Trade in the balance

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Tough times ahead for China's exports as global uncertainties continue

The coming of the Chinese Lunar New Year is often associated with change. But the next few days, when the nation gets ready to welcome the Year of the Snake, or even months, are unlikely to lead to higher shipments or better trade numbers for export-oriented Chinese companies as global uncertainties continue to drag down demand.

Though the final days of the Year of Dragon were remarkable for many Chinese traders, as exports rebounded to a seven-month high in December, experts admit that a similar turnaround looks highly unlikely this time around, despite bright prospects in developing markets.

China's foreign trade posted a year-on-year growth of 6.2 percent in 2012 to $3.87 trillion (2.88 trillion euros), but was still far from the anticipated full-year growth target of 10 percent. Exports grew by 7.9 percent to $2.05 trillion, while imports grew by 4.3 percent to $1.82 trillion.

Part of the reason why the experts are still glum in their trade forecast stems from the fact that the global economic climate continues to be fragile with hardly any indications of a sizable pick-up in future demand. The continuing growth-oriented reforms in China also do not augur well for exporters as most of these measures are intended to boost domestic consumption.

Though some experts maintain that they are "cautiously optimistic" on growth prospects, others feel that overall growth prospects are still gloomy.

Wei Jianguo, secretary-general of the China Center for International Economic Exchanges, says that the global trade environment will become even more complicated this year.

"Of course, the biggest challenge is whether the eurozone can overcome its debt crisis this year. The vitality of the European Union is essential for us as it is still one of China's largest trading partners. The second concern is the continuous appreciation of the renminbi, which will put further pressure on Chinese exporters. Though we anticipate a pick-up in trade with developing nations, it is not clear whether it would be enough to offset the losses in developed markets," he says.

Wei says the overall prospects for 2013 are at best "cautiously optimistic". "The full year numbers will be slightly better than that of 2012, but the growth rate will still be in single digits," he says.

Wei's opinion is shared by many other experts and also by a recent business confidence survey of Chinese exporters.

According to a survey conducted by B2B media company Global Sources, many Chinese exporters anticipate a tumultuous business climate in 2013, although some are still confident of boosting overseas orders.

The survey, conducted in November, had polled nearly 1,546 Chinese exporters from various industries, such as electronics, telecoms and computer products, fashion accessories, home products, and garments and accessories, on the export prospects for 2013.

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Fifty-one percent of the respondents said they expect revenue from overseas shipments to be higher in 2013, with some estimating 10 to 20 percent growth, and others by as much as 30 percent. In its confidence survey during the first half of 2012, 93 percent of the surveyed companies had anticipated a sales revenue growth in 2013.

Although the confidence is low, Wei says people still have to look at the bright side.

"This year will be a year of opportunity for China to optimize its foreign trade structure. The traditional pattern of relying on exporting low added-value manufacturing products in large quantities cannot last long," he says.

Zheng Yuesheng, spokesman for the General Administration of Customs, had on Jan 10 said that although the speed of China's foreign trade growth had slowed, there have also been considerable achievements in optimizing the trade structure.

"China has become less reliant on one or some trade partners. Emerging and developing markets are now beginning to account for larger amounts of the overall trade. The central and western provinces are also playing a key role in bolstering China's exports. A geographical export balance is certainly on the cards," Zheng said.

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