The Paper:

Affected by factors such as shrinking external demand, China's foreign trade imports and exports were under pressure in the first half of the year. How does MOFCOM evaluate the situation of foreign trade imports and exports in the first half of the year? In addition, we've noticed a significant decline in the growth rate of imports and exports in May and June. What is the reason behind this? Thank you.

Li Xingqian:

Thank you for raising these two important questions. Your first question is about the import and export performance in the first half of the year. Since the beginning of this year, the external challenges facing foreign trade have indeed increased significantly. The State Council has issued policy measures in a timely manner to fully support foreign trade enterprises in exploring markets. Overall, in the face of a severe and complex external environment, foreign trade in the first half of the year withstood the pressure and demonstrated strong resilience. There have been outstanding performances in three areas:

First, the overall scale of trade has remained stable, and the volume of trade has continued to grow. From January to June, China's imports and exports of goods exceeded 20 trillion yuan, with a year-on-year increase of 2.1%. When compared with the same period before COVID-19, that is, the first half of 2019, it increased by 36.7%. We continue to maintain our position as the world's largest trading nation in goods, and our market share is steadily increasing. According to the latest data from the World Trade Organization (WTO), in the first quarter, global exports fell by 1.6% year on year, while China's export market share in the international market was 14%, an increase of 0.3 percentage point compared with the first quarter last year. Our monitoring also shows that in the second quarter, China's export share in the international market still maintained a steady and rising trend. Against the backdrop of overall sluggish global demand, our neighboring countries and regions have generally experienced double-digit declines in exports. China's export market is diverse, and its products are rich, effectively offsetting the impact of weak external demand and the cyclical decline of some products. The current performance of China's foreign trade is in line with expectations.

Second, the quality of trade has been continuously improved. From January to June this year, the share of emerging markets in imports and exports increased by 1.8 percentage points compared with the same period last year, reaching 63.5%. Our imports and exports to FTA partners increased by 2.4%, and to countries along the Belt and Road grew by 9.8%, both higher than the overall export growth rate. The quality of exported products is improving, and high-quality, high-tech and high-value-added products are growing strongly. In the first half of the year, electric passenger vehicles, solar cells and lithium batteries together boosted the overall export growth rate by 1.8 percentage points. The model of foreign trade is also being innovated and developed. We have replicated and promoted 30 excellent practice cases of new foreign trade models nationwide. In the first half of the year, cross-border e-commerce exports increased by 19.9%, maintaining a fast development momentum.

Third, foreign trade has effectively served the overall economic development. Foreign trade has continued to drive the recovery of the national economy, directly and indirectly employing 190 million people. Last year, we canceled the registration requirement for foreign trade operators, further stimulating the enthusiasm of market entities. From January to June, there were 35,000 new foreign trade enterprises with import and export records compared to the same period last year. In terms of ensuring supply in the domestic market, we actively expanded imports of grain, energy and resource products, and high-quality consumer goods to meet domestic production and living needs. In terms of opening-up, we promoted the comprehensive implementation of the RCEP among the 15 signatory countries, so that the internal and external circulations flow more smoothly.

Your second question is about the decline in the growth rate of China's imports and exports in May and June. This is actually a direct reflection of the weak recovery of the world economy in the field of trade. Specifically, there are four main reasons for the decline. First, overall external demand remains weak. Major developed countries are still adopting austerity policies to cope with high inflation, and some emerging markets have significant fluctuations in their exchange rates and insufficient foreign exchange reserves, which has significantly suppressed import demand. Second, the electronics and information industry is in a cyclical downturn. Consumer electronics products are one of China's leading export products, but this field has an "Olympic cycle" and is currently in a low for the four-year period. Affected by this, the export growth rate of computers, integrated circuits and cellphones, which account for more than 30% of our country's exports, has declined by double digits. Third, the import and export base in the same period last year was significantly raised. From May to June last year, the average monthly import and export volume was 3.57 trillion yuan, which was 430 billion yuan higher than the average monthly volume of 3.14 trillion yuan in the preceding four months. Fourth, import and export prices are declining. Currently, international commodity prices have been weakening. In May, China's import prices fell by 4.5%, and in June, they fell by a further 8.5%. The export prices also turned negative year on year from May, indicating a shift from positive to negative.

However, we should also note that foreign trade is accumulating new vitality despite declining import and export growth in May and June compared to the same period last year. The month-on-month growth rate has remained positive. The foreign trade cargo and container throughput at China's ports monitored by the transportation department is also growing, and the actual flow of goods in and out is still rather active. Therefore, we remain optimistic about the prospects of foreign trade in the second half of the year. Thank you.