Despite virus, foreign trade soars 32.2% in Jan-Feb, consolidating fundamentals
China’s rosy foreign trade performance will sustain its GDP growth momentum in the first quarter of this year, consolidating the country’s fundamentals for steady and sound economic growth in the post-pandemic era, observers and business leaders said.
With the country’s foreign trade soaring 32.2 percent year-on-year to 5.44 trillion yuan ($828.6 billion) in the first two months of the year, they projected that China’s economy and opening-up will add greater impetus to the global business recovery in the first quarter and give support to its 6-plus percent GDP target for 2021.
There have been structural changes in the country’s export sector since the second quarter of 2020. Adversity caused by the COVID-19 pandemic and protectionism has forced export-oriented Chinese companies to transform their business mode, said Zhang Yansheng, chief researcher at the China Center for International Economic Exchanges.
“When exporters face difficulties in securing more orders, they expedite the upgrading of their businesses from running processing trade to general trade,” he said, adding that the inclination in recent years has been to ship more goods to easily accessible, relatively nearby markets such as member economies of the Association of Southeast Asian Nations, Japan and the Republic of Korea.
With many manufacturers in export-oriented provinces－such as Guangdong, Zhejiang and Jiangsu－continuing to increase production capacity to ensure timely delivery of exports, he said, these moves will boost the country’s GDP growth in the first three months of the year.
With China and its 14 partners planning to ratify the Regional Comprehensive Economic Partnership agreement before the end of the year and the country is aiming to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, Xu Liuping, chairman of China FAW Group, a Changchun-based State-owned automaker, said these moves will pave the way for his company to ship more products it manufactures in China to other Asia-Pacific markets.
“Benefiting from the free trade deals, we can make full use of the resources from the same economic region for production. Chinese automakers will enjoy more preferential tariff rates and trade treatment in the coming years,” he said.
China’s exports soared 50.1 percent year-on-year to 3.06 trillion yuan in the first two months of this year, and its imports surged 14.5 percent to 2.38 trillion yuan. The national trade surplus reached 675.86 billion yuan, according to the General Administration of Customs.
In February alone, China’s foreign trade totaled 2.42 trillion yuan, climbing 57 percent year-on-year.
The recovering demand from global markets has helped shore up China’s economic performance growth at a reactivated pace, said Hu Qimu, chief researcher at the Sinosteel Economic Research Institute in Beijing.
He predicted that China’s GDP would grow by double digits in the first quarter and continue to serve as a powerful engine for the global economy.
PMI hits year high
National Bureau of Statistics data show that the purchasing managers’ index－a gauge of manufacturing vitality－for China’s manufacturing sector rose in March to the highest level in a year.
The manufacturing PMI stood at 51.9 percent last month, up 1.3 percentage points compared with 50.6 percent in February. China’s manufacturing sector has remained in expansion territory for 13 consecutive months, according to the NBS.
Li Qilin, chief economist at Shanghai-listed Hongta Securities, said that economic activities have gained momentum from the demand side, with the new export order and import subindexes respectively rising to 51.2 and 51.1. Li added that the quick rise in new export orders had exceeded market expectations.
Apart from the manufacturing industry, the service business activity subindex rose by 4.4 percentage points monthly to 55.2 percent in March, showing that recovery of the sector in China is accelerating following the control of the pandemic.
The Chinese economy came to an unexpected halt in the first quarter of last year amid a strict lockdown to halt the spread of COVID-19 contagion, but it quickly rebounded after the government led a massive nationwide campaign against the pandemic, bringing it under control last year. China’s economy grew 2.3 percent year-on-year in 2020.