It has been five months since the outbreak of the domestic epidemic and the outbreak of the overseas epidemic. With the emergency prevention and treatment measures adopted by various countries, as of now, the confirmed cases, infection rates and other data in various countries have declined significantly. Therefore, many countries have We have begun to gradually “unblock” and resume normal work and life. At present, foreign trade orders have returned, so what will be the situation of my country’s foreign trade in the second half of the year?
Exports are one of the “troika” that drive economic growth. In 2019, exports contributed 11% to China’s economic growth. The primary goal of the government’s work this year is to promote “six stability” with “six guarantees”. “Stabilizing foreign trade” is not only important to “guaranteeing residents’ employment”, “guaranteeing basic people’s livelihood”, “guaranteeing market entities”, “guaranteeing the stability of industrial and supply chains” “It is very important, and it is also related to export earnings, foreign exchange reserves and even the stability of the monetary system.
In 2020, China has a heavy task of stabilizing foreign trade. Affected by the global epidemic, the world economy has suffered a severe recession, industrial and supply chain cycles have been blocked, international trade and investment have shrunk, and the commodity market has been turbulent. According to the forecast released by the World Trade Organization in April, global merchandise trade will fall by 13% in 2020 under optimistic conditions, and by more than 32% under pessimistic conditions, which will be accompanied by global GDP declines of 2.5% and 8.8% respectively. possibility.
1. New orders increased when the PMI index was released in May
According to data from the National Bureau of Statistics, in May, China’s manufacturing purchasing managers index (PMI ) was 50.6%, down 0.2 percentage points from the previous month.
From the perspective of sub-indices, among the five sub-indices that make up the manufacturing PMI, the production index, new order index and supplier delivery time index are all higher than the critical point, and the raw material inventory index and employee index are both above the critical point. below the critical point.
▎Production continues to recover
The production index is 53.2%, which is 0.5 percentage points lower than last month, but is higher than the critical point, indicating that manufacturing production continues to improve; in Among the 21 industries surveyed, the production index of 14 manufacturing industries was higher than the critical point, of which 7 manufacturing industries such as textiles, clothing and apparel were lower than the critical point. The supplier delivery time index was 50.5%, an increase of 0.4 percentage points from the previous month, indicating that the delivery time of manufacturing raw material suppliers has accelerated. In addition, the employment index was 49.4%, down 0.8 percentage points from the previous month, indicating that the employment prosperity of manufacturing companies was lower than that of the previous month.
▎New orders increased
The new orders index was 50.9%, an increase of 0.7 percentage points from the previous month, and the difference with the production index narrowed; the current global epidemic and the world economy The situation remains severe and complex, and foreign market demand continues to shrink. Among them, the new export order index and import index were 35.3% and 45.3% respectively. Although they increased by 1.8 and 1.4 percentage points from the previous month, they were both at historically low levels.
▎The price index rebounded
The purchase price index of main raw materials and the ex-factory price index were 51.6% and 48.7% respectively, an increase of 9.1 and 6.5 percentage points from the previous month. Both are highs in the past four months, with the main raw material purchase price index rising above the critical point and corporate raw material purchase prices rising. In addition, the raw material inventory index was 47.3%, a decrease of 0.9 percentage points from the previous month, indicating that the inventory of major raw materials in the manufacturing industry decreased.
▎Business confidence improved
The expectation index for production and operation activities of manufacturing companies increased by 3.9 percentage points from the previous month, reaching 57.9%. Relevant companies in some industries are generally optimistic about industry development trends in the next three months. In May, the comprehensive PMI output index was 53.4%, the same as last month, indicating that the production and operations of Chinese enterprises have steadily improved.
2. The actual overseas order volume is still small
With the significant increase in global economic uncertainty and the overall decline in international trade, it is necessary to stabilize domestic demand and give full play to the domestic market Potential, through export to domestic sales and other methods, can mitigate the adverse impact on the overall economy. Expanding export credit insurance and other methods will help promote the orderly operation of exports.
The current decline in overseas orders is a major challenge faced by many export-oriented companies. According to feedback from people in the foreign trade industry, the actual overseas orders placed by domestic related industries are still very small. Europe and the United States have just started to resume work soon, and many orders are still in the early inquiry stage. There is still some time before factory inspections and orders are placed. We have just seen hope. , and seasonal products such as clothing have lost many spring and summer orders.
It is understood that the impact of external demand exerts different pressure on various industries. Industry insiders have calculated the external demand exposure of various manufacturing industries. The results show that electronics, clothing, shoes and hats, furniture, cultural and entertainment supplies have a higher proportion of exports. These are also industries with weak foreign trade performance during the epidemic. As European and American countries gradually resumed work in June, external demand improved marginally. However, the time required for overseas countries to resume work may be relatively long, and the intensity should not be overestimated.
3. The foreign trade trend is expected to recover in the second half of the year
For export companies, the situation in the second half of the year is crucial. Can China’s foreign trade continue to improve? China’s foreign trade situation is closely related to global economic growth and trade situation. In the case of overall economic downturn, China’s foreign trade will also be affected. Since the epidemic broke out later in the United States and Europe than in China, the subsequent impact will continue to be felt in the second half of the year. China’s trade is expected to remain sluggish in the second quarter and will recover in the second half of the year. There are also optimistic expectations that foreign trade will recover moderately in the second quarter, and the trend of foreign trade throughout the year is highly uncertain.
Many international institutions have a negative attitude towards the global economic trend in 2020. According to the latest data from the United Nations Conference on Trade and Development, global tradeYi’s first quarter of 2020 dropped 3% from the previous quarter, and is expected to drop 26.9% quarter-on-quarter in the second quarter. The European Commission pointed out that Europe is experiencing an economic shock unprecedented since the Great Depression, and the GDP of the 27 EU countries will decline by 7.4% throughout the year. The Japan Economic Research Center combines forecasts from 24 institutions and believes that Japan’s GDP will shrink by 11% on an annualized basis in the second quarter.
Looking ahead to the whole year, overseas economies are in deep quagmire, which may put some pressure on China’s exports. The United States has only started large-scale shutdowns and social isolation since mid-to-late March. In the second quarter of the escalation of prevention and control, the United States may face greater economic challenges. It is expected that the U.S. GDP will shrink by more than 10% in the entire second quarter, and the unemployment rate will also reach at least 15%. However, emerging market economies such as India, Brazil, Turkey, and Russia are still unable to control the epidemic. From a global perspective, developed countries may fall into a sharp recession of -7% to -10% year-on-year in the second quarter, and the global economy will experience at least two quarters of negative growth.
China’s import and export trade accounts for nearly a quarter of global trade and has been deeply integrated into the global industrial chain. An overseas economic recession will not only affect China’s external demand, but also increase the risk of supply chain disruption. In particular, China mainly exports consumer goods and capital goods in the global value chain. If overseas epidemics severely dampen consumption and undermine investment confidence, the impact on the demand side of China’s foreign trade and the industrial chain may be more profound.
Affected by the epidemic, the country-by-country structure of China’s foreign trade has changed. ASEAN has surpassed the EU to become China’s largest export market. From January to April this year, China’s export share to emerging markets increased by 2.2 percentage points from the same period last year to 50.9%, while the share of exports to traditional markets has dropped to 49.1%. The future opportunities for China’s foreign trade will mainly be reflected in two aspects:
First, new market opportunities brought by the “Belt and Road” construction;
Second, innovative development brought about by the new technological revolution opportunities, relying on technology, model, business format and management innovation to “press out” a group of stronger Chinese foreign trade companies and promote high-quality development of foreign trade
With the implementation of the strategy of expanding domestic demand, the scale of the domestic economic cycle will further expand, and economic development will shift more from export-driven to domestic demand-driven. In the future, China’s dependence on external markets, including the traditional markets of the United States and Europe, will further decrease, while its dependence on emerging markets will further increase.
Foreign trade will still play an important role in the process of achieving high-quality development of China’s economy. Its function will shift from “quantitative driving” in the past to “qualitative leading”. By fully mobilizing and Utilizing two resources from both domestic and foreign markets, the competitive advantage of foreign trade will transform from factor-driven cost and price advantages to innovation-driven comprehensive competitive advantages. Product technology, brand, quality, service, and standards will become necessary for the high-quality development of foreign trade. elements of competition. </p
