Tap market potential

In the wake of the global recession, China's foreign trade has suffered negative growth since November last year. Export volume dropped by 26 percent in February.

As the second wave of the financial crisis emerges in Eastern Europe, the pace of global economic growth is expected to slow down even further. China's gloomy foreign trade prospects will not change substantially in the coming months as demand from the US and European countries drop. Rising protectionism in these countries will also have a negative impact on the country's exports.

However, as Chinese Minister of Commerce Chen Deming pointed out, this recent decline in foreign trade does not mean that China has lost confidence either in its economic recovery or the global economic recovery. The Chinese economy is still complementary with those of developed countries, despite shrinking orders and profits. People in developed countries still need daily necessities and that is where China has an advantage.

The US and European markets, which consume more than 60 percent of the world's textiles and clothing, have depended heavily on products that are made in China. The economic recession will prompt people to choose common consumer goods and middle and low-end commodities. Under these circumstances, the low-end market-oriented Chinese manufacturing industry still has a huge potential for further development.

At this year's session of the National People's Congress, Chinese Premier Wen Jiabao said the Chinese government is prepared for harsher economic conditions, and new economic stimulus packages are to be launched as necessary. The increased tax rebates granted to domestic exporters have produced positive effects on the economy. More policy tools can be employed, including favorable policies in financing exporters.

China is still in the early stages of industrialization and urbanization. It can tap the potential of its huge domestic market and abundant labor force. This would be an effective weapon to tackle the ongoing crisis.

People's Daily Overseas Edition

(China Daily 03/30/2009 page2)