In the first four months, the total exports of seven major categories of labor-intensive products, including clothing, textiles, and footwear, were 855.2 billion yuan, an increase of 2.2%, accounting for 20.7% of the total export value. This shows that my country still has certain competitive advantages in labor-intensive products.
Customs data shows that in RMB terms, exports in April increased by 4.1% year-on-year, and the cumulative decline was still year-on-year, but the decline narrowed to 2.1%; imports in the month fell by 5.7% year-on-year, and the cumulative decline was 7.5%; before The surplus increased by about 15% in four months. Compared with consumption and investment, net exports have little impact on stable growth, but foreign trade data still deserves our attention, especially from the perspective of exchange rates and inflation.
The negative growth in cumulative exports has been dragged down by the slowdown in global economic growth. In its latest “Global Economic Outlook”, the International Monetary Fund lowered the global economic growth rate in 2016 by 0.2 percentage points to 3.2%, and the growth rate of international trade by 0.3 percentage points to 3.1%. This reflects the uncertainty this year. Certainties are increasing. Against this background, the recovery of my country’s exports will inevitably face a complex situation.
But exports also show some good signs. In the first four months, the total export volume of seven major categories of labor-intensive products, including clothing, textiles, and footwear, was 855.2 billion yuan, an increase of 2.2%, accounting for 20.7% of the total export value. This shows that my country still has certain competitive advantages in labor-intensive products. Affected by rising labor costs and the appreciation of the RMB in the past few years, these industries have encountered relatively large difficulties and their share of the global market has decreased. With the end of the RMB appreciation cycle and the slowdown in labor cost growth, the situation of these industries will improve and they are expected to be able to more easily carry out transformation, upgrading and industrial transfer. In addition, in April, the year-on-year decline in the export volume of mechanical and electrical products and high-tech products narrowed significantly, and the export volume of integrated circuits increased even more, indicating that the recovery of exports can be expected.
Imports have experienced negative growth for four consecutive months, and the decline expanded again in April. On the one hand, it reflects that domestic economic growth has not truly stabilized and rebounded, and on the other hand, it is affected by the decline in international commodity prices. Imports of crude oil, natural gas, iron ore and other commodities have increased in quantity but decreased in amount.
The trend of commodity prices will have a major impact on this year’s foreign trade data. This will first be reflected in imports. Low commodity prices will cause my country’s imports to maintain negative growth; if their prices rise, it may push my country’s import growth rate from negative to positive. In addition, this will also affect my country’s exports. If commodity prices remain low, many emerging market economies will be in trouble, and my country’s exports are likely to experience low or even negative growth; conversely, if prices rise, my country’s exports may improve.
Judging from the price of crude oil, it reached a periodic low in January and February this year, followed by a wave of rising prices, but it has not yet exceeded the level of the same period last year. It is foreseeable that in the first half of this year, crude oil prices will decline year-on-year; in the second half of the year, the situation may change, because the base in the second half of last year was relatively low, and it is entirely possible to rise year-on-year. The future trend of crude oil prices is affected by supply and demand. On the demand side, growth is weak; on the supply side, it is difficult for Organization of the Petroleum Exporting Countries (OPEC) countries to reduce production, but non-OPEC countries may reduce production.
In addition, commodity prices are also affected by the trend of the US dollar, which is even more influential than supply and demand. The recent rise in commodity prices has a lot to do with the weakening of expectations for the Federal Reserve to raise interest rates and the decline of the U.S. dollar index. Will the Federal Reserve raise interest rates in June? The U.S. economy grew at a low rate of only 0.5% in the first quarter, and new non-farm employment has also fallen for two consecutive months, which reduces the possibility of the Federal Reserve raising interest rates in June. But if commodity prices continue to rise, it will push up U.S. inflation, and the Fed will feel the urgency to raise interest rates.
Foreign trade has a small impact on domestic economic growth, but it may have a significant impact on exchange rates and inflation. In terms of inflation, my country imports a large amount of commodities. If their prices rise, it may lead to imported inflation. In terms of exchange rate, if export growth is low and import growth turns from negative to positive, the trade surplus will decrease, which may trigger expectations of RMB depreciation. We should anticipate relevant situations and establish corresponding buffer mechanisms.
