China Focus: Despite slide, 2015 trade promising

The new year appears to be off to a rough start for China's foreign trade, with 2015 data turning negative two months in. But officials and economists remain confident the full-year target is achievable.

Exports surged more than 48 percent from the previous year in February, led by sales to the United States and Europe. However, decline of imports deepened, reflecting headwinds facing the world's second-largest economy. Exports and imports combined fell 2 percent in the first two months.

Wang Tao, chief China economist with UBS, said the contrasting surprises in the export rebound and double-digit import collapse should not be "over-interpreted" as Chinese New Year distortions are "notoriously volatile."

It is common for the Chinese economy to start the year sluggishly due to lunar New Year holidays, which fell in February this year but January in 2014.

On Saturday, Commerce Minister Gao Hucheng said February's foreign trade might be weak but expressed confidence that China would meet the trade target of around 6 percent for 2015.

"Looking ahead, there are signs of stabilization in the trade performance as suggested by the official purchasing managers' index, for which new export orders and import indices both rebounded in February," Barclays chief China economist Chang Jian said.

Strength in external demand, especially recovery in the U.S., more free trade agreements, favorable tax policies and more flexible exchange rates for the yuan would all help boost foreign trade this year, said Bai Ming, a trade expert with the Ministry of Commerce (MOC).

Latest data showed U.S. employers added more jobs than forecast in February, with the unemployment rate falling to the lowest level since May 2008, providing evidence that U.S. recovery has picked up.

China's largest export market, the U.S. saw a 21.2-percent surge in shipments from China during the January-February period, according to customs statistics.

It's hard for China to sustain the rapid expansion of foreign trade seen in years past because the market share in some markets had been large, MOC spokesman Shen Danyang said Monday in comments published on the government website (www.gov.cn).

Lower growth of foreign trade would be a "new normal," Shen said. "Foreign trade remains an important engine for economic development, and its growth rate can't slow too much."

The Chinese government will adopt measures to support foreign trade, including boosting the service trade, facilitating the transformation of processing trade and expanding trials in cross-border e-commerce, Premier Li Keqiang said in the government work report at the National People's Congress annual session.

The government also plans to increase the country's share of heavy industrial products in the international market, including railway, electric power, telecommunications and engineering machinery industries.

Liu Jia, vice general manager at Leisure Clothing Ltd., a Malta-based subsidiary of China Chongqing International Corp. for Economic and Technology Cooperation, said China's foreign trade would still have huge development potential if export companies move up the value chain.

After launching its own brand, orders from Europe climbed and sales expanded 30 percent year on year in February, Liu said.

Mei Xingbao, a member of the National Committee of the Chinese People's Political Consultative Conference, said the "Belt and Road" Asian trade infrastructure initiatives will play an important role in boosting foreign trade and stabilizing growth by strengthening manufacturing exports. Endi