China’s foreign trade will see challenges during the second half of the year, but is still expected to register solid growth, according to analysts and business leaders.
Such challenges include recurring COVID-19 outbreaks, rising costs from disrupted logistics and surging commodity prices, they said.
Their remarks came as the latest data from the General Administration of Customs showed that the nation’s total imports and exports expanded to 21.34 trillion yuan ($3.3 trillion) in the first seven months, up 24.5 percent year-on-year and 22.3 percent from the same period in 2019.
Exports and imports jumped 24.5 percent and 24.4 percent from a year earlier, respectively.
“The reoccurring COVID-19 outbreaks, especially the rampant spread of the Delta variant, together with surging commodity and sea freight prices, will have a negative impact on China’s foreign trade,” said Zhang Yansheng, chief researcher at the China Center for International Economic Exchanges.
“But the good performance of China’s foreign trade in the past seven months also indicates promising prospects in the coming months, considering that performance was achieved when China only adopted minimal economic stimulus measures,” Zhang said.
Imports are expected to continue their healthy momentum as the Chinese economy continues to recover and grow, while exports will be supported by recovering demand overseas as countries such as the United States have been resorting to strong economic stimulus measures, he said.
Zhang added that challenges facing China’s foreign trade mainly come from high commodity prices, disrupted logistics, increased shipping costs, order transfers from China as other countries resume production and pressure on economic growth amid the country’s pursuit to peak carbon emissions before 2030 and realize carbon neutrality before 2060.
In a note on Aug 8, researchers at Sinolink Securities said China’s exports are supported by increasing global demand in high-tech sectors, such as information technology, high-end equipment and new energy.
Liang Ming, director of the Institute of International Trade affiliated with the Chinese Academy of International Trade and Economic Cooperation, said production resumption in other countries will drive up demand for higher value-added goods that China has comparative advantages in producing, such as intermediate products.
Stephen Fung, president of Fung Group in China, believes China’s exports and imports in the second half of the year are likely to hit new highs, based on considerations such as rising overseas demand due to the vaccine-driven recoveries and the attractiveness of China as a production base amid COVID-19 uncertainties.
Yet Li Kuiwen, director of the General Administration of Customs’ Statistics and Analysis department, said the growth rate of China’s foreign trade is likely to slow during the second half of the year due to a high comparative base in 2020.
He also mentioned that high material costs and disruptions in maritime freight have compromised profitability of foreign trade enterprises and dampened their willingness to accept new orders.
Li Qiyuan, director of Jiangsu Jinlong Technology Co Ltd’s export department, a knitting and weaving machinery manufacturer, said export orders of the company were stable in the first seven months. However, the COVID-19 pandemic has caused a decline in exports of knitting machines to some countries, including India and Vietnam.
Previously, customers paid more attention to factors such as machine quality, configuration and stability. Now they are more willing to purchase cost-effective products that can be delivered within a short period in order to get profits in a short period of time, he added.