Foreign trade faces added challenges

China's foreign trade will face increased challenges this year after lackluster growth in 2012, according to experts, with one calling for urgent efforts to improve the trade structure.

"I am concerned that China's foreign trade this year will be more challenging than that in 2012," Wei Jianguo, vice-chairman and secretary-general of the China Center for International Economic Exchanges, told a forum on Friday. Wei said there will be more uncertainties than expected during the global economic recovery in the next three to five years.

Economic growth in the US, China's biggest export destination in 2012, may not bounce back as expected owing to difficulties in shoring up manufacturing to boost the real economy.

Wei, a former vice-minister of commerce, said, "We must watch out for the European Union, a key player in China's exports. The debt woes will last for a long time and the biggest concern now is its unemployment and the looming fiscal trouble in Italy. Sluggish demand in the EU will further drive down turnover at the Canton Fair (China's largest trade fair, held twice a year, and a barometer of its exports) after a 9.3 percent drop in the autumn session."

China's imports and exports rose 6.2 percent year-on-year in 2012, contrasting with a 22.5 percent surge in 2011. Exports in 2012 grew 7.9 percent year-on-year, the slowest pace in more than a decade, except for 2009.

Yao Jingyuan, a researcher at the Counselors' Office of the State Council — China's cabinet — blamed weak exports in 2012 for China's slow economic growth, which expanded 7.8 percent year-on-year, the slowest pace since 1999.

"High-tech exports retained quite high growth in 2012, suggesting the current export growth model and structure is not sustainable. Amid rising costs at home and fierce competition from neighboring countries with lower costs, we have reached an urgent time to transform exports and take the downward pressure off exports as the motivation for restructuring," Yao said.

Chen Zhihan, general manager of Fujian Jiamei Group, a leading maker of ceramic artware, said, "It's not very difficult for us to get orders this year, but hard to beat rising costs for profit. The exchange rate fluctuation in 2012 eroded about 10 percent of the profit while labor advantage have faded out and raw materials are cheaper in some overseas markets."

Guo Ruolai, an assistant to the general manager of the Dahuachem International Economic & Trade Co Ltd, a giant chemicals manufacturer, said the focus this year is ensuring the safety of capital to be collected from trade partners in debt-troubled economies.

Li Demin, general manager of the Dongning Huaxin Group in Heilongjiang province, said, "We expect our trade value to rise to $250 million or $300 million this year from $200 million in 2012, mainly driven by our transformation from mechanical and electrical exports to Russia to agricultural investment, which in return boosts machine exports."

Wei added, "Training of migrant workers, or semi-skilled workers … must be enhanced for the country to retain its position of world factory and leading exporter. In addition, more efforts should be made on trade in services to improve the trade growth model."