Promoting trade in all possible ways

Not easy

Boosting foreign trade is a challenge. Zheng Yuesheng, spokesman for the GAC, said the biggest challenge facing China is weak external demand dampening its exports. In the Global Economic Prospects report released in June, the World Bank lowered its expectations on global economic growth in 2013 from 2.4 percent to 2.2 percent. Economic growth in developed countries is expected to fall from 1.3 percent to 1.2 percent, while that of developing countries is expected to drop to 5.1 percent from 5.5 percent. "Sluggish external demand has directly caused the decline of orders from Chinese exporters, restraining growth," said Zheng.

According to the GAC, among the 2,000 exporting enterprises that have been surveyed monthly since the start of the year, each month more than 45 percent reported their export orders have dropped this year. The survey in June showed that 49.2 percent of the enterprises saw shrinking orders.

Growing export costs due to foreign exchange rates and labor costs have also worsened the situation. According to the People's Bank of China, the country's central bank, by August 8, the yuan's rate against the U.S. dollar has appreciated by 2 percent from the end of last year. In the meantime, labor costs in China are rising. In the first half of this year many provinces, autonomous regions and municipalities raised their minimum wages. Among the nearly 2,000 enterprises subject to the GAC's monthly survey, 70 percent of them said cost pressure was growing and their products were less competitive.

Trade frictions have intensified, deteriorating China's trade environment. The MOFCOM figures showed that in the first quarter 12 countries launched 22 trade investigations against China. "Both countries and products involved in trade frictions are becoming more diverse, seriously affecting China's exports of competitive products," said Zheng.

A slowdown in domestic industrial production has also curbed demand for raw material imports. According to the National Bureau of Statistics, in June, added value completed by industrial enterprises whose annual sales revenue is over 20 million yuan ($3.27 million) grew by 8.9 percent over a year ago, which was 1 percentage point lower than the rate at the beginning of this year. Industries with surplus capacity, such as steel, cement, shipbuilding and solar panels, keep seeing their profits decrease.

"In the second half of the year China's foreign trade will still be volatile and full of difficulties and challenges," Zheng said. "Therefore China should continue to transform its growth pattern with the aim of ensuring that Chinese products don't lose their share in the global marketplace."