(Economic Watch) China's new policy to solve the "urgent need" of foreign trade

　　China News Agency, Beijing, May 6 (Reporter Li Xiaoyu) The executive meeting of the State Council of China held on the 5th determined a number of measures to promote the stability and improvement of foreign trade.

In less than a month, foreign trade has become the focus of the State Council executive meeting twice.

　　In the past two years, China's foreign trade has been quite strong, but due to the impact of the new crown epidemic and the conflict between Russia and Ukraine, there are currently signs of weakening in exports.

In the first quarter, the total value of China's import and export of goods trade increased by 10.7% year-on-year, and the growth rate was 2.6 percentage points lower than the previous two months.

　　The China Council for the Promotion of International Trade recently released a research report showing that foreign trade companies are facing difficulties in four aspects.

First, the sea freight rate remains high. Although the situation of "lack of containers, ships, and a box is difficult to find" has eased, the problems of tight shipping capacity and high freight rates are still prominent.

Second, the price of energy and raw materials has risen, and enterprises have reported that production costs have risen, and there has been a problem of "export income does not increase, income increase does not increase profit".

Third, the bottleneck of the global supply chain has not been eased, and the shortage of important raw materials such as chips continues to plague enterprises.

The fourth is the impact of the conflict between Russia and Ukraine. Foreign trade enterprises that have business dealings with Russia and Ukraine have been significantly affected by factors such as exchange rate fluctuations, difficulties in foreign exchange settlement, rising prices of bulk commodities and raw materials, traffic congestion and delays.

　　As one of the "troika" driving the economy, foreign trade is of great significance to the steady development of China's economy.

According to Yang Weimin, member of the Standing Committee of the National Committee of the Chinese People's Political Consultative Conference and deputy director of the Economic Committee, the reason why China's economy can achieve a growth rate of 8.1% in 2021 when the global economic recovery is sluggish, the rapid growth of imports and exports has played a very important role, with a contribution rate of more than 20%.

Under the current situation, whether it is to stabilize economic growth or ensure employment, it is imperative to stabilize foreign trade.

　　Previously, in order to promote the stable development of imports and exports, the government has requested to speed up the progress of export tax rebates, and allowed the export credit insurance indemnities obtained by foreign trade enterprises to be regarded as foreign exchange receipts, and tax rebates should be processed.

However, analysts believe that, compared with "saving expenditure", a more direct and fundamental measure to stabilize foreign trade is to "open source" to reduce the burden of foreign trade enterprises in terms of finance and taxation, and create conditions to help enterprises obtain orders and deliver shipments.

　　Gao Lingyun, a researcher at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, said that the premise of reducing taxes and fees and exporting tax rebates is that foreign trade companies still have orders and are still exporting, and there is room for tax reduction and tax rebate. When the order is closed, the measures to reduce the tax burden will lose its meaning.

　　The State Council executive meeting launched a policy to stabilize foreign trade at this time. On the one hand, because the second quarter is the traditional peak season for foreign trade companies to receive orders and deliver goods, it is necessary to "strike the iron while the iron is hot"; on the other hand, the current round of the epidemic has continued since March. If the force is exerted, foreign trade will be further dragged down, and the entire Chinese economy will also be affected.

　　Each of the foreign trade stabilization policies deployed at this State Council executive meeting hits the “pain points” of the current foreign trade enterprises, aiming to solve the urgent needs of enterprises.

　　For example, in response to the difficulty of enterprises receiving orders under the epidemic, the official proposed to ensure orders, stabilize the import and export of key industries and labor-intensive industries, optimize platform services such as the Canton Fair, and support small, medium and micro enterprises to participate in overseas exhibitions.

　　In response to poor logistics and untimely delivery of raw materials needed for production, the new policy requires key foreign trade enterprises to be guaranteed in terms of production, logistics, and employment.

　　In addition, in order to ensure the timeliness of enterprise delivery, the government requires a strong and orderly dredging of sea and air ports and other collection and distribution, improve the efficiency of operations and customs clearance, and ensure the transportation of important parts, equipment and products.

　　As for some foreign trade enterprises whose funds cannot be turned around for a while, it is unsustainable. The policy is clear. It is necessary to increase the credit extension to small, medium and micro foreign trade enterprises, support banks to not blindly withdraw, cut off, and suppress loans for temporarily trapped enterprises, and sort out a batch of urgent loans. Funds are needed to give key support, expand the scale of export credit insurance short-term insurance, shorten the payment time, and increase the financing of credit insurance policies.

　　Analysts believe that compared with the previous policy of stabilizing foreign trade that focused on the later stage of tax rebates, the new policy launched at the executive meeting of the State Council is more systematic and comprehensive. Difficulty measures are more targeted.

　　Wei Jianguo, vice-chairman of the China Center for International Economic Exchanges, believes that under a series of comprehensive measures, the steady growth of China's foreign trade can be expected.

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