SCIO briefing on China's commerce development in 2015

Singapore Lianhe Zaobao:

I have two questions. The first is: the total volume of China's foreign trade dropped by 9.8 percent this January, how do you see the trend of China's foreign trade in the whole year? What is the target for this year's foreign trade? The second question is about the "Belt and Road" Initiative. This year is the critical year for its comprehensive implementation. Can you tell us how the roles of this initiative will counter the United States' rebalancing strategy towards the Asia Pacific, given that the U.S. led TPP negations have already been concluded, and how the "Belt and Road" Initiative will complement the China-proposed Free Trade Area of the Asia Pacific? Thank you.

Gao Hucheng:

We saw a continued decrease in China's foreign trade this January due to factors like migrant workers returning home ahead of the Chinese traditional holidays. You may have missed the fact that major economies all saw drops in their foreign trade. I have got some figures here, but won't read it one by one. The fact is, most of them declined by over 10 percent. In the context of global foreign trade and economic growth, China's foreign trade sustained the tendency in 2015.

I would like to take this opportunity to review China's foreign trade in 2015, which will help you understand better its development in 2016. The 2015 government work report set that year's growth rate of foreign trade at around 6 percent. But the actual figure was a negative growth of 8 percent. Exports fell by 2.9 percent, imports fell by 14.1 percent, and the total volume of foreign trade stood at US$3.96 trillion. Why was there such a big deviation from our projected goal? It has caught the attention of many people recently.

Before talking about this statistical deviation, I'd like to clarify one point. Over the past 30 years'of reform and opening-up, China's foreign trade grew by an annual average of 15.3 percent. Upon China's accession to the World Trade Organization (WTO), its foreign trade was only about US$500 billion. We all noticed the big deviation between last year's projected goal and actual performance. In fact, deviations have been there over nearly 20 years, some even surpassed that in 2015. We ignored it because the economy was growing rapidly. Here are some examples. The 2003 government work report set the country's foreign trade growth rate at 7 percent, while the actual figure was 37.1 percent; In 2007, our goal was maintaining a high rate of export growth and moderately expanding imports, a general goal without specific figures. But it actually grew by 23.6 percent. In 2009, our projected goal was an 8 percent growth rate, but it actually plummeted 13.9 percent. I found out that over the past 20 years, only five years saw a close match between the projected goals and actual outcomes. Why did no one care about this situation? Because we have been so accustomed to rapid growth that whenever a negative growth was reported, we thought it was a problem. The fact is, the global trade suffered negative growth in 2015. The WTO recently published the foreign trade statistics of 71 major economies, and it showed overall exports fell by 11 percent and imports declined by 12.6 percent. I just said that China's foreign trade still delivered a satisfactory card because in the context of an overall growth in the world, China's growth rate was higher than other major economies; while the global trade declined, China declined the least. It still maintains its position as the largest trader in goods. And its share in global goods trade grows faster than previous years, up from 12.2 percent to 13 percent. Reviewing the past 20 years, a forecast of 6 percent of growth and an actual 8 percent decline is not a pronounced contrast. We need to adjust our thinking because we have come to an age when traditional industries need to improve their quality and efficiency and emerging sectors need to engage in innovation. And we should also pay attention to the gear shift, an inevitable hurdle we must cross.