Export Decline, Foreign Trade Policy Or Loosening

China's trade growth slowed sharply in the first half of this year, and the trade surplus in general trade fell sharply in 1-5 months. The surplus was only 9 billion 180 million US dollars, which was only about 1/4 of the same period last year.

The Renmin University of China reported that exports were deteriorating in the second half of the year, and the contribution rate of net exports to economic growth was estimated to be negative 8%.

According to sources, the slowdown in external demand has attracted the attention of the central government and relevant departments. A number of investigation teams have been sent to Zhejiang and Jiangsu provinces for export processing. It is expected that some policies to ease the pressure of export enterprises will be issued in the second half of this year.

It is understood that the textile and garment industry's export tax rebate increase proposal has been submitted to the State Council for approval in early June, and other export processing industry policies are also in the process of brewing.

Improving the export tax rebate for textile export

Since last year, while the RMB appreciation has accelerated, the government has constantly adjusted and tightened its foreign trade policy, drastically lowered the export tax rebate rate and expanded the processing trade restriction catalogue, implemented the "margin pfer" of the account margin, and proposed the adjustment of the policy of "re import of domestic goods". At the same time, the tight currency policy also increased the financing cost of the export enterprises, making it difficult for the export enterprises to continue.

Renmin University of China reported that the sharp decline in external demand is the primary cause of the current macroeconomic downturn in China. There is a further deterioration of China's external demand in the second half of this year.

Considering the factors of exchange rate changes, it is estimated that the decline in net export growth in 2008 will directly lead to a 0.83 percentage point decline in GDP growth throughout the year.

RMB appreciation accelerates foreign trade

Therefore, the report believes that the "hard landing" of China's economy may be avoided in the process of a sharp fall in external demand, and that the structure of exports and imports should be appropriately adjusted under the premise of ensuring a certain growth rate of external demand.

The report recommends the adjustment of the exchange rate and the intensity of trade adjustment. "The government needs to reconsider the intensity of various trade adjustment policies since 2007, appropriately adjust the export tax rebate rate or import tariff of some industries, while controlling the magnitude of the appreciation of the renminbi and preventing the impact of accelerated appreciation on trade."

This year's worsening foreign trade situation has attracted the attention of policymakers.

Senior officials of the Ministry of Commerce said that the government's policy orientation to maintain steady growth in foreign trade exports will not change much.

"In the international market downturn, we should prevent the accumulation of various factors and hurt the fundamentals of export growth."

Deliberate on the policy of adjusting export processing industry

The relevant departments recently set up a research group to evaluate the effect of the previous stage of trade policy adjustment, and deliberate on policy adjustment.

In May, the NDRC went to Wenzhou and other places to investigate the status of export processing industry. In mid June, the State Administration of taxation was also studying the export tax rebate policy in Zhejiang and Jiangsu.

For the possible policy adjustments in the second half of the year, sources said that the government may temporarily relax foreign trade policies, such as appropriately raising the proportion of export tax rebates and increasing credit support, so as to promote the harmonious development of society.

But while maintaining steady growth in exports, the state will optimize the structure of export commodities and change the policy orientation of export growth mode. It will also restrict the export of products with high pollution, high energy consumption and resources, and will tilt certain policies towards light industry, textile and other large labor intensive industries, so as to maintain the export growth of these industries, encourage technological upgrading, and encourage export policy for independent innovation, expansion of independent brands and independent intellectual property rights.