The Ministry of Commerce has described China’s foreign trade situation as “complicated and severe”. With trade frictions mounting and protectionism rising, Chinese exporters face considerable uncertainty and should not be blindly optimistic.

Vanessa Ip reports

The world is witnessing a surge in trade frictions between China and its trade partners. According to the Ministry of Commerce (MOFCOM), in the first eight months of this year, 20 countries launched 85 trade investigations into China’s exports at a combined value of US$10.3 billion, representing a year-on-year increase of 94%.

In the past year, the US has launched 15 section 337 investigations into Chinese products under its Tariff Act, and together with the EU has accused China of flooding markets with excess steel and putting pressure on global prices. Adding insult to injury, the EU and US have displayed a reticence as to whether China will be granted market economy status in December, which marks 15 years since its accession to the World Trade Organisation (WTO).

Amidst the friction, China’s foreign trade has yielded negative growth. According to the customs statistics released by MOFCOM, China’s total import and export in January and August 2016 reached RMB15.4 trillion (US$2.28 trillion), down by 1.8% year-on-year. Among them, exports amounted to RMB8.8 trillion, down by 1%. In January and August, although exports of conventional trade sustained a positive growth of just 1.3%, the exports of processing trade decreased by 6.8%.

According to the Hong Kong Trade and Development Council, in 2015 the US, Hong Kong, Japan, South Korea, Germany, Vietnam, the UK, the Netherlands, India and Singapore were China’s top 10 export markets. While exports to the EU have remained steady, with a growth of nearly 3% this year, exports to the US have decreased by approximately 6%.

At a press conference in September, a MOFCOM representative said that now is not the time for China to relax or be blindly optimistic about the foreign trade outlook: “… the difficulties are not short-term, uncertain and unstable factors are still increasing, the downward pressure on foreign trade still looms very large, and this year’s foreign trade situation is still complex and severe.”

So, what does this all mean for Chinese exporters?

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