Foreign trade faces challenges in 2013

China's foreign trade still faces "challenging prospects" in 2013, despite January's significant pickup in growth, the Ministry of Commerce said.

"The January figure suggests that China's foreign trade maintained the stable growth momentum from the end of last year, and measures to stabilize foreign trade are working well," Commerce Ministry spokesman Shen Danyang told a news briefing on Wednesday.

"But trade growth in January is normal and within expectations if the impact of Spring Festival falling in January last year is taken out of the equation."

This January had 22 working days, five more than in 2012 when the seven-day Spring Festival holiday fell in the first month of the year.

"Trade prospects for the whole year remain challenging as demand in overseas markets has seen no significant improvement," Shen added.

Foreign trade in the world's second-largest economy rose 26.7 percent year-on-year in January to 2.17 trillion yuan ($345.59 billion), with exports rising 25 percent and imports growing 28.8 percent, according to the General Administration of Customs.

After adjustments due to seasonal factors, foreign trade in January eased from December's 10.2 percent and increased 8.1 percent year-on-year, with exports rising 12.4 percent and imports increasing 3.4 percent.

"Export growth in February will not be as high as the 29.6 percent year-on-year rise witnessed in the same period last year. The January and February figures should be read together to get a full picture," Shen said.

Li Jian, a researcher from the Chinese Academy of International Trade and Economic Cooperation, a think tank of the Ministry of Commerce, said real trade growth in January was at "a slow pace" and the prospects for the whole year's foreign trade are "still not optimistic".

"The world economy is slowly recovering at a low growth rate with the economies of the European Union and Japan struggling, which weakened demand for Chinese exports. In addition, domestic costs keep rising amid a shrinking labor force," Li said.

He added that China's foreign trade growth in 2013 will "still be single digit" following the 6.2 percent expansion in 2012.

"More unfavorable factors are the quantitative easing or currency depreciation moves in developed economies, which will force renminbi appreciation, while increasing Chinese exporters' costs and curtailing their competitiveness," Li said.

Shen from the ministry said that currency depreciation or quantitative easing measures not only dent China's foreign trade, but also harm global commerce.

Zhuang Jian, a senior economist with the Asian Development Bank, called for more value-added exports and a diversification of export destinations.

"We have to significantly enhance the competitiveness of Chinese exports through technological innovation and increasing added value rather than relying on low costs. In addition, exports to Africa, Latin America and Asia, where Chinese products remain popular, can be expanded, while the EU and the US are not performing well," Zhuang said.

He predicted that China's foreign trade will be slightly better than last year.

Zhuang added that trade protectionism will increase if measures to boost growth do not work well in major economies and thus take their toll on China's trade environment.

The US Department of Commerce announced on Jan 17 that it was launching countervailing duty investigations on frozen warm-water shrimp from China and another six countries, the first probe into Chinese agricultural products. The department has already imposed anti-dumping duty orders on frozen warm-water shrimp from Brazil, China, India, Thailand and Vietnam for eight years.

"Without recognizing China as a market economy, the US anti-dumping and countervailing investigations, with no sufficient evidence, violate world trade rules and its own federal laws," Shen said.

"We hope the US prudently handles the case and avoids harming bilateral trade and agricultural cooperation."