SCIO briefing on China's import and export performance in H1 2022

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Mr. Li, you just said that China's foreign trade had achieved steady growth in H1. What do you think are the drivers behind it? Do you think the growth momentum can be maintained in the second half of this year? How do you forecast China's foreign trade in H2? Thank you.

Li Kuiwen:

Thanks for your questions. In H1, China's foreign trade grew steadily, maintaining positive growth for eight consecutive quarters. The foreign trade volume has grown steadily to 19.8 trillion yuan (US$2.95 trillion), which has contributed to a stable macroeconomic performance. The growth of China's foreign trade, in my opinion, is attributed to the following aspects:

First, the international market demand is relatively stable. Since this year, despite the rising external risks caused by the COVID-19 pandemic and the Ukraine crisis, the global economy is generally picking up, and the international market demand is stabilized. In H1, China's export of electrical equipment and products, integrated circuits, and automobiles have increased by 24.8%, 16.4%, and 51.1%, respectively. The export of labor-intensive products like textiles and garments, plastic products, and footwear rose by 10.8%, 14.9%, and 31.4%, respectively.

Second, the demand for domestic production is high. This year, faced with a complex external environment and economic downside pressure brought by the COVID-19 pandemic, the CPC Central Committee has effectively coordinated epidemic control and socioeconomic development, which has helped stabilize the macroeconomic performance. The demand for domestic production gradually recovered, providing strong support for import growth. In H1, China's import in copper products, basic organic chemical products, and integrated circuits grew by 16.2%, 7.9% and 5.5%, respectively.

Third, the rapid recovery of import and export in some regions have firmly stabilized the overall state of China's foreign trade. This year, the Yangtze River Delta region, the Pearl River Delta region, and China's northeast had seen cluster cases of COVID-19, which has resulted in the slump of their foreign trade. But after the epidemic has been quickly taken under control, these regions have seen a rapid recovery in foreign trade with growth rates turning negative to positive. Their strong resilience in foreign trade have also helped stabilize China's overall foreign trade performance. In May, these three regions have seen their imports and exports grow by 4.8%, 2.8%, and 12.2% year-on-year, respectively, and their growth rate further picked up to 14.9%, 6.4%, and 12.8% year-on-year in June, respectively.

Fourth, the vitality of market entities has been effectively stimulated. As the country's policy measures to stabilize the economy have taken effect, the work related to increasing both the volume and quality of imports and exports is rapidly progressing, and the vitality of market entities in China's foreign trade market have been effectively stimulated. In H1, the number of companies with visible progress in foreign trade grew by 5.5% year on year. Various businesses in foreign trade maintained growth in both imports and exports. The import and export of private enterprises grew by 13.6%, 4.2 percentage points higher than the average growth, and these private businesses have contributed 6.5 percentage points to the growth of China's foreign trade.

Moreover, the high international commodity prices, to some extent, have also driven the growth of import value. In H1, the Thomson Reuters/CoreCommodity CRB Index, which reflects the fluctuations of international commodity prices, has grown by more than 25%. Against this background, the average import prices for crude oil, natural gas, and coal visibly picked up and have driven the growth rate of the overall import value.

I won't repeat my forecast on future foreign trade because my earlier remarks have already covered this part. It is fairly to say that China's foreign trade is faced with some instabilities and uncertainties, as well as some positive factors. I think we are still on a solid foundation to steadily increase both the volume and quality of imports and exports. Thank you.

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