SCIO briefing on China's Q1 imports and exports

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Speaker:
Huang Songping, spokesperson of China's General Administration of Customs.

Chairperson:
Xi Yanchun, vice director-general of the Press Bureau, State Council Information Office

Date:
April 13, 2016

Xi Yanchun:

Ladies and Gentlemen, good morning! Welcome to today's SCIO briefing. How time flies! It's time again for us to release the economic statistics of the first quarter. We are glad to have Mr. Huang Songping, the spokesperson for China's General Administration of Customs, here to introduce the imports and exports during the first quarter of this year. Now, the floor belongs to Mr. Huang.

Huang Songping:

Good morning ladies and gentlemen. Welcome to today's press conference. I am very happy to meet you here and inform you of the situation of China's foreign trade, imports and exports during the first quarter of this year. After that, I will answer your questions.

The global economic situation is complicated this year, as global trade continues to shrink and Chinese economic development has entered a phase known as the"New Normal." According to statistics from Chinese customs, the total value of imports and exports during the first quarter was 5.2 trillion yuan, down by 5.9 percent over the same period of last year. Among them, the value of exports was 3 trillion yuan, down by 4.2 percent, and the value of imports was 2.2 trillion yuan, down by 8.2 percent. The value of trade surplus widened by 8.5 percent from one year earlier to 810.2 billion yuan.

The following represents the major aspects in detail.

Imports and exports continue to decline on a year-on-year basis. The decline of exports has become stable month by month after using the seasonal adjustment method. During the first quarter, the value of imports and exports has fallen by 6.7 percent, 2.9 percent and 3.3 percent in January, February and March respectively, compared with the figures from last year. The exports declined by 4.2 percent and 0.8 percent respectively in the first two month and saw an increase of 0.9 percent in March. Meanwhile, the value of imports has dropped 10.3 percent, 5.5 percent and 8 percent respectively year on year.

The proportion of imports and exports in general trade has increased. During the first quarter, the value of imports and exports in general trade was 2.91 trillion yuan, down by 4.9 percent, accounting for 55.9 percent of the total value, up 0.6 percentage points over the same period of last year. The structure of the trade model has become optimized.

The exports to countries along the "Belt and Road" have increased. During the first quarter, China's exports to Pakistan, Bangladesh, Egypt, India and Russia increased by 26.4 percent, 16.6 percent, 6.3 percent, 6.1 percent and 6.2 percent respectively. Meanwhile, China's exports to the EU, the United States and the Association of Southeast Asian Nations, decreased by 1.4 percent, 3.4 percent and 8.5 percent respectively. China's exports to the latter three partners account for 46.7 percent of the total value of exports in the first quarter.

Exports from private enterprises keep top position. The value of imports and exports from private enterprises reached 2 trillion yuan, up by 3.6 percent, accounting for 38.2 percent of the total value of China's foreign trade. Among them, the value of exports is 1.39 trillion yuan, up by 2.4 percent and accounting for 46.1 percent of the total value of exports, surpassing the proportions of those from foreign-invested companies and state-owned enterprises. The value of imports from the private sector increased by 6.5 percent, maintaining the trend of growth from the fourth quarter of last year.

Mechanical and electrical products as well as labor intensive products are the main export products. In the first quarter, the value of mechanical and electrical export products was 1.74 trillion yuan, down by 4.2 percent, accounting for 57.7 percent of the total value of exports. Among them, exports of medical instruments, storage batteries and solar batteries increased by 3.3 percent, 2.7 percent and 10.9 percent respectively. During the same period, the value of labor intensive products export was 622.52 billion yuan, a drop of one percent and accounting for 20.7 percent of the total value. Among them, exports of textile products, toys and plastic products increased.

The imports of bulk commodities such as iron ore, crude oil and copper continued to grow. The prices have maintained a low level. In the first quarter, China imported 242 million-ton iron ore, 91.1 million-ton crude oil, and 1.43 million-ton copper, up by 6.5 percent, 13.4 percent and 30.1 percent respectively. Meanwhile, the imports of coal were 48.46 million tons, product oils 7.75 million tons and steels 3.13 million tons, a drop of 1.2 percent, 1.9 percent, and 3.3 percent respectively.The total import prices dropped by 11.5 percent. Among them, the import price of iron ore dropped by 30.8 percent year on year, the price of crude oil dropped by 37.2 percent, the product oil price dropped by 25.9 percent, the coal price declined by 23.6 percent, the copper price decreased by 17.1 percent and the steel price was down 11.3 percent.

Moreover, the total export price in the first quarter fell by 4.2 percent. Therefore, China's terms-of-trade was 108.2 in the first quarter, which means we can buy 8.2 percent more imports for a given level of exports. This figure means our terms of trade are improving.

China's leading indicator of exports is picking up. In March, the leading indicator is 31.6, an increase of 0.3 from the previous month, which indicates that China's exports are expected to make a steady comeback in the second quarter. Online survey data shows that China's Export Managers Index, new Export Order Index and Manager Confidence Index all rose slightly in March.

In the meantime, China's exports still have to make headway through adversity. For instance, bilateral trade fell between China and its major trade partners, including the European Union, the United States and the ASEAN; imports and exports by foreign-funded enterprises and state-owned enterprises decreased by 9.1 and 16.9 percent, respectively; and processing trade was down by 11.6 percent.

In the face of such a pressing and complex foreign trade situation, Chinese customs will firmly put into practice all policies and measures from the CPC Central Committee and State Council regarding the maintenance of stable growth in foreign trade and will be closely linked to the construction of a new open economic system, deepening reforms in a comprehensive way, persistently making progress while ensuring stability, creating an easier business environment, inspiring momentum in market entities and promoting steady growth in foreign trade. Now I am ready to take your questions.


Xi Yanchun:

Thank you, Mr. Huang. Please identify the media outlet you are representing when raising your questions.

CCTV:

In your introduction I noticed that China's leading indicator of exports picked up this March and imports of staple goods such as iron ore and crude oil grew considerably. Does this mean that China's imports and exports start improving? How does the General Administration of Customs view the country's foreign trade situation in the year of 2016?

Huang Songping:

Thank you for your questions. Let me start with the leading index of export. The index basically experienced drops month after month in 2015. In the first quarter of this year, the index picked up in January and March on a monthly basis, which indicated that China's exports were expected to make a steady comeback in the second quarter. On how to view this year's foreign trade situation, we have witnessed growth in imports of iron ore and crude oil. In the first quarter, China's economic growth remained at a reasonable level despite of many difficulties. The Manufacturing Purchasing Managers' Index was 50.2 percent in March, signaling expansion of industrial activities. At present, China's economic situation is better than other major economies, and China is still an important engine for the world's economic recovery by fueling import growth of some staple goods in the first quarter.

China allowed some crude oil processing enterprises to apply for the right of non-state importation in 2015. The measure has promoted the rapid growth of crude oil imports. In the first quarter of this year, China's crude oil imports for processing increased by 43.4 percent. This is the information we have on the growth of China's staple goods imports.

We can analyze this year's situation and find out the good or bad elements that will influence China's foreign trade imports and exports. Let's take a look at the good side. First, the policies are good. Since last year, the central government has issued various policies and measures one by one to stabilize foreign trade development. This year's government work report further mentions the promotion of foreign trade's innovative development, encouraging business model innovation, the optimization of trade structure, the development of trade convenience, and the push to implement more positive import policies. We can say that the Chinese government is working hard to create a good environment in every aspect for foreign trade. Currently, the RMB exchange rate is staying steady, which is good for stabilizing enterprises' expectations and lowering the fluctuation risks of the exchange rate; at the same time, fee-charging in import and export section has been further cleaned up and regulated and the enterprises' burden has been gradually eased. As the policies and measures were implemented step by step and the dividends of the policies have been in effect, all of these will create a good policy environment for China's foreign trade.

Second, we enjoy widespread cooperation, and China's cooperative deployment in multilateral and bilateral trade has been better. Until now, China has signed and implemented 14 free trade agreements, involving 22 countries and regions in Asia, Latin America, Australia and Europe. In 2015, China signed bilateral free trade zone agreements with South Korea and Australia respectively, and China has finished the negotiation with ASEAN on upgrading the free trade zone agreement and signed an upgrading memo. China has also achieved positive progress for the Regional Comprehensive Economic Partnership negotiation. In addition, China continues to strengthen economic, trade and investment cooperation with the United States, the European Union and major countries in Asia, Africa and Latin America. China's "Belt and Road" initiative will also be pushed forward and this will create a bigger stage for the sustainable development of China's foreign trade. During the first quarter of this year, China's exports to Australia have increased by 3.9 percent and the exports to Switzerland have increased by 9.1 percent.

Third, the confidence has been stronger. The domestic manufacturing industry has undergone a positive transformation, and the export managers have stronger confidence. According to the National Bureau of Statistics, the Purchasing Managers' Index (PMI) of the manufacturing industry issued for March was 50.2 percent, a 1.2 percent increase when compared to last month's index. It was the first time the PMI came back above the threshold since last August. The New Export Orders Index and Import Index all rose again more than 50 percent. In addition, we, the General Administration of Customs, have surveyed nearly 3,000 export enterprises online and the survey reveals that, in March, China's Export Managers Index was 36.1 percent, a 3.4 percent increase from last month's index, while the New Export Orders Index was 35.7 percent, a 3.8 percent increase from last month's index. The Manager Confidence Index was 40.2 percent, which represented a 4.7 percent increase.

Those are the good elements. Now, we need to look at the bad side. In addition to the fact tha tglobal trade continues to shrink, there are two major negative elements.

First, the world economy is facing increasing uncertainty. Current world economic situations remain complicated, and the monetary policies in major economies have experienced differentiation. The uncertainties of capital flow and the restart of monetary wars will intensify the turmoil in the international financial market, and are probably causing a big impact on certain countries. The risks and uncertainties have increased in world economic operation. At the same time, geopolitical turmoil is also becoming tenser, which will obviously have a negative influence on the global economy. Once the regional situation deteriorates, this will affect the confidence of investors, and global trade will step further into depression.

Trade protectionism has limited our exports. Facing weak market demands, some countries and regions have seen a rise in trade protectionism. China has become one of the countries that suffer from trade frictions in the world.

In light of these issues, we think this year's foreign trade situation is still severe and complicated, and the pressure of downturn is still relatively big. But the positive elements to boost the development of foreign trade are accumulating. As various measures to stabilize the growth of foreign trade will be implemented, with joint-efforts in every aspect, China's trade in goods for imports and exports is expected to achieve steady prospects while moving in a positive direction. Thank you!


TV Asahi:

Could you please introduce the Sino-DPRK trade in the first quarter of this year? The Ministry of Commerce and China's General Administration of Customs published a list of commodities to be embargoed to and from the Democratic People's Republic of Korea (DPRK) at the beginning of April 2016. How will the measures affect the trend of bilateral trade in the future?

Huang Songping:

According to the figures by Customs, Sino-DPRK trade volume in the first quarter of the year reached 7.79 billion yuan (US$1.2 billion), a year-on-year increase of 12.7 percent. Specifically, exports were 3.96 billion yuan, up 14.7 percent; imports stood at 3.83 billion yuan, up 10.8 percent. The exports primarily involve electromechanical, labor-intensive and agricultural products while the imports mainly consist of coal and garments. On April 5 of this year, the Ministry of Commerce announced a list of commodities to be embargoed from the DPRK, which took effect from the date of promulgation. Therefore, China's imports from the DPRK were not involved with embargo in the first quarter. A UN resolution banned all exports from the DPRK of coal, iron ore and iron, with exemptions for livelihood purposes and those not associated with funding for its nuclear programs. On April 5, the Ministry of Commerce and China's General Administration of Customs published an announcement on a list of a number of mineral products embargoed from the DPRK, which took effect from the date of promulgation. As for the items banned in the resolution by the UN Security Council, Customs will faithfully implement the control provisions as required in the resolution.

Xi Yanchun:

The above-mentioned figures were collected before the ban.

CRI:

Could the spokesperson please comment on the overall performance of China's foreign trade in the first quarter of this year? Both China's imports and exports continue to go down. Please make an analysis on that as well.

Huang Songping:

Thanks for your question. The world economy has been undergoing a slow recovery this year. Global trade continues to be shrinking. China's imports and exports in goods trade face a weak external environment, leading to a decrease in both import and export volume in the first quarter. We will continue to notice that our foreign trade will receive a structural upgrade, trade conditions will continue to be improved, exports will become gradually stable, and foreign trade in private enterprises shows stronger vitality. As far as imports are concerned, China's import volume can hardly see a significant increase.

On the whole, our foreign trade has been improved in the process of adjustment. The fundamental aim that foreign trade become stable remains unchanged, which is our overall view on China's imports and exports in goods trade in the first quarter of this year.

As for the decrease in both imports and exports of China's foreign trade, the reasons in our analysis are as follows.

As far as exports are concerned, the world economy continues to experience slow growth with weak recovery on the whole and global trade is undergoing profound adjustment, curbing growth in China's exports. At the very beginning of this year, major international agencies universally trimmed their global growth forecast for this year. The World Bank cut its global growth projection on January 6 to 2.9 percent this year from a forecast of 3.3 percent. The International Monetary Fund (IMF) had its 2016 forecast cut from a global growth rate of 3.6 percent to 3.4 percent this year in its World Economic Outlook released on January 19, 2016. The exports volume of 70 world economies this January accounted for 90 percent of the total global trade volume, a year-on-year decrease of 11.7 percent, down 0.7 percentage points from the decrease of all of last year calculated with the same caliber in US dollars. Exports are going down in the United States, Japan, the European Union (EU) and in BRICS countries. Meanwhile, domestic foreign trade enterprises hold a high comprehensive cost, leading to some sectors and orders going outbound. It is also a vital factor that curbs China's exports. In recent years, comprehensive production costs are on the rise in China's labor force, land, financing and environment. The EU, the United States, Japan and other developed markets are carrying out a strategy of re-industrialization, causing a number of high-to-middle-end manufacturing industries to head back to developed countries. A number of developing countries are also accelerating an undertaking of international industrial transfer. China's exports are facing dual pressures.

As of March, China's imports and exports in processing trade decreased in 15 and 13 consecutive months respectively. Additionally, statistics by the Ministry of Commerce show that China's manufacturing sector's actual use of foreign capital reached 39.1 billion yuan in the first two months of this year, down by 14.9 percent year-on-year.

With regard to imports, China's commodity prices remained low, which contribute to an imports decrease. Although the global commodity prices rebounded at the end of last year, it remained low when compared to the same period of last year. China's imports price level went down 11.5 percent in the first quarter of this year and decreased 11.6 percent in March, and continues to go down.

This is our preliminary analysis on the decrease in both imports and exports in the first quarter. Thank you!


Tass:

As a Russian media outlet, I would like to ask some questions about Chinese-Russian trade. Could you tell us the bilateral trade volume in the first quarter and in March, citing specific export and import statistics? And can you give an evaluation of current trends?

Huang Songping:

Chinese-Russian bilateral trade volume totaled 91.77 billion yuan in the first quarter of this year, an increase of 3.6 percent. As part of this increase, export to Russia was 45.91 billion yuan, up 6.2 percent; import to China was 45.86 billion yuan, up 1.1 percent; and the favorable balance of trade was 50.53 million yuan while the unfavorable balance of trade was 2.13 billion yuan in the same period of last year. Exports to Russia are mainly traditional labor-intensive products such as mechanical and electrical products, while imports from Russia are mainly resource products including crude oil, refined oil, coal and iron ore. Bilateral trade growth in the first quarter was mainly driven by exports of mobile phones, portable computers, clothing and shipping products, and imports of nickel, copper, sawn timbers and potassium chloride. Thank you.

Phoenix TV:

March statistics show that exports have achieved positive growth for the first time in the past nine months, and the growth margin is comparatively big. Is there any particular reason for such growth in this particular month? Do you think this trend will continue?

Huang Songping:

Chinese exports increased significantly in March of this year. On one hand, the base of trade volume in March of last year was somewhat low. Last year, the Spring Festival vacation was in middle and late February and the Lantern Festival was on March 5. Many enterprises didn't return to work until very late. This year, the Spring Festival vacation was in early and middle February and production and trading activities basically returned to normal early in March. Therefore, compared with the same period last year, exports increased significantly in March of this year. On the other hand, a favorable policy environment is another reason for improvement in exports. We have released the March statistics on the internet for you to look over. As I mentioned just now, there was a gradually stabilized momentum in exports for the first quarter, and the Export Leading Indicator (ELI) also confirms such a judgment.

BTV:

My question is about the cross-border import tax. Recently, we saw a picture on the internet, in which a lot of goods were abandoned at the Shanghai Pudong Airport because the passengers didn't want to pay taxes. Could you tell us the truth about that? What impact will the implementation of new cross-border import tax policies have on consumers of overseas shopping?

Huang Songping:

Some time ago, media outlets covered the situation mentioned in your question, but later the newspapers made a clarification. It is not true that the passengers abandoned the goods at the airport. Customs authorities have also made a clarification on this issue. We believe that the new policy of cross-border e-commerce will have a positive impact in this field in the future. Cross-border e-commerce is a newly emerging industry. The process of cloud operation has put forward a new task of reform and innovation for government management. The cross-border e-commerce retail import tax policy, publicized on April 8, is a sign of government management. The introduction of the new policy has aroused widespread concern and an enthusiastic response from the public. The policy adjustment of this time is aimed at creating a stable and unified tax policy environment for cross-border e-commerce development, guiding e-commerce enterprises to engage in fair competition, encouraging innovation in business models, forming an environment of fair play between new and traditional business patterns and between domestic and overseas goods, improving market efficiency, and promoting overall development. Thank you.


China News Service:

We noticed that this year's government work report proposed the promotion of the innovative development of foreign trade. How does the General Administration of Customs illustrate the word "innovation," what kind of measures do you plan to implement in future?

Huang Songping:

Thanks for your question. This year's government work report asks for high-level reform and opening up, including promoting the innovative development of foreign trade. Under the background of the current tough trade situation, the General Administration of Customs will promote foreign trade development in the following four areas.

First, the deepening of "double random reform" will be implemented. During import and export customs checking, the subject and object are all chosen by the computer at random, which features fairness, honesty and efficiency. The "double random reform" has been implemented in customs administrations all over the country. Currently, we are trying our best to make random checking account for 90 percent until the end of June.

Second refers to the practice of comprehensively promoting customs clearance integration. This year, we vow to deepen reform, and establish a customs duty management center and a risk control center.

Third refers to the practice of helping enterprises alleviate burdens and increase profits. This year, we will continuously regulate the charging rate of imports and exports, so as to alleviate the burden on enterprises.

Fourth refers to the practice of increasing accuracy checks. We will increase risk analysis efforts and carry out precise inspections based on effective risk control and supervision in order to both guarantee effective supervision and convenient customs clearance. At the same time, we will further promote the building of a single window for international trade, work to optimize cooperation between customs and checking, and actively cooperate with relevant departments to take a number of measures to lower duties, so as to make trade more convenient, make customs clearance run more smoothly, and help the public receive more benefits.

Hong Kong TVB:

I would like to ask a question about cross-border commerce and trade. After the implementation of the new measures, how much tax revenue will be increased? There are numbers of purchasing agencies on Chinese on-line shopping websites; are there any problems in carrying out the new measures? Is there any tax evasion?

Huang Songping:

In regard to tax revenue, currently, we have no statistics. During supervision, the administration of customs will implement a new tax policy, and perform duties during the supervision. Thank you!

Xi Yanchun:

Yesterday, the SCIO held a press conference on implementing trials of replacing business taxes with VAT. A number of journalists also asked questions regarding this issue to officials from the Ministry of Finance and the State Administration of Taxation at yesterday's conference. If you like, you can search their responses online.


People's Daily:

I have two questions. First, regarding regulations for cross-border e-commerce, are there any changes on the limits of how much personal luggage Chinese tourists can bring upon reentering the country, and are these regulations now stricter than before? Second, please brief us on exporting of cultural products. Some reports have claimed that China is the largest exporter of cultural products, including films and animated pictures, to the United States. Is there any data to support this?

Huang Songping:

The latest reforms did not bring any changes to the limit on the amount of luggage a tourist can carry home. This is the answer to your first question.

As for your second question regarding cultural products, recent years have seen rapid development in the cultural and creative industries of China, leading to rising exports of cultural products in the form of concrete goods. The exporting of cultural products has become a new feature of Chinese exports, thanks to the government's focus on developing cultural products, as well as all relevant departments' support in terms of favorable policies on finance and trade, which has shaped a good environment for development.

Detailed statistics on the export of cultural products in the form of concrete goods in Q1 will be available later if you need it. Historical data shows that the United States, Hong Kong SAR and the European Union are the main markets for our exports of cultural products, among the 220 countries and regions in the world. Our export markets are becoming more diversified as China's international influence continues to expand. Thank you.

Xinhua:

As China strives to accelerate transformation and improvement in its foreign trade, I would like to ask the speaker: is there any data to demonstrate the new development of such transformation and improvement?

Huang Songping:

As for the transformation and improvement of our foreign trade, I don't have the data analysis at hand. We can provide that to you after the briefing session. Thank you.

Yonhap:

My question is also concerned with China's trade with North Korea. Would you please brief us in detail on whether there were North Korean ships that called on Chinese ports and address the suspicions that contraband items on the embargo list have been denied by Chinese customs after the U.N. Security Council passed sanctions on North Korea?

Huang Songping:

I have just briefed on our Q1 trade with North Korea. It doesn't involve the U.N. embargo as the Sanction Resolution 270 didn't take effect until April. Chinese customs will faithfully execute the resolution as I have just now mentioned. Thank you!

JoongAng Ilbo:

You have just introduced the trade volume between China and the DPRK in Q1 this year. How about the statistics in March?

Huang Songping:

I didn't bring the trade statistics for March. But you can look them up on the official website of the General Administration of Customs. Thank you.

Caijing Magazine:

Does the overall rate hike of new taxes have anything to do with the imminent promulgation of new tax laws and the change of heavily levied turnover tax?

Huang Songping:

I suggest you ask the Ministry of Finance for relevant information. Thank you.

Xi Yanchun:

As the question is concerned with several government agencies, you can contact their information offices for further information. This is the end of today's press conference. Thank you, Mr. Huang. Thank you everyone.

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