Market Watch - 17 May 2020
Pandemic poses major challenge to China trade
China’s foreign trade faces "unprecedented" challenges as the coronavirus pandemic hobbles global demand, according to Commerce Minister Zhong Shan.
Mr. Zhong said Monday during a briefing that Chinese exporters face liquidity pressures and canceled orders, as external demand has fallen sharply in the past few months.
In the first four months, China’s exports declined 9.0% from a year earlier, while imports fell 5.9%, data from the customs bureau showed last week. But economists widely believe exports are set to worsen in the coming months as the effects of the pandemic-prompted recessions in other parts of the world start to kick in.
China’s commerce minister said the government has stepped up export-tax rebates in recent months to ease liquidity pressures for exporters, and also moved to help companies sell products in the domestic market. In April, sales of export products sold in the Chinese market rose 17%, the minister said.
Mr. Zhong also said China will double the number of trials this year for cross-border electronic commerce to promote foreign trade amid the pandemic. He added that the ministry will focus on the development of convenience stores, farm markets and pedestrian streets to boost domestic consumption.
The minister pledged to support the catering and housekeeping sectors, which were hit hard by the coronavirus and the ensuing lockdowns. In the first four months, revenues for Chinese restaurants slumped 41%, with the sector accounting for 11% of China’s retail sales.
In the same briefing, Vice Commerce Minister Wang Shouwen said the text review of the Regional Comprehensive Economic Partnership, or RCEP, is expected to be completed at the end of June. If the trade deal is signed by the end of the year, this could help countries in the region facilitate a recovery in trade activity in the post-pandemic era.
The RCEP agreement brings together the Association of Southeast Asian Nations as well as China, Japan, South Korea, Australia and New Zealand.