He Weiwen: difficulties in import and export trade are temporary
Author: he Weiwen
In order to prevent and control the new coronavirus pneumonia, some countries and regions have taken control measures on the mainland of China. In the area of trade, Indonesian trade minister AGUS recently said he was considering whether to impose import restrictions on Chinese goods. All of this naturally raises concerns about China's import and export prospects in 2020.
In my opinion, the impact of travel restrictions on import and export trade is limited. First of all, these restrictions are aimed at the travel of people, not goods. In the first quarter, the import and export mainly fulfilled the existing contracts, and there are no new major restrictions on the import and export of goods.
However, the travel restrictions have a negative impact on the negotiation and signing of trade contracts in the second half of the year. Although the proportion of cross-border e-commerce is increasing day by day, the bulk international commodity transactions, especially the transactions of mechanical and electrical equipment, automobiles and many durable consumer goods, to a large extent, take place in the internationally recognized industrial international expositions, often requiring on-site inspection and negotiation. The purchase and sale of equipment for major projects shall be conducted through open international bidding.
If this restriction continues to the Canton Fair in spring, it will affect the number of foreign businessmen and turnover, but only partially. Germany, which has the largest number of world-renowned international trade fairs, has not imposed such restrictions.
Secondly, because the interests of international trade include both China and foreign countries, China's import and export are blocked, and the other side of trade will suffer losses. Therefore, not only China itself, but also China's overseas trade partners will strive to overcome and promote the lifting of tourism restrictions, and strongly oppose trade restrictions.
If the new coronavirus epidemic can be alleviated significantly by the end of March, it is estimated that some countries will relax tourism restrictions, and the possibility of implementing trade restrictions is less. Therefore, the key is whether China can effectively prevent and control the epidemic as soon as possible.
The impact of the epidemic on import and export trade is also temporary. At present, the interests of people's life and health are higher than those of import and export. Therefore, different ways of isolation, postponement of resumption of work and reduction of contact cannot be relaxed even if they temporarily affect production and trade.
But on the other hand, according to the existing arrangement, after the enterprise returns to work 9 days later, the performance of the existing contract can be completely carried out as before, or a small part of it can be delayed due to force majeure. Even if the enterprise has a holiday, the shipment of many port goods has not stopped, and the import has not stopped. A large number of urgently needed medical supplies and foreign donated materials enter through the customs source.
During SARS in 2003, import and export trade slowed down significantly in the second quarter. But it grew rapidly in the second half of the year after the outbreak ended. The annual import and export trade volume increased by 37.1% over the previous year, the highest growth rate since the 1980s, and has not been broken so far.
Of course, we don't want to compare the growth rate with that of 2003, just to prove that there is usually a strong rebound after the epidemic. The key remains how long the outbreak lasts. If the second quarter starts to return to normal, the annual total import and export volume will not have a significant impact.
There are objective laws governing the production, import and export of commodities. As the undertaker, the enterprise can only realize social expansion and reproduction in the production or trade of products, otherwise its own survival and development will become a problem. After natural or social disasters, enterprises must also make up for them quickly, so production and trade often rebound.
But it's not enough to see the general rules. At present, the most urgent problem is to help production and trade enterprises, especially small and medium-sized enterprises, quickly and accurately. Due to the impact of the epidemic, many enterprises stop production and stop work, and have no income, but the employees' wages are still paid, the cost of plant office and equipment maintenance cannot be reduced, and the burden of rent and interest is still the same. The tension of the capital chain directly affects the purchase and production of raw materials after the resumption of work and the ability to pay the import advance deposit.
What's more, before the outbreak of new coronavirus, the whole industrial production profit of our country has been reduced, and the cost has increased, which brings great difficulties to the import and export trade operation. Therefore, there is an urgent need for the government to provide support in finance, taxation, credit, social welfare and other aspects. Such support can only be one policy for one place, one policy for one enterprise, and it must also take into account the current and long-term, not to drink poison to quench thirst, and significantly increase the debt ratio of enterprises.
At the same time of doing domestic work well, we also need to do foreign work well. The International Monetary Fund predicts that the world economy and trade will have a "very sluggish" temporary recovery in 2020. Global GDP will grow by 3.3%, higher than 2.9% in 2019; the growth rate of world trade in goods and services will rise to 2.9% from the extremely low level of 1.0% in 2019.
But the group warned that such a recovery was fragile, and that various unilateral tariffs and restrictions, trade tensions and the accumulation of financial market risks could bring new risks at any time. The multilateral trading system is at a critical juncture. Our external environment is not relaxed. Therefore, we must not only win the domestic epidemic prevention and control war, but also win the war of maintaining multilateralism and stabilizing the international trade environment.
He Weiwen, former economic and Commercial Counsellor of Consulate General in San Francisco and New York, senior researcher of Chongyang Institute of finance, Renmin University of China