Overseas trade unlikely to grow in short term
- By Yi Xianrong
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E-mail China.org.cn, September 30, 2012
In August, China saw a jump in exports while imports continued to fall, according to the Ministry of Commerce (MOC). Statistics from MOC released on Sep. 10 showed exports climbing by 2.7 percent year-on-year last month, 1.7 percent higher than meager 1.0 percent growth in July. However yearly export growth remained 0.2 points below expectations.
Meanwhile, imports plummeted 2.6 percent compared with last year's figures, falling far short from the expected 3.5-percent growth and also dampening the promising 4.7 percent year-on-year increase in the import market recorded in July.
In response to the sluggish overseas trade, the State Council carried out eight stimulus measures, including streamlining the process of export tax rebates, increasing financing capability, expanding the coverage and scale of export credit insurance, elevating the facilitation of overseas trade, tackling trade disputes in considerate and reasonable ways, proactively stimulating imports and optimizing markets both at home and abroad, in hopes of resuming the previous rate of growth.
These measures, however, don’t offer anything new. Thus, it is doubtful that these measures will have an instant effect on the growth of overseas trade. Some of the measures will take more time to produce results. Therefore, hopes that these policies will ameliorate the current trade situation should not be so optimistic.
Although the current external economic climate has hindered the growth of China’s overseas trade, deep-seeded internal economic problems are also to blame. It is impossible to resume previous levels of growth simply with a slew of irrelevant measures if structural transformation does not come.
As far as external factors are concerned, faltering demand from the overseas market resulting from the recession in the wake of the global financial crisis won’t be restored any time soon. The United States’ third round of quantitative easing (QE3) to stimulate its domestic market is proof of a major decline in China exports. Given the circumstances, the Chinese government’s recent measures to spur exports offer little more than pious hope.
A variety of factors have contributed to falling imports, including a decline in processing industries for trade, a descending pricing curve in bulk commodities, and abating demand for imported goods at home.
Judging from a series of consecutive declining indexes, including the Purchasing Managers Index (PMI), Producer Price Index (PPI) and Gross Domestic Product (GDP), a weakening domestic economy is exacerbating the problem, despite the current stimulus measures now in place.
To achieve some intended effects, the government has to carry out a string of infrastructure-building stimulus packages in frequent intervals. Yet these stimulus projects can hardly satisfy the current thirst to reinvigorate demand. Besides, they will likely cause a multitude of negative consequences if not utilized properly.
