Press briefing on foreign trade

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Speaker:
Zhang Ji, director-general of the Department of Foreign Trade, Ministry of Commerce

Chairperson:
Hu Kaihong, vice director-general of the Press Bureau, State Council Information Office

Date:
May 20, 2014

CRI:

Just now you said that great changes have taken place in the current situation and conditions in foreign trade both at home and abroad. What is your analysis of the medium- and long-term situation for foreign trade?

Zhang Ji:

Just now I talked about the current situation in foreign trade. In fact, the current, medium-term and long-term trends are related each other. The trend has both external and internal factors, both objective and subjective factors.

According to customs statistics, from 1978 to 2008 China's trade in goods advanced significantly, and the change could be summarized as "earth-shattering." The average annual growth rate has approached 18 percent, ranking first in the world currently from 32nd in 1978. It should be said that this progress did not come easily. It was made under the guidance of the state's correct development strategy and the hard work of many foreign trade enterprises. It was also the result and reflection of the Chinese people's diligence and wisdom. At the same time, I think there was a special background. The change in this kind of background will be helpful for us to judge the medium- and long-term trends.

This special background includes the following aspects:

First, a long period of prosperity of the world economy. From 1979 to 2008, the global economy grew at an average annual rate of 3.4 percent, and global trade grew at an average annual rate of 8.2 percent. Second, an acceleration of globalization. In the late 1980s, labor-intensive industries involving textiles, garments and furniture transferred from Hong Kong, Singapore, South Korea and Taiwan -- the so-called "Four Asian Dragons" -- to the Chinese mainland. In the late 1990s, labor-intensive industries like IT processing also transferred from Japan and South Korea to China. This has formed strong export abilities in China and helped the formation of a trade power. Third, the United States' IT revolution and financial innovation has boosted global economic growth and international industrial transfers. Fourth, the stable advantage of the low cost of China's land, labor force and environment.

From 1995 to 1999, the annual labor cost of a Chinese manufacturing worker was US$729, accounting for only one fortieth of the cost in the United States, one fourth of that of Thailand, and even lower than India. In that context, our foreign trade achieved a great deal by relying on our traditional advantages and low cost elements. Take mechanical and electrical products for example. If there was no financial crisis and the growth rate of the year 2002-2007 could have been maintained, by 2012 our export volume would have been the total of Japan, the United States and Germany, accounting for 40 percent of the world total. It was impossible, so it was not sustainable.

The factors I mentioned just now have undergone profound changes. Currently, we need to be aware of both the difficulties and the deep-seated factors. We should also look into trade development with a more peaceful state of mind. First, the world economy has entered a period of slow growth. It is still difficult for new energy, energy-saving and environmental-friendly emerging industries to become a new economic growth point. Second, some developed countries have put forward the return of industries and slowed down the transfer of industries to China. Third, trade protectionism has risen again, with China being the first to suffer the impact. It has extended from traditional industries to new industries, and from developed countries to developing countries. Fourth, traditionally competitive advantages have gradually weakened. But we still have our advantages. We still have many favorable conditions and opportunities.

First, the world economy is still slowly recovering. External demand is expected to gradually improve. China's market diversification strategy has made substantial progress. There is always plenty of room to maneuver.

Second, China still has comprehensively competitive advantages such as an improved infrastructure, complete industrial facilities, high-quality human resources, and a good business environment.

Third, we have developed a group of internationally competitive industries and enterprises. Private enterprises have become the main market in the development of China's foreign trade with the most activity and potential.

Fourth, the CPC Central Committee and the State Council attach great importance to foreign trade work. In recent years, a series of policies on foreign trade growth and structural adjustment have been issued to create a good policy environment.

Fifth, the Third Plenary Session of 18th CPC National Congress made a series of major decisions. In Particular, the building of new system of open economy and the implementation of various reform tasks will be a strong driving force for the development of foreign trade.

Generally speaking, the era of high-speed foreign trade growth has gone forever. For a considerable period of time, China's foreign trade will develop at a medium to low speed. We are confident that, through the joint efforts of the Chinese people, the steady growth of foreign trade and structural improvement can be achieved to play a supporting role in economic development.

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