Factors behind slump in China's trade volume

China's trade volume in March totaled $332.52 billion, down 9 percent from a year earlier, according to statistics released by the General Administration of Customs on April 10. Export value dipped 6.6 percent year-on-year to hit $170.11 billion, while import value slumped 11.3 percent to stand at $162.41 billion, resulting in a trade surplus of $7.7 billion, compared with trade deficit of $960 million last March.

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March was the first month this year to be free from the impact of the Chinese Spring Festival holidays, and the statistics reflect the actual economic scenario. Despite the recovery in developed economies and the recent yuan depreciation, which should have helped Chinese exports, China saw a trade slump, which can be attributed to the following factors:

First, last year's export data might have been whitewashed as some enterprises inflated their export orders in order to channel international capital into the country. Such cases have fallen due to the recent yuan depreciation.

Second, some emerging countries are encroaching upon China's share in the global trade market. For instance, the United States imported 22 percent more goods from Vietnam last year, and 19 percent more as of January this year.

Third, developed countries in Europe and the US have since the end of 2012 reinvigorated their manufacturing industries, or "reindustrialization", depriving Chinese enterprises of some of the opportunities brought by the upturn in the international market. And this is likely to continue for some years.

Fourth, import slump was mainly attributable to flagging domestic demand, albeit the falling commodities prices also should take some blame.

With trade figures gradually getting free of false-order distortions and coming back to normal, the country's trade outlook is expected to improve in the second quarter, as the Chinese government is expected to roll out a slew of stimulus measures to boost investment and consumption, such as the rebuilding of shanty towns and railways.

The author is a certified financial planner and independent commentator. The views do not necessarily reflect those of China Daily.