China will ramp up financial support, cultivate new growth engines, and strengthen services for foreign trade enterprises in order to unlock momentum and foster resilience in the country’s foreign trade sector – a critical pillar underpinning overall economic growth, officials and analysts said. As global trade faces strong headwinds and protectionist pressures, China is strengthening the coordination of its trade, fiscal, financial, and industrial policies to provide holistic support for enterprises in stabilizing orders and expanding markets, they added. “Over the past 11 months, China’s total imports and exports have reached CNY39.79 trillion, up 4.9% year-on-year. The country’s export share in the global market has remained largely stable,” Wang Shouwen, Vice Minister of Commerce, told a news conference in late November. In recent years, the global economy has faced a backlash against globalization, with trade protectionism on the rise. Over the past decade, global trade growth has fallen behind global GDP growth, Wang said.
Foreign trade companies have said that the coverage of export credit insurance needs to be further expanded. Smaller firms are facing certain financing difficulties, and they are also encountering bottlenecks in sea freight transportation, Wang added. Against this challenging back-drop, China’s foreign trade has maintained stable growth. However, the country has seen a slight moderation in the pace of expansion since August, Wang said. Foreign trade has been a bright spot in the Chinese economy over the past months, as sluggish domestic demand and a tepid property market have to some extent dragged down overall economic expansion, analysts said, calling for strengthened support in key areas.
Increasing financial support, and leveraging financial instruments to hedge against the uncertainties that enterprises may face, as well as reducing capital turnover cycles, are of utmost importance for foreign trade companies, especially smaller ones, said Zhou Maohua, Researcher at China Everbright Bank. The Export-Import Bank of China will be tasked with strengthening credit allocation in the foreign trade domain. The bank will better tailor its financing products and services to meet the diverse needs of different types of trade enterprises, as laid out in the policy package introduced by the Ministry of Commerce (MOFCOM).
Additionally, financial institutions across the board will be encouraged to increase lending to small and medium-sized foreign trade businesses in accordance with market-oriented and rule-of-law principles. Over the course of the year so far, the one year and five-year-plus loan prime rates have declined by 0.35 and 0.60 percentage point, respectively, according to the People’s Bank of China (PBOC). As a result, the weighted average interest rate on new corporate loans extended in September was around 3.5% – a 0.31 percentage point drop compared to the same period last year, reaching a historic low, said Liu Ye, an official at the central bank. As part of the new initiative, dedicated efforts will be made to expand the scale and coverage of export credit insurance, aiming to empower enterprises in exploring more diversified overseas markets.
In addition to robust financial services, catalyzing the growth of the cross-border e-commerce sector is also high on the work agenda, and a key priority is the continued advancement of overseas smart logistics platforms, according to MOFCOM. The government will encourage local authorities to explore the establishment of cross-border e-commerce service platforms to provide enterprises with legal advisory, tax guidance, and other crucial business services for navigating overseas markets.
During the first three quarters of the year, China’s cross-border e-commerce imports and exports grew by 11.5% year-on-year, accounting for nearly 6% of the country’s total foreign trade. The rapid expansion of China’s cross-border e-commerce sector underscores its growing significance in driving the overall growth of the nation’s foreign trade, analysts said. A number of influential international e-commerce companies have emerged, and an efficient and smart global logistics network has been established, strengthening China’s international competitiveness, Lan Qingxin, Professor in the School of International Trade and Economics at the University of International Business and Economics, said. The authorities will provide compliance training to help over 120,000 cross-border e-commerce enterprises, many of which are small businesses, and navigate Customs clearance, taxation, product quality, and intellectual property issues, Vice Minister Wang said.
China’s foreign trade is heavily dependent on sea freight, with 95% of cargo volume transported through maritime logistics. The challenges faced by major shipping corridors this year, including the Red Sea, Suez Canal, and Panama Canal, have had a tangible impact on the international trade environment. The next step is to facilitate matchmaking between local foreign trade companies and freight forwarding firms, enabling better alignment of demand and supply in the sea freight market, said Zhou Mi, Senior Researcher at the Chinese Academy of International Trade and Economic Cooperation, as reported by the China Daily.
