Hong Kong Bauhinia Magazine:
Foreign trade is one of the "three carriages" driving China's economy, contributing much to the country's employment and taxes, and playing a vital role in building a moderately prosperous society in all respects. Faced with the complicated global trade situation, what are MOFCOM's forecasts for China's foreign trade in the future? What policies and measures will you be taking? Thank you.
Wang Wentao:
As we all know, foreign trade is one of the "three carriages" driving China's economy. To answer your question, I will cite a series of statistics.
First, foreign trade has promoted the steady development of the economy. In 2020, the scale of China's foreign trade hit a record high of $4.6 trillion, accounting for 14.7% of the international market share. Second, it has fueled supply in the domestic market. The CIIE planned, arranged and promoted by Xi Jinping, general secretary of the CPC Central Committee, has boosted imports, and provided numerous commodities favored by Chinese consumers. With imported goods going to ordinary supermarkets and millions of households, consumers now have more options. Third, it has expanded employment and taxes, bringing jobs to around 180 million people.
Since the 18th CPC National Congress in 2012, China's foreign trade has contributed a total of 11% to the country's total financial revenue, while maintaining a stable foreign exchange reserve of around $3 trillion. It has effectively guaranteed the sound balance of international payment for a huge country like ours. China has already become the world's largest trading nation in goods. Last year, it ranked first in terms of total trade volume in goods and services globally.
How do we perceive this situation? China's foreign trade maintained an upward momentum in the first seven months of this year, with an increase of 24.5% year on year, hitting a 10-year high. This growth can be attributed to multiple factors, while of which are one-offs. Given the temporary nature of these one-off factors, we think the situation in the first half of next year will be very serious. For example, the increasingly severe pandemic situation in surrounding regions brought about the re-shoring of orders, with many orders shifting to China. However, as the pandemic has gradually been curbed, these re-shored orders might be transferred back. The exports of medical supplies such as masks, medical isolation gowns and respirators soared at the beginning of the pandemic. Now, there has been a sharp decline as these one-off factors fade away. We see growth gradually slowing as the second half of 2021 gets under way. We may encounter more severe challenges next year. At the same time, our economy started to recover from the second half of last year. Given the huge numbers, the rapid pace of recovery cannot be sustained for a long time. We hope the recovery will slow down in a gradual manner with growth eventually stabilizing within a reasonable range. Improving the cross-cycle policy adjustment will allow the economic fluctuations to stabilize within a reasonable range, and prevent harm from dramatic fluctuations in economic growth and market entities. So, for the second half of this year, we will concentrate on improving the cross-cycle policy adjustment in a bid to keep foreign trade within a reasonable range. Specifically, we will focus on four aspects: stabilizing growth, promoting innovation, ensuring a smooth flow in industrial and supply chains and expanding cooperation.
We will stabilize growth, mainly in terms of market entities and orders. We are still faced with some difficulties, which are also commonly seen in the international community, such as limited shipping capacities and expensive shipping fees, rising prices of bulk commodities and raw materials, pressure caused by the rising renminbi exchange rate, and rising labor costs. These are the four main issues being faced by foreign trade companies. Small- and medium-sized enterprises (SMEs) are facing rather difficult circumstances. Therefore, we will take a series of measures to stabilize market entities and orders.
We will promote innovation. Besides the traditional foreign trade activities, we will fully promote the development of new business forms and patterns, such as cross-border e-commerce and exports of high-tech, high-quality and high added value products. We will also step up efforts to promote Chinese brands overseas.
We will ensure a smooth flow in both foreign trade industrial and supply chains.
We will expand cooperation. Due to time constraints, I will condense this point as deepening international economic and trade cooperation. As Mr. Wang said earlier, we should deeply integrate the efforts in protecting the multilateral trading system, negotiating FTAs and upgrading FTAs into overall international economic cooperation, and better play our part in promoting development of the globe and Chinese foreign trade. Thank you.
Chen Wenjun:
Due to time constraints, we will take one last question.
