Foreign trade helps with advance on Chinese path to modernization

 

Zhou Jiahui, president of Ningbo Aijia Electrical Appliances Co, recently spent a lot of time at the company's design unit and workshops in Zhejiang province. His goal was to incorporate feedback from a Russian client into the development of a prototype for a new kitchen appliance.

 

Zhou had just returned from the first phase of the 133rd China Import and Export Fair (Canton Fair) in Guangzhou, capital of Guangdong province. With a full resumption of on-site activities, the fair - a major gauge of China's foreign trade - accommodated a record 34,933 companies, compared with 25,000 last year, from home and abroad. It attracted buyers from a total of 226 countries and regions, the organizer said.

 

"Big orders must be gained from face-to-face talks. We gained over $5 million worth of export orders and intended orders from our foreign clients during the Canton Fair," Zhou said.

 

The company's export markets are mainly in Europe and the United States, but it has received its first order from Russia and a growing number from customers in Southeast Asia, Zhou added.

 

To meet the demand for customer orders placed at the Canton Fair, more than 20 production lines owned by Ningbo Aijia, which employs 1,500 workers, are now in full operation. Many foreign clients have also visited the company's factory to track follow-up orders and seek opportunities for launching new projects.

 

China's foreign trade, supported by resurgent overseas demand, closer business ties with emerging markets, and various industrial upgrading efforts, grew by 5.8 percent on an annual basis to 13.32 trillion yuan ($1.92 trillion) in the first four months of this year, General Administration of Customs data show.

 

Lyu Daliang, director-general of the administration's statistics and analysis department, said the trade recovery is expected to continue as China's overall economic operation improves and the nation's sound economic fundamentals remain unchanged.

 

In a recent article published in Qiushi Journal, a flagship magazine of the Communist Party of China Central Committee, Xi Jinping, general secretary of the CPC Central Committee, called for efforts to give full play to the supporting role played by exports in the economy, and for the transformation of China into quality trader to be accelerated.

 

Xi emphasized efforts to expand domestic demand by prioritizing the recovery and expansion of consumption and effectively driving investment throughout society through government investment and policy incentives.

 

In terms of modernizing the nation's industrial system, he said China has the most complete industrial system and a domestic market with the greatest potential in the world. He also called for efforts to improve the country's resilience and the security of industrial and supply chains while paying close attention to addressing weaknesses and enhancing strengths.

 

Huang Qunhui, director of the Institute of Economics at the Chinese Academy of Social Sciences, which is based in Beijing, said China is accelerating efforts to develop advanced manufacturing to gain a key competitive edge globally and inject new impetus into its economy. As a result, the nation's export sector, backed by high added-value products, green transformation and digital solutions, will become a powerful driving force on the Chinese path to modernization.

 

China's strong supply chain competitiveness and improved business environment were highlighted by Enric Tria, managing director for Europe at Taurus Group, a Spanish home appliances manufacturer and a buyer at the Canton Fair.

 

He said Chinese products are known for their affordability, quality and versatility, making them a popular choice for companies worldwide looking to source parts, components and finished goods.

 

"In this massive market, our expectation is to look for new products and see what the main partners and suppliers present to us. We are mainly looking for any products related to small domestic appliances," Tria said.

 

Imports rise

 

Such optimism is shared by Chen Wenling, chief economist at the China Center for International Economic Exchanges in Beijing. She said China's commitment to high-level opening-up will not only accelerate the recovery of the global economy and increase its import volume, but also create fresh opportunities for international cooperation.

 

Despite challenges ranging from the disruption caused by the COVID-19 pandemic to geo-economic fragmentation, China's imports rose by 0.02 percent on a yearly basis to 5.65 trillion yuan in the first four months of this year, customs data show.

 

During this period, the nation's imports of crude oil rose by 4.6 percent year-on-year to 179 million metric tons, while its imports of coal totaled 142 million tons, up by 88.8 percent from the same period a year ago.

 

"An open industry or market can enhance corporate competitiveness and spur technological innovation, thereby promoting high-quality economic development," Chen said.

 

Bai Ming, deputy director of international market research at the Chinese Academy of International Trade and Economic Cooperation in Beijing, said: "China's expansion of opening-up is a crucial catalyst for its trading partners. It will push toward a more open, inclusive and balanced economic globalization."

 

For example, China's potential accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership would see the nation's consumer base triple and also result in a 1.5-fold expansion of the pact members' total GDP, Ministry of Commerce data show.

 

With global demand picking up and product quality improving further, government officials and trade experts predict that China's foreign trade will continue to advance this year, with mechanical and electrical products the key drivers of such growth in coming months.

 

Chen Bin, deputy director of the expert committee at the China Machinery Industry Federation in Beijing, said that while clothing, furniture and home appliances, once known as the "big three pillars" that drove China's export growth, are constantly being upgraded, the "new big three pillars" — electric vehicles, lithium-ion batteries and solar cells — have become the emerging driving force for the country's exports.

 

Customs data show the nation's outbound shipments of the latter three products rose by nearly 67 percent on a yearly basis to 264.69 billion yuan in the first quarter.

 

At a factory owned by Shuangdeng Group Co, a storage battery producer based in Taizhou, Jiangsu province, a batch of lithium-ion batteries was being prepared for export to South Africa. The company added a new production line for such batteries this year to respond to surging overseas demand for household energy storage.

 

Wang Shuai, head of the delivery department for lithium products at the company, said, "Compared with the same period last year, demand among our overseas clients for energy storage has gradually met expectations, increasing by more than 60 percent."

 

Meanwhile, Xie Xiaoqing, director of the international procurement department at Chinese automobile maker SAIC Motor Corp, said the growth rate for exports of the company's new energy vehicles, or NEVs, is still relatively high. He predicts that the proportion of NEVs among the group's total auto exports will rise to 25 percent this year, up from 16 percent last year.

 

To meet growing demand from overseas customers, 1,000 MG-branded vehicles produced at SAIC Motor's factory in Ningde, Fujian province, were shipped to Mexico in late March.

 

SAIC Motor sold more than 1 million vehicles overseas last year. The company has established a whole value chain for the automobile industry overseas, including research and development centers, manufacturing bases, supply chain hubs, regional sales and after-sales centers, and finance companies, Xie said.

 

Stefan Hartung, chairman of the board of management at Robert Bosch, the German industrial and technology group, said: "Right now, about 11 percent of vehicles made in China are exported … At the same time, many auto parts need to be imported into China. In view of this, I think there is a need for good collaboration in world markets and among people around the world."

 

Gulferaz Ali, vice-president and managing director for Asia-Pacific at Eastman Chemical Co, a specialty materials manufacturer based in the United States, said China is a huge market that drives the global economy. As it is critical to all industries and multinational companies, the country's thriving auto market represents a big opportunity for his company.

 

As NEVs become increasingly popular, all players in the industry need to adapt their product offerings quickly to keep up with changing market trends, he said, adding that this could potentially lead to the entire automotive industry being reshaped.

 

Thanks to China's well-developed industrial clusters, economic recovery and various multilateral and bilateral free trade agreements, the foreign trade of foreign-invested enterprises amounted to 4.06 trillion yuan in the first four months, accounting for 30.5 percent of the nation's import and export value, customs data show.

 

Tackling challenges

 

Acknowledging that domestic exporters face challenges in the form of increased trade risks and the need to improve profitability, Wang Shouwen, vice-minister of commerce, said the government will resume offline trade fairs and assist with the orderly resumption of international passenger flights this year.

 

Key measures will include helping automakers establish and improve their global marketing and service networks, ensuring funding for large-scale equipment projects, and accelerating revision of the list of encouraged technologies and products for import.

 

To improve its foreign trade structure, China will transfer the processing trade to central, western and northeastern regions, formulate green and low-carbon standards for some foreign trade products, guide enterprises in making good use of cross-border e-commerce export-related tax policies, and improve the efficiency of customs clearance, Wang said.

 

Eager to gain more orders from other parts of the world, many Chinese manufacturers from sectors such as NEVs, electrical appliances, petrochemicals equipment and construction machinery have been rushing to reserve booths at overseas business exhibitions this year.

 

Xie Weihong, dean of Guangdong University of Technology's School of Economics, said: "China's export-oriented companies are acutely aware that without orders, there is no revenue. They will not be able to invest in research and development, and this situation could lead their businesses to a dead end."

 

As a result, such companies have been keen to upgrade the technological content of their products, and they prefer to have face-to-face interactions with foreign clients, particularly with companies dealing in clothing, foodstuffs and industrial parts, he said.

 

Not all export deals can be sealed via cross-border e-commerce channels, Xie added.

 

Wang Linjie, spokeswoman for the China Council for the Promotion of International Trade, said that in addition to registering for global trade shows, many Chinese companies have been actively exploring emerging markets, especially in signatory countries to the Regional Comprehensive Economic Partnership agreement.

 

The global trade shows the companies have registered for include Techtextil North America in Atlanta, US, this month, IFA Berlin 2023 in September, and the International Tools and Hardware Expo in Tokyo in October.

 

Sang Baichuan, dean of the Institute of International Economy at the University of International Business and Economics in Beijing, said domestic companies have also found a new way to increase sales by setting up livestreaming studios at their factories to directly promote a wide variety of products.

 

A meeting of the State Council early last month decided that China will make more efforts to implement a policy mix to maintain the stability of foreign trade and help businesses secure orders and expand the market.

 

It was also decided that the nation will find ways to stabilize exports to developed economies and guide companies to continue their exploration of markets in developing countries as well as regional markets such as member states of the Association of Southeast Asian Nations.

 

Six central government branches, including the National Development and Reform Commission and the General Administration of Customs, launched a special campaign this year to optimize the business environment at key ports and further advance the facilitation of cross-border trade.

 

The campaign is scheduled to run for five months in 17 cities in 12 provincial-level regions, including Beijing, Tianjin, Shanghai and Chongqing.

 

Measures will be taken to increase the construction of smart ports and the digital transformation of ports, and to support the upgrading of the foreign trade industry, as well as the healthy and sustainable development of emerging forms of business.