Economic Observer Online
August 13, 2013
By Zhang Bin (張斌)
Translated by Luo Shuqi
Original article: [Chinese]

China’s gloomy economic data seems to have finally brightened a bit. 

On Aug 8, the General Administration of Customs (海關總署) released statistics showing that imports increased by 5.1 percent in July and exports by 10.9 percent. And China’s trade surplus hit $17.82 billion.

After viewing the numbers, the Ministry of Commerce (MOFCOM) stated that the second half of 2013 will be both challenging and promising for China’s foreign trade.

Bounce Back of Trade 

An official from MOFCOM expressed confidence that the central government’s goal of 8 percent growth in foreign trade over 2013 could be met. According to the General Administration of Customs, from January to July the average growth rate was 8.5 percent.

Several factors could account for the improved foreign trade in July. Liu Ligang (劉利剛), an economist at Australia and New Zealand Banking, says that banks gradually recovered from the credit crunch in June and start financing foreign trade enterprises again. This facilitated the signing of new orders.

The official from MOFCOM said that in June, customs tightened supervision over goods, so many orders that could have been completed in June were delayed until July. 

Cautious Optimism

MOFCOM’s attitude towards July’s data is more cautious than optimistic. A source in the ministry said that the decreasing external demand will be an issue for China’s foreign trade for at least two more years. MOFCOM Minister Gao Hucheng (高虎城) also said in an interview with CCTV that the golden era 20 percent annual growth is over. Other problems such as the increasing cost of labor and the continuing appreciation of the RMB will also hamper the growth of foreign trade.

However, MOFCOM is still confident that new policies will help China to meet the 8 percent annual foreign trade growth target. On July 24, the State Council put forward 12 new plans to alleviate the financial burden on relevant enterprises, such as tax breaks. China also established free trade zones with Iceland and Switzerland in 2013 and is discussing doing so with other countries like Japan, Australia and Korea.