Unable to reach 10-percent growth target this year, China rethinks foreign trade

The 112th China Import and Export Fair - commonly referred to as the Canton Fair - concluded on Nov 4, with an air of pessimism.

According to statistics released by the China Chamber of Commerce for Import and Export of Light Industrial Products and Arts-Crafts, the total transaction volume for light industrial products declined by 7.67 percent compared to the previous fair, and those for other products, such as machinery and electric products, textiles and apparel, also declined.

A foreign businessman negotiates with an exporter during the 112th Canton Fair. Business declines at the fair indicated gloomy foreign trade prospects for China. [Photo/bjreview.com.cn]

The Ministry of Commerce, or MOFCOM, on Oct 26 released its Report on Chinese Foreign Trade Development (Autumn 2012), which showed that China's foreign trade volume only rose by 6.2 percent in the first three quarters this year compared with the same period last year, and is unlikely to reach the goal of 10-percent annual growth set by the Chinese Government at the start of the year.

The export-driven growth model that China has relied on has gradually weakened in the last five years since the outbreak of the global financial crisis.

In a downturn

The global economic recession explains China's lackluster foreign trade performance, according to the Report on Chinese Foreign Trade Development.

This year has seen the ongoing global financial crisis continuing to impact the world economy as the European sovereign debt crisis deepens, world economic recovery slows and the demand across the international markets drops.

Zhao Jinping, deputy director of the Research Department of Foreign Economic Relations at the Development Research Center of the State Council, says among China's major export destinations, Europe is of highest concern.

In the first three quarters this year, China's exports to Europe dropped by 5.6 percent while exports to the United States grew by 9.6 percent.

However, the United States' role in bolstering China's exports is weakening. From January to June, China's exports to the United States increased by 13.6 percent, but from January to August, export growth dropped to 10.2 percent, and then to 9.6 percent for the January-September period.

As for trade with Japan, Jin Baisong, a researcher with the Chinese Academy of International Trade and Economic Cooperation, says the territorial dispute between the two neighbors has chilled trade relations.

The report also says China is the biggest victim of trade protectionism. In the first three quarters, China was confronted with 55 trade remedy investigations, up by 38 percent and involving $24.3 billion worth of goods, an eight-fold increase year-on-year. Influenced by trade frictions in several foreign markets, exports of photovoltaic cells were frequently blocked.

According to the report, some countries restrict imports to support local industries and alleviate employment pressure when their economies show no signs of improvement, thereby obstructing normal international trade and investment activities.

The WTO estimates that from October 2011 to May 2012, WTO members had launched 182 new restrictive trade measures, affecting 0.9 percent of the world's imports.