and the development of trade in services.
Preliminary textual negotiations over the Agreement on Trade Facilitation have also been concluded. Although there are not many substantive binding provisions yet, it still bodes well for massive benefits as it is viewed as the first multilateral agreement since the WTO's inception in 1995. Negotiations on a Digital Economy Partnership Agreement have not yet concluded.
It involves a number of digital trade issues that have been closely watched by various parties. As the negotiations wind down, the pact will provide guidelines for the future development of digital trade in China.
China has inked 19 free trade agreements with 26 countries and regions, and the conclusion and implementation of the RCEP agreement is of great significance to the nation.
Efforts to fully utilize the rules of origin for trade with RCEP member economies are crucial for enterprises. In future, China will also launch a new round of upgrade of the China-ASEAN Free Trade Area to further strengthen regional economic and trade cooperation between itself and the Asia-Pacific region.
The leading and demonstrated role of high-level opening-up platforms will be better brought out. China has 21 pilot free trade zones. It has also set up the Hainan Free Trade Port, which has outperformed the other free trade zones in terms of taxation and other preferential policies.
The trade growth in pilot free trade zones and free trade ports is higher than the national average.
The foreign trade of Hainan's free trade port, especially, has grown by double digits. Such platforms should be fully utilized as a pilot for promoting China's institutional opening-up.
China applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, as well as the Digital Economy Partnership Agreement. Domestic efforts will be made to advance reform and better align with these international trade and commerce rules.
Holistic approaches will be adopted to better coordinate the domestic economic development with foreign trade growth and fully harness both domestic as well as international markets. The role of a unified national market will be given full play.
A new pattern of development that is focused on the domestic economy and positive interplay between domestic and international economic flows will be further improved.
The share of net exports in China's GDP growth reached 7 percent in 2008, before it showed a downward trend. It now stands at around 3 percent. The role of exports in driving overall economic growth has been on the wane.
China's economic growth will, going forward, depend more on internal demand and the domestic market. Though foreign trade will be an important growth driver, expectations should remain modest.
China's foreign trade has strong resilience and flexibility to cope with short-term pressures and challenges.
What's more, it is imperative to shape an objective and correct positioning of China's foreign trade in the overall economic growth, in line with long-term development.
It is important to boost foreign trade while refraining from setting hard-to-achieve goals.
China should place a higher premium on realizing greater openness through foreign trade activities and advanced international rules, as well as improving the socialist market economy with Chinese characteristics through institutional innovation.
The writer is vice-president of Nankai University. The article is based on the translation of his Chinese op-ed piece published on the WeChat account of the China Macroeconomy Forum, a think tank.
The views don't necessarily reflect those of China Daily.
