Experts say that China's foreign trade is doing "losing business"

Yu Yongding, president of the China World Economics Association, said that China’s foreign trade is doing “losing and selling”. He said that in the context of worsening trade conditions, the more imports and exports, the more the economic structure of China is deteriorating.

The Financial Weekly reported that in the first quarter of this year, China's terms of trade ended a marked improvement in 2009 and returned to a deteriorating state before 2008. The terms of trade in February were 81, reaching a low point since 1998.

The terms of trade refer to the ratio of the export price index to the import price index. As an important indicator of the purchasing power and national welfare level of a country in the field of international trade, it has not received corresponding attention for a long time. People are only concerned about the total volume of imports and exports and the trade surplus. In fact, since 1998, China’s terms of trade have been deteriorating, reaching a historical low in the first three quarters of 2008. Due to the impact of the financial crisis, China's terms of trade improved significantly in the second half of 2008 to 2009, and fell to a historical low in the first quarter of this year.

According to the calculation results published by Song Guoqing, a professor at the China Center for Economic Research of Peking University, on April 25, from January to March this year, according to the year-on-year price of imports and exports, the decline in export prices caused the export sector to earn less than US$10.4 billion, while the increase in import prices The import sector spent an additional $40.4 billion, totaling $50.8 billion. The deterioration in terms of trade has resulted in losses accounting for 4.9% of national income, which means that the real national income growth rate in the first quarter is 7% instead of 11.9%.

Song Guoqing said that the 4.9 percentage points of national income is China's "contribution" to other countries, especially oil exporting countries and mining countries.

Yu Yongding, president of the China World Economics Association, said that China’s foreign trade is doing “losing and selling”. He said that in the context of worsening trade conditions, the more imports and exports, the more the economic structure of China is deteriorating.

Closely related to the import and export structure, the changes in terms of trade are closely related to China's import and export structure. China imports a large number of primary products and exports finished products, making the prices of these two types of products greatly affect the changes in terms of trade.

According to data from the General Administration of Customs, the China Import Price Index rose by 31% year-on-year in the first quarter, with the price of international commodities contributing the most.

The spot price of the London Stock Exchange showed that from January to March, copper prices rose by 61.59%, 106.6% and 98.68% respectively.

Crude oil prices in the first quarter increased significantly by 89% year-on-year, and reached an 18-month high on April 6, reaching $86.84 per barrel.

Compared with the general increase in the prices of imported raw materials, the export price index in the first quarter fell by nearly 2% year-on-year, and reached the lower value of the export price index in the first quarter of 2000.

However, the price increase did not bring about a significant change in the number of imports and exports. According to China Customs statistics, in the first quarter, total imports increased by 64.6% year-on-year, and total exports increased by 28.7%. Buying more goods at a higher price and selling the goods at a lower price is the performance of “losing and selling”, and behind it is the problem of industrial structure.

On the one hand, there are a large number of low value-added export enterprises in China, and their fierce competition and overcapacity make the export bargaining power almost zero.

Take the Chinese container industry as an example. Shi Yanqiu, vice chairman and secretary general of China Container Industry Association, spoke at the 6th Steel Industry Development Strategy and Steel Products Production and Demand Seminar on April 25th. From January to March, the cumulative export of containers was 310,000, an increase of 123.8 year-on-year. %, the export value was 678 million US dollars, an increase of only 0.4% year-on-year, and the profit was minimal.

On the other hand, China's secondary industry accounts for 46.8% of GDP, and over-reliance on imported resources such as resources and energy has become one of the important demand factors for raising the price of international commodities.

According to the National Bureau of Statistics' annual national statistical bulletin, the proportion of China's tertiary industry in GDP in 2009 was only about 42.6%, compared with only 10% in 1998 and 12 years. At present, the proportion of China's tertiary industry is about 15 percentage points lower than the world average. Compared with developed countries, it is nearly 30 percentage points lower.

At the same time, the profit margin of the importing enterprises themselves is very low, and most importing companies cannot transfer the price increase of raw materials to the price of their own products. Taking the steel industry as an example, Li Xinchuang, president of the Metallurgical Industry Planning and Research Institute, said that the backward production capacity of the steel industry is still very serious, and the industry profit margin has dropped from 4%-5% in 2008 to around 3%. The China Iron and Steel Industry Association announced on April 28 that in the first quarter of this year, 10 out of 77 large and medium-sized steel companies lost money.

At the same time, strong demand for commodities also shows strong domestic investment demand. The investment intensity of local governments is still very high. In the first quarter, the investment in new infrastructure projects increased by 36%, resulting in a lot of rigid demand.

The deterioration trend is continuing in the future, and the rising prices of primary products in the international market may further aggravate the deterioration of China's terms of trade.

On April 30, the New York Mercantile Exchange (NYMEX) June crude oil futures price of 85.46 US dollars / barrel, only less than 1 US dollar lower than the 18-month high on April 6.

This year, the three major mines demanded that the price of iron ore rose by more than 90%-100%. On April 28th, the negotiations between the steel mills of the China Iron and Steel Association and the three major mining companies broke down, allowing the steel mills to consider signing contracts themselves. The price of ore is unstoppable.

The government has recently realized this change in terms of trade. The April 14 executive meeting of the State Council mentioned that it will incorporate the management of commodity price inflation expectations into the future macro-control policy objectives.

Yu Yongding said that the serious deterioration of China's terms of trade shows that economic growth is out of line with the growth of national welfare, and it is time for China to seize the mode of economic growth. The first thing to do is to increase the flexibility of the exchange rate. On the one hand, the appreciation of the exchange rate can lower the price of imported goods, increase the price of export commodities, and directly change the worsening terms of trade. On the other hand, the exchange rate also has the effect of eliminating backward production capacity, which can make the export industry The efficiency is improved and its industrial structure is improved. And raising interest rates can avoid overheated investment demand in the country.

Zuo Xiaolei, chief economist of China Galaxy Securities Co., Ltd., told Financial Weekly that Hong Kong has gathered a lot of hot money to wait for the exchange rate to appreciate and enter arbitrage. If the interest rate is changed, it will become a double arbitrage. Currently, the United States and Japan All are zero interest rates, and such macroeconomic policies will attract a larger influx of hot money.

On the one hand, we must maintain economic stability and prevent the continuous deterioration of trade conditions. On the other hand, we must guard against international hot money waiting for opportunities. How to achieve "two evils and one right", the decision-making level faces difficult choices.

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