With the novel coronavirus pandemic now ravaging the world and almost all of its major trading partners implementing lockdowns to contain the spread of the virus, China's foreign trade is under severe pressure. With more than half of humanity asked to stay at home, Chinese exporters have felt the impacts as economic activity has ground almost to a standstill in many places, disrupting global supply chains, and consumer demand has plummeted.
Due to the prevention and control measures introduced in the country, China's foreign trade fell 9.6 percent in the first two months of this year, with exports declining by 15.9 percent and imports by 2.4 percent, according to the General Administration of Customs.
Although it picked up in March, the worsening of the pandemic situation elsewhere, particularly in the United States, Japan and Europe, which account for nearly 40 percent of China's total exports, means the worst is yet to come for China's exporters in the months ahead, especially as these economies are likely to slip into recession.
The sudden slump in external demand has already taken a heavy toll on China's exporting companies, especially in consumer-related industries such as textiles and apparel, with the dispatch of goods delayed and orders canceled.
It is therefore necessary for the government to help the sector, especially the small exporting companies, weather the storm with supportive monetary and fiscal policies.
Plans are also being drafted to establish new pilot zones for cross-border e-commerce and to support the processing trade — which accounts for one-fourth of China's total foreign trade. The China Import and Export Fair, known as Canton Fair, will be held in mid-June. The fact that this largest and oldest trade expo in China, the barometer of the country's foreign trade, is still to be held in such difficult times, albeit as a virtual event, attests to not only the importance of the country's foreign trade sector but also its resilience.
That the global trade situation is extremely difficult as a result of the pandemic was highlighted by a report released by the World Trade Organization last week, in which it predicts a contraction in international commerce of between 13 percent and 32 percent this year, saying the impact on trade is likely to exceed the slump caused by the 2008 global financial crisis. As it said, developments remain uncertain. And it is the uncertainties stemming from the pandemic, such as when other countries will be able to get people back to work and restart economic operations, that are posing the biggest challenges to China's trade.
Therefore, while striving for the best, the country must prepare for the worst. It needs to accelerate efforts to improve its investment environment and open wider to the outside world, while at the same time supporting its bedrock exports and seizing the opportunity to wean itself off its reliance on exports.