MOC warns of further fall in foreign trade

As China’s foreign trade unexpectedly slipped in the first quarter in 2014, the Ministry of Commerce ratcheted up its warnings about a further drop in April, but predicted a pickup in May and a continued recovery within this year.

Meanwhile, the ministry is speeding up its testing and investigating in maintaining the growth of exports, providing fuel for the transformation of the processing trade.

“We are expecting a better performance in foreign trade in the second quarter, but the bounce may be arriving in May,” said Shen Danyang, a ministry spokesman, at a news conference on Thursday in Beijing.

“The full-year trade growth will be similar to last year — and we are confident of reaching that goal,” said Shen.

Despite the 3.7 percent decline in total foreign trade, exports to significant markets, such as the European Union, United States and members of the Association of Southeast Asian Nations, increased more than 5 percent respectively in the first quarter.

Further, in terms of goods, exports of color television sets, electric motors, steel, toys, ceramic products, fertilizers and other bulk commodities, China realized a year-on-year growth of more than 10 percent in the same period.

“We have to pay close attention to the full-year trend against the background of the recovery in developed economies and the slowdown in emerging countries,” Shen said.

But Shen mentioned that positive factors, including the resilient demand of the global market, the improvement of competitiveness among Chinese manufacturers and the government’s decision to boost and upgrade exports, will help the world’s second-largest economy to produce a satisfactory outcome at the end of this year.

Thanks to the recovery in the US and Europe, and with developing economies continuing to outpace developed economies in terms of GDP growth, global trade is expected to grow by 4.7 percent in 2014, compared with 2.1 percent in 2013, according to the World Trade Organization.

“While there is a stable global demand and the upgrading in China continues it is possible for China to maintain a better performance in global trade,” said Shen.

Nonetheless, Song Hong, an economist at the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, cautioned that the phasing-out of quantitative easing in the US will affect some emerging economies, such as Turkey and Indonesia.

“The influence

of

fluctuating

capital flows in emerging countries may expand into China’s foreign trade performance because emerging economies are important Chinese trading partners,” Song said.

At the same time, as a manufacturing power, encouraging a mild recovery is also challenging the government’s guiding and supporting policies.

In the first quarter, the total processing trade dropped 8 percent to 1.87 trillion yuan compared with the same period last year.

“The processing trade has been playing a significant role in increasing employment, increasing the number of industries and promoting economic development,” said Shen.

Shen said the ministry is conducting research among manufacturers and experts in a bid to ramp up measures to maintain steady growth and accelerate the restructuring of the processing trade.