'Uphill climb' forecast to reach trade target

Customers select imported wines at a duty-free shop in Haikou, Hainan province. The Ministry of Commerce said on Tuesday that it will be extremely hard to achieve this year's trade growth target of 7.5 percent. CHINA DAILY

Simultaneous export, import decline unusual; fall also reflects fake invoicing

Achieving the 7.5 percent foreign trade growth target for 2014 will be an arduous task, given that the nation's exports and imports are under extreme pressure, as shown by unexpected weakness in the first four months.

"We have to achieve average growth of 11.3 percent in the coming eight months, which will take a lot of effort," Zhang Ji, head of the Ministry of Commerce's foreign trade department, told a news conference in Beijing on Tuesday.

Total foreign trade contracted 3.1 percent year-on-year to 8.1 trillion yuan ($1.3 trillion) in the first four months of 2014, according to the General Administration of Customs.

In the past 10 years, Zhang said, there have only been two periods when exports and imports both declined. Apart from the present, the other time was in 2009, when global trade collapsed in the wake of the financial crisis.

A major factor in the weakness of foreign trade this year was an artificially high base. Widespread fake invoicing activity took place via Hong Kong early in 2013 as a means to evade regulations on capital flows. Shipments to Hong Kong fell 31 percent in the first four months of this year from that base, he noted.

Also, total processing trade (which accounts for about one-third of the country's overall trade) slid 6.5 percent to 2.55 trillion yuan. Processing trade involves using imported raw materials or parts to assemble items for export.

In April, the Ministry of Commerce forecast a pickup in trade starting this month that would persist throughout the year. It cited resilient demand in the global market, Chinese producers' improved competitiveness and government moves to boost and upgrade exports.

However, Zhang said the decline of the first four months showed that China still faces deep-rooted problems, such as weak traditional industries and turbulent global markets.

He added that it's a tough time for Chinese exporters, given the rapid transfer of traditional manufacturing to neighboring countries and rising costs of production.

Still, as the global and national economies go through an adjustment period, it's unnecessary to focus too heavily on figures, according to experts.

"We've gotten used to a situation where the growth of foreign trade outpaces economic growth. However, it is time to slow down to upgrade the trade structure," said Jin Bosong, a researcher at the Chinese Academy of International Trade and Economic Cooperation, a government think tank.

Noting the World Trade Organization's forecast that global trade will expand by 4.7 percent in 2014, Jin said that even 7 percent growth for China would be far faster than the global average.

"It will take time for China to change from an export-oriented economy," said Jin.

And it's not all gloom, he said. There are also positive developments.

"The drop in processing trade is indicating that the country is climbing up the value chain. Still, Chinese producers' added-value in the processing trade is very low," Jin said.

China's trade in services is also making progress, at least when weighed against soaring global investment in the sector.

From January to April, foreign investment in services totaled $22.5 billion, up 19.1 percent.

"Although investment in services doesn't drive merchandise trade as much as investment in manufacturing does, it's a sign of a transition," said Jin.

Mentioning the State Council's measures to deal with the "severe and complicated" foreign trade situation, which were announced earlier this month, Jin cautioned that China's export advantage lies in its numerous engineering and technical personnel.

"The government should pay more attention to the protection of intellectual property rights to stimulate the country's economy," the researcher added.