Market Trends

Survey shows trade to ride out stiff odds

China's foreign trade is expected to maintain momentum this year despite various challenges like high raw material and energy costs, a survey released on Thursday revealed.

The profitability of Chinese exporters in sectors like railway and aviation-related equipment manufacturing, shipbuilding and automobile, has improved during the third quarter of this year, according to a survey by the China Council for the Promotion of International Trade.

Major issues that troubled export-oriented companies in the first half, like high costs of logistics, capital and exchange rates, have eased, the survey report stated.

The survey interviewed 2,043 export-oriented companies in late August on issues related to their business outlook and market conditions for the third quarter.

The effects of various policies that were rolled out to stabilize foreign trade in the first half, started to show in the third quarter, said Sun Xiao, spokesman for the Beijing-based CCPIT.

As domestic exporters grow in confidence and develop positive expectations of foreign trade, more and more Chinese companies are getting proficient at both adapting favorable policies under the framework of the Regional Comprehensive Economic Partnership agreement and growing new formats of foreign trade, including cross-border e-commerce, said Sun, who is also the secretary-general of the China Chamber of International Commerce.

Despite facing headwinds from weakening overseas demand, more than 30 percent of Chinese exporters are expected to achieve year-on-year growth in annual trade volume, about 4.09 percentage points higher than that in the second quarter, the survey found.

China's foreign trade surged more than 10 percent year-on-year to 27.3 trillion yuan ($3.79 trillion) during the first eight months of this year, data from the General Administration of Customs showed.

Yet, the annual growth pace in August was 8.6 percent, down nearly 8 percentage points from that in July.

The slowing growth of exports came amid increasingly complex environment, with both the global economy and international trade facing unfavorable conditions. For the government, it is necessary to introduce new policies to ease pressure on businesses and stabilize foreign trade, said Zhang Yongjun, a researcher at the Beijing-based China Center for International Economic Exchanges.

Even though supported by smooth domestic logistics and well-developed industrial and supply chains, China's exporters must further diversify their market layout and avoid risks, as European countries and the United States — China's main export destinations — are facing potential recessions. If the current situation continues in the same vein, it could slow growth of external demand, he said.

The government will encourage and facilitate companies' participation in various exhibitions, and further improve the efficiency of goods distribution at ports and via domestic transportation, so as to ensure products are swiftly transferred and delivered, the Ministry of Commerce announced early this week.

Zhou Maohua, an analyst at China Everbright Bank, said China's export structure has been notably optimized, with exports of electromechanical products — computers, vehicles, smartphones and the like — increasing proportionately in foreign trade.

He said this pattern has also reshaped China's role from a manufacturer of low-end products like furniture and travel cases to a provider of high value-added industries like electric vehicles and liquefied natural gas carriers.

Exports of electromechanical products rose by 9.8 percent year-on-year to 8.75 trillion yuan between January and August, accounting for 56.5 percent of the nation's total export value, Customs data showed.

In addition to shipping seven gantry cranes to its Indonesian client in August, Jiangsu Watts Energy & Engineering Co Ltd, a Qidong, Jiangsu province-based oil and gas storage and transportation equipment manufacturer, will start to build 12 mega LNG tanks for Japan's Mitsubishi Heavy Industries Ltd in October.

Because Chinese companies have distinct advantages in terms of cost control and project execution, many orders of offshore engineering vessels and auxiliary products have flowed into China in recent years, said Zhang Hongbiao, the company's vice-president.

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