China’s foreign trade will see challenges during the second half of the year, but is still expected to register solid growth, according to analysts and business leaders. Such challenges include recurring Covid-19 outbreaks, rising costs from disrupted logistics and surging commodity prices, they said. China's foreign trade reached CNY21.34 trillion in the first seven months, up 24.5% year-on-year and 22.3% from the same period in 2019, according to the General Administration of Customs (GAC). Exports and imports jumped 24.5% and 24.4% from a year earlier, respectively. “The reoccurring Covid-19 outbreaks, especially the rampant spread of the delta variant, together with surging commodity and sea freight prices, will have a negative impact on China’s foreign trade,” said Zhang Yansheng, Chief Researcher at the China Center for International Economic Exchanges. “But the good performance of China’s foreign trade in the past seven months also indicates promising prospects in the coming months, considering that performance was achieved when China only adopted minimal economic stimulus measures,” Zhang said.
Zhang added that challenges facing China’s foreign trade mainly come from high commodity prices, disrupted logistics, increased shipping costs, order transfers from China as other countries resume production, and pressure on economic growth amid the country’s pursuit to reach peak carbon emissions before 2030 and realize carbon neutrality before 2060. Researchers at Sinolink Securities said China’s exports are supported by increasing global demand in high-tech sectors, such as information technology, high-end equipment and new energy. Liang Ming, Director of the Institute of International Trade affiliated with the Chinese Academy of International Trade and Economic Cooperation, said the resumption of production in other countries will drive up demand for higher value added goods from China, which has comparative advantages in producing intermediate products. Stephen Fung, President of Fung Group in China, believes China’s exports and imports in the second half of the year are likely to hit new highs, based on rising overseas demand due to vaccine-driven recoveries and the attractiveness of China as a production base amid Covid-19 uncertainties.
Yet Li Kuiwen, Director of the General Administration of Customs’ Statistics and Analysis Department, said the growth rate of China’s foreign trade is likely to slow during the second half of the year due to the high comparative base in 2020. He also mentioned that high material costs and disruptions in maritime freight have compromised the profitability of foreign trade enterprises and dampened their willingness to accept new orders, the China Daily reports.
China's foreign trade has also been boosted by an increase in cross-border e-commerce. Last year, as many as 10,000 firms like exporters and importers embraced digitalization for the first time, helping boost foreign trade via cross-border e-commerce by 31% to CNY1.69 trillion. A large number of export-oriented firms in China have started to adopt digital solutions like big data, business-to-business (B2B) platforms and online exhibitions to attract overseas customers and boost sales.
