Foreign Trade Situation in 2019: Although there is pressure, there is no need to be pessimistic

In 2018, China handed in a beautiful answer to its foreign trade. According to customs statistics, in 2018, China's total foreign trade import and export value reached a record high of $4.62 trillion, an increase of 12.6%, of which $2.48 trillion in exports, an increase of 9.9%, $2.14 trillion in imports, an increase of 15.8%, and a trade surplus of $35.17 billion, a narrowing of 16.2%, the best performance in the last seven years, achieved remarkable results.
However, the December 2018 foreign trade figures were significantly lower than expected.
In terms of exports, first of all, the weakening of global economic growth has led to continued pressure on China's exports. In December, JPMorgan Chase's global composite PMI index was 52.7%, down 0.5 percentage points from November. Among them, the US Markit Manufacturing PMI index and the EU Manufacturing PMI index were 53.8% and 51.4% respectively, down 0.5 percentage points and 0.4 percentage points from November. The overall downward trend of the global manufacturing cycle continued to narrow external demand.
Secondly, the effects of trade frictions between China and the United States are beginning to disappear. According to the list of mutual tariffs on trade frictions between China and the United States, before each round of tariffs falls to the ground, the list involves more obvious commodities - ldquo; export rush - rdquo; situation. However, as trade frictions between China and the United States begin to release a signal of easing, & ldquo; export rush & rdquo; phenomenon has significantly weakened. Data show that China's exports to the United States have fallen by the largest margin of 13 percentage points in all developed countries. From the product point of view, mobile phones, clothing, agricultural products, textiles, footwear, integrated circuits are the main drag on the export amount of the month.
Finally, it is related to the high cardinality effect in 2017. In December 2017, China's absolute import and export volume and growth rate were the same period's highs in the past five years, respectively. Influenced by the elevation of the base number, China's import and export growth in December 2018 was under great pressure.
The decline in imports is even greater. First, the overall growth rate of domestic demand in China has declined due to the downturn in the economy. On the one hand, the pressure of industrial production activities led to the reduction of related imports. In December, the PMI index of China's manufacturing industry was 49.4%, the lowest in 2018. On the other hand, the total retail sales of social consumer goods, infrastructure investment and real estate investment continue to decline, leading to the weakening of domestic demand.
Second, the decline of major imports continued to expand under the influence of Sino-US trade frictions. In December, imports of automobiles and chassis declined 29.9% year on year, continuing the decline since September. Imports of high-tech products fell 13.8% year on year, down 10.2 percentage points from last month. Imports of mechanical and electrical products fell 16.1% year-on-year, down about 13 percentage points from last month.
Third, the fall in commodity prices year-on-year affects imports. In December, the CRB spot index of industrial raw materials fell 4.3% year on year, continuing the downward trend since August.
As the import decline in December 2018 is greater than the export decline, and the impact of the appreciation of the RMB, the monthly surplus has expanded compared with the expected and pre-value, achieving a trade surplus of 57.06 billion US dollars and an expansion of 15.2 billion US dollars over the previous month, which is actually a kind of “ recessionary surplus-rdquo; phenomenon, which is likely to be unsustainable.
The high and low levels of foreign trade in 2018 also indicate that China's trade situation is likely to face more difficulties in the context of the slowdown of global economic growth in 2019. In its latest global economic outlook report, the World Bank downgraded its global economic growth forecast, predicting that global economic growth will decline from 3% in 2018 to 2.9% in 2019. The unexpected changes in Sino-US trade, the separation of Britain from Europe, the monetary policy of the Federal Reserve and the economic situation of the United States may occur, which in fact poses greater challenges to Global trade and China's foreign trade.
Despite the great pressure, the favorable factors of China's foreign trade still exist. Firstly, the proportion of foreign trade from regions outside developed countries has gradually increased. In 2018, China's imports and exports to ASEAN grew by 11.2%. The momentum of growth continued. The close trade relationship between the two sides gradually deepened, and China and Russia will become the growth point of China's exports in the future. The volume of trade between China and Russia has exceeded 100 billion US dollars, a record high, and both sides still have great potential for development. In addition, China has a total of 8 trillion and 370 billion yuan of imports and exports to &ldquo and &rdquo along the way, an increase of 13.3%, which is 3.6 percentage points higher than the national growth rate as a whole. With the convening of &ldquo, 2019 and &rdquo, the summit of international cooperation will be held in &ldquo, along with &rdquo. The influence of the countries along the border will gradually increase, and it can effectively hedge the economic slowdown caused by the developed countries.
In addition, Sino-US trade frictions are easing. On January 7-mdash and 9, 2019, China and the United States held Vice-ministerial consultations on economic and trade issues in Beijing. Both sides have the desire to make positive progress. In the short and medium term, Sino-US trade frictions are likely to ease, which will certainly boost global economic confidence. Of course, in the long run, Sino-US trade frictions still deserve long-term attention.
At recent important central economic conferences, stable foreign trade has been frequently mentioned as one of the six stability factors. With the emergence of favorable factors in China's foreign trade, there is no need to be pessimistic about China's foreign trade situation in 2019.