Cautious Optimism on China's Foreign Trade

来源: CHINA FOREX 2017 Issue 3
By Wang Jiaqiang and Xie Feng

China has seen some encouraging signs in foreign trade this year,as a recovering global economy and improved domestic demand buoy imports and exports. But there are numerous uncertainties on the horizon and the main one is the rise of opposition to globalization in key market economies.  At the same time,China is grappling with the thorny problem of reducing leverage in the domestic economy and the need to reduce financial risk.  

In the first half of 2017,China's combined imports and exports reversed a six-year downturn. In the future,in the face of major uncertainties,globalization needs to be actively promoted alongside of a deepening of structural,supply side reforms to enhance the competitiveness of the foreign trade sector. China must also push ahead with its efforts to prevent systemic financial risks.

China's foreign trade grew a year-on-year 19.6% in the first half of 2017,reaching its highest level since 2011. Imports and exports had rebounded since the second half of 2016,reflecting the improvement in the domestic economy and an upturn in external demand. A number of policies were put in effect to stimulate domestic demand and promote steady trade growth,among them the "Belt and Road" initiative,a program that will benefit trade over the longer term. In the first half of this year,domestic fixed asset investment grew 8.6% year-on-year and total retail sales climbed 11%. Against this background,the global economy is expected to improve over the next two years.  On the external side,the European and Japanese economies continued to recover steadily in the first half of the year while emerging markets maintained high growth.

At the same time,the structure of the nation's trade is improving. In the first half of 2017,exports of high value-added mechanical and electrical products showed strong momentum,and imports of some high value equipment and key components gained pace. China's combined imports and exports with the countries covered under the ¡°Belt and Road¡± program grew 23.4% in the first half of the year,while total trade with Africa jumped 28.3%,outpacing the overall growth in foreign trade in the same period. This kind of demand from emerging markets is consistent with China's strategic trade and its opening to the outside world.

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