The Ministry of Commerce explained four reasons for the decline of export growth in February:
● The Spring Festival this year was half a month earlier than last year, and many enterprises rushed to export before the year, leading to a large increase in January, while exports in February were more than 20 billion dollars less than the previous month
● Affected by the subprime mortgage crisis, the U.S. economy has slowed down significantly, and the decline of China's exports to the United States and Europe has led to a decrease of about 12 percentage points in the overall export growth
● Since last year, China has successively introduced a series of foreign trade regulation policies such as reducing export tax rebates, and its effects have gradually emerged
● RMB appreciation is also an important reason for export decline
Chen Deming, Minister of Commerce, said yesterday that the slow growth of foreign trade exports in February was mainly due to international factors, and foreign trade exports will continue to grow steadily throughout the year.
Chen Deming said at the press conference held at the first session of the 11th National People's Congress yesterday that the import and export data in February did not indicate any turning point in China's foreign trade situation. "Personally, I think foreign trade exports will grow steadily this year."
The latest statistics show that due to the snow disaster and the Spring Festival, China's foreign trade exports grew slowly in February, while imports increased 35.1% year on year, leading to a sharp reduction in the trade surplus in February. In February, China's total import and export value was US $166.181 billion, of which the export value was nearly US $87.4 billion, an increase of only 6.5%, 45% lower than that of the same period last year, and 20% lower than that of January.
Chen Deming said that the reason for the sharp decline in export growth in February was that the Spring Festival this year was half a month earlier than last year. Many enterprises scrambled to close the customs years ago, leading to a relatively large growth in January, while exports in February were more than 20 billion dollars less than that in January. "At the same time, it should be noted that last February, because the Spring Festival was relatively late, the growth rate last year was 51.6% compared with the year before last, which also led to a relatively small growth rate in February this year," he said.
Chen Deming further said that the more important and long-term reasons for the decline in exports in February were international factors. "Affected by the subprime mortgage crisis this year, the U.S. economy has slowed down significantly and consumer spending is also decreasing. China's exports to the United States grew only 6.8% in December last year, only 0.4% in the first two months of this year, and exports to the EU grew only 1% in February." He said that the decline in exports to the United States and Europe led to a reduction of the overall export growth of about 12 percentage points, so, The international factor is a relatively large one.
Since last year, China has successively introduced a series of foreign trade regulation policies, and their effects are gradually emerging. According to the data from the Ministry of Commerce, in February, China's crude oil and steel billet exports were basically zero, and steel exports also fell from 5.64 million tons in January to only 3.11 million tons, with a total cumulative decline of 17.2% in the first two months. The export growth of labor-intensive products such as clothing, shoes, hats, boxes and bags, which reduced tax rebates, also fell further in February.
In Chen Deming's view, the appreciation of the RMB was also an important reason for the sharp drop in exports last month. "Since this year, the RMB has appreciated by 2.9% in January and February. Since the reform of the RMB exchange rate began in July 2005, it has appreciated by 16.5% in total. These appreciation factors account for 1/3 of the export cost. In addition, the price of raw materials has risen, wages have risen, environmental protection costs have risen, and so on."
Price pressure in downstream products in the next stage
Chen Deming, Minister of Commerce, said yesterday that at present, the short-term factors of low temperature, snow and freezing disasters are eliminating their impact on prices. The next stage of price pressure is on downstream products, and the annual CPI is likely to stabilize at a high level.
Chen Deming analyzed at the press conference held at the first session of the 11th National People's Congress yesterday that the main reason why the CPI reached 8.7% in February was the rise in food prices, some of which were domestic agriculture products Restorative rise in prices.
He said that what the Ministry of Commerce felt more important in its practical work was that the price of international primary products, including mineral energy resources and agricultural and sideline products, had entered a relatively comprehensive and substantial rise period. Chen Deming said that the rise in the price of international primary products has something to do with the economic recovery and growth of the whole world, the overcapacity in the world, and the demand growth of new economies.
He further said that how prices will go depends on the strength of regulation, the confidence of society and the trend of international uncertainties. For example, the purchase price of raw materials, fuels and power in February has risen considerably, so the price pressure of the next stage is on downstream products.
Foreign investment attracted this year will increase
Chen Deming, Minister of Commerce, said at the press conference yesterday that a series of macro-control policies last year will not have an impact on the introduction of foreign investment, and the foreign investment absorbed by China in 2008 will continue to grow. In the next step, China will develop cross-border equity mergers and acquisitions, encourage foreign-funded enterprises to participate in the reorganization and transformation of state-owned enterprises through mergers and acquisitions, and encourage high-tech foreign-funded enterprises to further invest in China.
According to the data previously released by the Ministry of Commerce, in January this year, China's actual foreign direct investment (FDI) totaled US $11.2 billion, an increase of 109.78% over the same period last year. This figure is close to 15% of last year.
When explaining the reason for high FDI in January, Chen Deming said that from the situation in the first few months of this year, the speed of large projects entering China is accelerating, which shows that international capital and overseas investment are still optimistic about China's economic development.
Chen Deming said that the expectation of the appreciation of the RMB against the US dollar accelerated the investment of some foreign-funded enterprises. The appreciation of RMB has accelerated the progress of investors' investment. In addition, the implementation of the "two taxes in one" policy has prompted many foreign-funded enterprises to focus on the reinvestment of profits earned in China during this period.
Chen Deming believes that the impact of the subprime crisis is a deeper background for accelerating the inflow of foreign capital into China. Affected by the economic slowdown of developed countries, China's economy has good growth, which makes them more willing to invest in China.
"The growth of China's introduction of foreign capital generally shows that China's investment environment is being optimized step by step," Chen Deming said. According to the statistics of the United Nations Conference on Trade and Development, the global transnational investment (FDI) reached 1.5 trillion dollars in 2007, which is an increase of 18% on the basis of the growth of 38% in 2006. Chen Deming believes that under such a situation, China will absorb more foreign investment this year.
