Foreign trade prospects

To spur their own economic revivals, the US, the EU, Japan and other major economies have raced to launch quantitative easing policies, causing continuous depreciation of their currencies. This has added exchange rate pressures to China's foreign trade enterprises. For domestic export-oriented enterprises, the appreciating yuan has resulted in a continuous decline in their profits. Such pressures will not subside if the yuan's upward trend does not change.

A long-standing trade surplus has aided China's economic development, but for other countries and regions it has been the source of discontent, fuelling increased frictions and trade rows. To change this, China has worked to adjust its previous export-oriented foreign trade policy in an effort to strike a balance between imports and exports and create a relaxed and friendly international market environment for its enterprises. At the Boao Forum for Asia Annual Conference 2013, President Xi Jinping said that China will have $10 trillion worth of aggregate imports within five years, which will offer enormous opportunities for its trade partners and offset its own exports.

Theoretically, the first-quarter foreign trade recovery is a reflection of China's economy recovering. However, the 7.7 percent GDP growth in the first quarter is lower than expected. The slowed economic pace, together with a year-on-year decline in the March producer price index and the volume of rail freight, as well as a near-zero growth in power consumption, indicates that China's economy is still facing downturn pressures, although the measures adopted to stabilize growth since the latter half of last year have had some effect. But the continuing lack of a competitive edge in the international market will put further pressure on Chinese enterprises in the future.

In the past, the government has increased support to export-oriented sectors to make up for the country's lack of domestic demand. However, the adverse international environment means the difficulties domestic export enterprises face will not ease in the immediate future. That demands China abandon its obsession with the pursuit of the size of trade alone and accelerate pursuit of technological innovations and improve the quality of its commodities to win market share.

The author is a Shanghai-based economics commentator.

(China Daily 04/19/2013 page8)