3rd LD Writethru-News Analysis: China's foreign trade structure optimized as growth dented

China's foreign trade structure has been optimized although growth remained anaemic in the first quarter of 2015, official data showed Monday.

Exports slumped in March despite previous signs of improvement, the General Administration of Customs (GAC) found.

Last month, foreign trade volume dropped by 13.5 percent to 1.76 trillion yuan (286.6 billion U.S. dollars) from a year earlier, following an 11.3 percent increase in February and a 10.8 percent decrease in January, according to GAC.

The lackluster performance was partly dragged down by a 14.6 percent export slump in March, following a 48.9 percent surge in February, indicating a grim external environment.

Total foreign trade posted a 6 percent decrease in the first three months, falling to 5.54 trillion yuan, with exports rising 4.9 percent and imports dropping 17.3 percent.

The figures come after the annual target for foreign trade growth was lowered to around 6 percent for 2015, from 7.5 percent in 2014, when a mere 2.3 percent increase was delivered, falling short of the target for the third consecutive year.

Trade with the European Union, its biggest trade partner, waned by 2.1 percent in the first quarter, while with the United States, the second largest, rose 3.2 percent. Trade with Japan plummeted by 11 percent during this period.

"Generally speaking, foreign trade is on the decline as the global recovery is sluggish, and domestic downward pressure is mounting," said GAC spokesman Huang Songping.

Huang attributed the decline to disruptions caused by the Spring Festival holiday and high comparative base in March last year.

It is common for the economy to start the year sluggishly due to the Lunar New Year holiday, when many businesses and factories shut for a week, which this year fell in February compared to January the previous year.

However, foreign trade was streamlined in layout and structure despite the decline, according to Huang.

In the first quarter, the combined volume of exports and imports in the central and western regions advanced 1.9 percent year on year to 1.93 trillion yuan, accounting for 34.9 percent of the nation's total, up 2.7 percentage points from the same period last year.

Specifically, the exports of central and western regions soared 16.5 percent, much higher than the national average level.

Key production sites started to expand into less developed central-west regions from the developed eastern coast.

Private-owned enterprises contributed 34.9 percent of the overall foreign trade volume in the first three months, 2.7 percentage points higher than the same period last year, said Huang. "Illustrating gradual improvement of self-directed development of foreign trade."

Huang further noted that the structure of exports has also been upgraded given the robust performances of high-end products.

The transportation vehicle, smart phone and metal processing tool sectors all expanded over 20 percent year on year in the first quarter.

As to the imports, Huang said China managed to buy more because of an overall 9.8 percent price drop in imports.

The prices of imported iron and ore, crude oil and coal slipped 45 percent, 46.8 percent and 18.6 percent on average year on year, Huang said.

Foreign trade in general has improved in "structure," "benefit" and "quality" despite weakened growth, he continued.

Trade surplus exploded 6.1 times to 755.3 billion yuan in the first three months.

As China has entered a "new normal" phase, marked by slower but better growth, the central government has been at pains to move the economy away from growth that relied heavily on investment and exports.

China's economic rise over the past two decades relied on enormous capital investment and exports backed by a huge, cheap labor force, but that cannot last forever.

The economy grew 7.4 percent in 2014, a 24-year low. The official growth target this year is a record low of around 7 percent.

China has a full "tool kit" at its disposal and will use it if growth nears the lower end of the range, Premier Li Keqiang said in early March.

As part of efforts to shore up growth, the Silk Road Economic Belt and the 21st-Century Maritime Silk Road initiatives were launched to improve cooperation with countries in Asia, Europe and Africa.

The overall foreign trade volume with the countries alongside the "Belt and Road" was estimated at 1.45 trillion yuan in the first quarter this year, accounting for more than 25 percent of the total. The growth rate of exports to those countries as a whole has exceeded 10 percent year on year, far exceeding the global average, said Huang. Endi