1. Review of China's trade Development from January to May 2024
I) Sustained growth of import and export
In terms of trade scale, the total value of imports and exports (in US dollars) from January to May was us $2.46 trillion, up 2.8% year on year. Among them, exports reached US $1.4 trillion, up 2.7% year on year; imports reached US $1.06 trillion, up 2.9% year on year, with a trade surplus of US $337.2 billion. The recent trade recovery has shown significant momentum. Observe the monthly data of China's import and export volume in the past year, foreign trade declined to a certain extent in 2023. It basically bottomed out and rebounded in February 2024, and maintained positive growth in recent months. The trade surplus has continued to grow. From the monthly trend of the import and export trade balance, the trade surplus in February 2024 showed a minimum value and then continued to rise, and the trade surplus reached us $82.6 billion US dollars in May. All types of trade have increased. From January to May this year, imports and exports in general trade reached 11.4 trillion yuan, up by 5.6%, accounting for 65.1% of the total foreign trade. Exports grew by 7.9% and imports by 2.7%. Imports and exports of processing trade reached 3.02 trillion yuan, up 1.6%, accounting for 17.3%. Exports fell by 2.3% and imports increased by 9.1%. China's import and export through bonded logistics reached 2.42 trillion yuan, up 16.5%. Among them, exports grew by 12.5% and imports by 19.2%.
2) Private enterprises have made outstanding achievements
From the perspective of enterprise ownership, the cumulative growth rate of import and export of private enterprises reached 4.5%, which was significantly higher than the overall growth rate; the proportion of import and export reached 55%. Private enterprises contributed a lot to imports, with a cumulative growth rate of 9.1% from January to May, accounting for 41.9%. Private enterprises also contributed a lot to the trade surplus, which accounted for 138% of the total, 1.38 times the overall trade surplus. In other words, the overall trade after excluding the private enterprise trade will show a deficit. The status of private enterprises in trade continues to improve. The proportion of total imports and exports of private enterprises continued to increase, rising from 37% in 2015 to 55% in the first five months of 2024. Private enterprises play a more important role in export. The export growth of private enterprises is even more obvious, accounting for 45% in 2015 to 65% in 2024. The trade momentum of private enterprises still needs to be consolidated. Since 2015, the import and export growth rate of private enterprises has been the highest in most months. The growth rate of private enterprises and state-owned enterprises in some months is similar, which decreased in 2021 and 2022 years, but the growth rate of private enterprises after 2023 is significantly higher than that of other ownership types of enterprises, but it remains to be seen whether it can be sustained.
3) The regional pattern has not changed significantly
In terms of trade regions, the developed coastal provinces and regions still rank the top in trade volume, while the western and northeast regions have the top growth in trade growth. Exports of the top ten provinces in Guangdong, Zhejiang, Jiangsu, Shandong, Shanghai and other developed areas, from the characteristics of the main export provinces, 1-may this year, exports of Guangdong province accounted for nearly a quarter of the total exports, accordance with the pearl river delta region manufacturing advantage and port advantage, export goods covering electronic products, machinery, textiles, and other fields, continue to maintain a strong momentum of growth. Zhejiang and Jiangsu provinces ranked second and third, both with growth rates of 3.9 percent. These two provinces also play an important position in the national import and export trade according to their strong manufacturing base and perfect industrial chain. Shandong province ranked fourth, with 7.9 per cent growth, higher than the top three provinces. Shanghai and Beijing ranked fifth and seventh in exports, respectively. Shanghai mainly depends on its status as an economic center and an international financial center, while Beijing mainly depends on high-tech industries. The export performance of Sichuan and Chongqing is better, mainly due to the promotion of the "Belt and Road" initiative.
4) Traditional markets remain important
From the perspective of trade direction, the top three trading partners of China's import and export are ASEAN, the European Union and the United States respectively, but it cannot be ignored that ASEAN and the European Union are not one country, but a group of countries or one economy. In terms of a single economy or country, the United States is China's largest trading partner in import and export. Although the cumulative import and export from January to May fell by 1.4% year on year, it still ranked first with the import and export volume of 263.53 billion US dollars. Therefore, the future should pay attention to the trade relationship with the United States. By exports and imports, the United States is clearly China's largest export market, with exports close to $200 billion in the first five months and the largest source from Taiwan Province, with nearly $80 billion in the first five months.
5) Vehicles and ships become the export support force
In terms of product structure, the top three export products are electronic equipment, textile and clothing and metal stone products, which account for more than 60%; the top three products are electronic equipment, mineral products and metal stone products.
In terms of subdivided products, the fastest export growth is hybrid electric buses, with a growth rate of 75375.5%, showing blowout growth; the growth rate of non-plug-in hybrid passenger vehicles reached 480.5%, and the growth rate of container ships reached 212%. In general, the export growth rate of vehicles and ships is obvious, becoming the supporting force of China's export. With the gradual recovery of the global economy and the strong demand for the shipping market, the demand for new ships in the global shipping market is growing steadily.
China's trade development outlook in the second half of 2024
1) The world economic recovery lacks momentum
The overall world economic recovery is weak. According to the latest IMF forecast released in April, global GDP growth is 3.2% this year, the same as last year, slightly higher, developing countries may be slightly lower than last, and Asian emerging markets are also lower than last year.
2) Supply chain pressure and high transportation costs still exist
Supply-chain pressures still exist. Although it has been more than a year since the end of COVID-19, the pressure of logistics disruption and blocked supply chains due to the outbreak still exists. Observe the monthly data of the global supply chain pressure index since the epidemic, it can be found that the index was the highest during the epidemic, and then declined. The index was negative from February to November in 2023, and then the supply chain pressure rebounded again. So you still have to be wary of the problem of supply chain pressures. According to the global container index, although it has now declined from the peak, it has recently risen again, and high transportation costs still exist. The outbreak of the Red Sea crisis further had a negative impact on international trade. After the outbreak of the Red Sea crisis, the growth rate of the transit trade of the Suez Canal continued to decline, while the Cape of Good Hope increased significantly.
3) Many countries have adopted a tightening monetary policy
Major economies are on a "high interest rate model". Interest rates in Brazil, Chile and other emerging economies have exceeded 7 per cent, while developed countries such as the US and the eurozone are also likely to cut rates. In the future, the overall monetary policy will develop towards the direction of tightening.
4) Geopolitics are a drag on trade development
Geopolitics are not optimistic. Although geopolitical risks are no longer the highest, geopolitical factors will still drive the price of crude oil, once the geopolitical ferment, crude oil prices will be affected and rebound. The conflict between Russia and Ukraine made "camp" the world trade, but the overall trade in goods only decreased by about 2.3%. However, the two camps decreased by nearly 5% in both the strategic industry and the general situation, indicating that the conflict hit the world trade hard.
5) External demand has a trend of warming up
The global manufacturing PMI continues to expand. Since the second half of 2023, the global manufacturing PMI has continued to grow above 50%, which is considered an expansion period; while the manufacturing PMI in Europe and the US has improved. The US enters the inventory replenishment phase, in terms of total inventory and total sales; the euro zone, and the demand is inevitably strong, which will increase external demand, especially for Chinese products.
3. Important issues facing the development of China's foreign trade
1) What is the future of sino-US trade relationship?
Trade frictions between China and the United States are escalating. On May 14,2024, the US issued the results of the four-year review of the 301 tariffs on China, announcing that on the basis of the original tariffs, it would further increase the tariffs on electric vehicles, lithium batteries, photovoltaic cells, key mineral semiconductors, steel, aluminum and aluminum, port cranes, personal protective equipment and other products imported from China. On May 9,2024, the US Department of Commerce announced that it would add 37 Chinese entities to the export control "entity list". According to the reasons released by the US Department of Commerce, 11 entities were involved in high-altitude balloon related activities, four were acquiring or trying to obtain US components for drone related activities, and 22 were acquiring or trying to acquire US components for developing quantum technology capabilities. On May 8,2024, some U. S. members of Congress introduced a bill to make it easier for the Biden administration to impose export controls on AI models to prevent American technology from falling into the hands of countries that shouldn't.
On May 7,2024, Ginath, the first vice managing officer of the International Monetary Fund, said that the rising tensions between the United States and China have had a global impact, and countries are increasingly paying attention to economic security and national security when deciding trade and investment targets, thus dividing the world into three groups: pro-China, pro-American and centrist. The trend of economic fragmentation may lead the world to deviate from the rule-based global trading system and suffer a significant reversal of the results of economic integration. The United States and China need to take practical measures to rebuild trust, starting with maintaining the pipeline of communication open. The US-China dialogue can help to avoid the worst outcome.
Judging from the map of the flow of the world supply chain, the US is the most important and largest market for China's value-added trade and final product trade, and China's exports are very dependent on the U. S. market. Although the trade war and the epidemic have had some impact on China-US trade, they have not stopped China's exports to the US. The proportion of Chinese products imported by the United States shows a downward trend, while the American demand and the American market are still expanding. Although the number of American imports from China is growing, the continuous expansion of the American demand and market leads to the faster growth of overall imports, so the proportion of China's exports declines.
4. The direction of the future force
1) Improve the pattern of opening-up and foster new drivers of foreign trade
The Central Economic Work Conference proposed to accelerate the cultivation of new drivers of foreign trade, consolidate the basic market of foreign trade and investment, and expand the export of intermediate goods, trade in services, digital trade and cross-border e-commerce.
First, expand the trade in intermediate goods. As the link between the upstream and downstream of the industries, intermediate products have increasingly become the main body of global trade. China's intermediate goods trade is constantly expanding, reflecting the transformation and upgrading of China's manufacturing industry and the improvement of technical level. However, compared with the data of import and export of intermediate goods in the period of rapid development of Europe, America, Japan and South Korea, China's intermediate goods trade still has room for improvement. The level of division of labor in the industrial chain determines the development level of intermediate goods trade, so behind the expansion of intermediate goods trade is the transformation and upgrading of China's manufacturing industry and the overall improvement of the manufacturing industry level. In the future, we will further attract global advanced manufacturing enterprises to invest in China, so that more intermediate commodities can be processed and produced in China, and Chinese enterprises will be encouraged to go global and drive other countries to integrate into the global industrial chain and supply chain. Second, we will expand trade in services. We will establish a system for opening up high-standard service industries. We will establish a sound negative list management system, implement opening-up measures, improve regulatory and risk prevention and control mechanisms, and constantly improve governance under open conditions. We will support pilot demonstrations and pilot trials. We will use comprehensive pilot and demonstration cities to lead the opening up of industrial development, continue to promote the opening up of key industries such as science and technology, telecommunications, culture and tourism, and finance, and foster new models and business forms of trade in services.
Third, we need to promote the development of digital trade. We will strengthen the top-level design of digital trade, establish and improve the statistic and monitoring system for digital trade, actively explore and improve the basic systems, standards and norms of data right confirmation and transaction circulation, strengthen the construction of digital trade platforms, accelerate the digital transformation of the whole trade chain, strengthen and optimize the national digital service export base, and build digital trade demonstration zones. We will improve our capacity for independent innovation in digital technologies such as cloud computing, big data, artificial intelligence, and blockchain. We will deepen bilateral and bilateral and regional dialogue and cooperation among Belt and Road countries and share the development opportunities of digital trade.
Fourth, promote the development of cross-border e-commerce. Empowered by policies and new technologies, cross-border e-commerce has formed a new form of business in terms of technology, model and supply chain, which has become one of the new drivers driving the growth of foreign trade. In 2023, China's import and export of cross-border e-commerce will reach 2.38 trillion yuan, up 15.6%. There are more than 100,000 cross-border e-commerce entities, 1,800 overseas warehouses, and 255 full-cargo aircraft. With the expansion of the overall scale of cross-border e-commerce, China's cross-border e-commerce has shown a new trend in platform operation, supply chain integration and development. We will accelerate the improvement of digital infrastructure. We will explore the use of blockchain, big data, artificial intelligence and other next-generation information technologies, and establish and improve an online comprehensive service platform. Further optimize the international supply chain management, based on key markets, the construction of global overseas warehouse network. While consolidating and expanding the market, we will guard against external environmental risks and promote cooperation and exchanges with trading partners in the field of intellectual property rights.
2) Promote the "Belt and Road" construction with high quality
First, we will further strengthen infrastructure construction. The improvement of infrastructure is the basis of promoting regional economic integration. Second, we will promote soft connectivity of rules and standards. By coordinating the laws, regulations, technical standards and trade rules of various countries, we can reduce the barriers to cooperation, improve the efficiency of cooperation, and help build a more open and inclusive environment for cooperation. Third, we should strive to build a mutually beneficial and win-win industrial chain and supply chain cooperation system. By optimizing resource allocation and strengthening the cooperation between the upstream and downstream of the industrial chain, a complementary supply chain can be formed, so that all parties can benefit from it. This can not only enhance the competitiveness of the industries of various countries, but also help to promote the balanced development of regional economy.
Fourth, we will improve trade and investment liberalization and facilitation. By lowering trade barriers, simplifying investment processes, and promoting the free flow of capital, goods and services, we will further stimulate market vitality and bring more development opportunities to countries along the Belt and Road. Fifth, deepen international cooperation on production capacity and third-party markets. We will transform our production capacity advantages into cooperation advantages, and explore new opportunities for cooperation with third-party markets to achieve common development. This will not only help to enhance the industrial competitiveness of all countries, but also contribute to the balanced development of the global economy.
3) Safeguarding relations with its major trading partners
Relationship with the United States: Seek common ground while reserving differences and avoid decoupling. China-us relations is one of the most important bilateral relations in the global economy. In this relationship, they strive to find areas and opportunities for cooperation while maintaining their respective core interests and values.at the same time. The United States is one of China's most important trading partners, and even if there are political and strategic differences, it should strive to maintain the continuity of trade and investment and avoid the disruption of economic relations.
Relations with the EU: active communication, each to break down. The European Union is composed of multiple member states. Different member states have different needs and positions. They adopt targeted strategies, exchange and coordinate on policies, regulations and standards, and establish good cooperative relations with other countries respectively. Relations with ASEAN: close ties and win-win cooperation. Asean is China's important economic partner in Asia. In terms of infrastructure construction, trade facilitation, regional economic integration, China can seek win-win cooperation mode and jointly promote the prosperity of regional economy.
4) Enhance scientific and technological strength, stabilize the chain and strengthen the chain
First, strengthen basic research and development investment, and strive to produce original leading technology. We will strengthen investment in basic research and development, especially in key areas and cutting-edge technologies, further cultivate internationally competitive original technologies, promote scientific and technological progress and industrial upgrading, so as to occupy a favorable position in global competition.
Second, we need to enhance the resilience of industrial and supply chains through innovation. Innovation is the key to enhancing the resilience of the industrial chain and supply chain. Through continuous technological innovation, the adaptability and flexibility of the industrial chain can be improved, so that it can better respond to market changes and external shocks, and build a more stable and flexible industrial chain and supply chain system.
Third, smooth the domestic and international circles, so that scientific and technological innovation can be directly translated into trade benefits. Unblocking domestic and international circles refers to breaking the boundaries between regions and industries, promoting the transformation and application of scientific and technological achievements, and strengthening the connectivity of domestic and foreign markets. By establishing an efficient transformation mechanism of scientific and technological achievements, scientific and technological innovation will be directly transformed into economic benefits and improve trade competitiveness.
Liu Yuanchun, president of Shanghai University of Finance and Economics, former vice president of Renmin University of China and co-founder of China Macroeconomic Forum (CMF), " pointed out that the past decade was a decade of the restructuring of the global supply chain and trade pattern. During this decade, China's foreign trade actually maintained a state of steady growth. The main reason is the comparison between the cost effect and the decoupling effect. It is obvious that the decoupling effect has been more intense in the past two years, but the impact from the cost should not be ignored. In fact, the cost factor in China's foreign trade can be attributed to three main aspects: first, technological progress, second, the scale effect of the market, and third, the reallocation effect. The combined effect of three aspects makes China's position in the world trade increasingly important although "risk" movement, geopolitical " conflict, the intensity of the game is likely to make decoupling effect in the future into a new stage, should also recognize that the industrial chain, supply chain, innovation chain, talent chain chain fusion of the cost effect into an era of rapid fermentation. To better control the fusion and the cost effect and decoupling effect, don't have to because of the acceleration of decoupling effect and excessive panic, and to continue to play the role of the cost effect, relying on the unity of the domestic market, domestic competition order, but also pay attention to global competitiveness, in every corner of the world for all kinds of penetration and layout.(Marketing Terminal)
