China's Exports Will Soon Enter A Growth Era.

After the subprime crisis, the US economy is expected to decline this year.

Because the United States is China's largest trading partner, the industry is pessimistic about exports in 2008.

But by October, the export growth rate has exceeded the general expectation of the market, with a cumulative growth rate of 21.9%, which is almost the same as my annual export growth rate of 20% in February at the macro annual spring meeting of the stock market weekly.

This year's exports can still maintain a relatively high nominal growth rate, for two reasons: first, as I said at the beginning of the year, "the West does not brighten the Orient", the decline of the US economy will make China's exports to the US decline, but because of the existence of endogenous comparative advantage, the export growth rate of the European Union, India and Russia and other economies has accelerated; secondly, the price index of export products continues to rise this year because of the rising raw material prices, energy prices and labor prices.

At present, the two major factors have been reversed. The deterioration of the export environment will bring the growth rate of exports to a single digit growth level in 2009.

The cumulative effects of RMB appreciation, the cancellation of export tax rebates and other changes in foreign trade policy, the rising social cost of energy and environmental protection, and the implementation of the new labor law will all increase the cost of export enterprises and weaken the competitiveness of exports. These have been the main reasons for the expected decline in export growth in the future.

But in 2009, after the global financial crisis, the contraction of the economy led to the reduction of export orders, which is the focus of the decline in China's export growth.

Although the US government has introduced a high rescue plan, it is almost impossible to completely resolve the financial crisis. The crisis will surely lead to the decline of the real economy.

When the crisis has not yet been fully resolved, it is too early to discuss the early recovery of the US economy as a bellwether. It is even more difficult for the EU and Japan to see the hope of recovery.

The recession of the three big economies will make China's exports to the developed economies hard to pick up next year. The data in October have reflected this trend.

At present, China's exports to the United States account for 18.4% of the total exports. In October, China's exports to the United States increased by 12.4% over the same period last year, down 1.1 percentage points from the same period last year.

Exports to the EU account for 20.4% of China's total exports. In October, China's exports to the EU increased by 15.7% over the same period last year, down 18.2 percentage points from the same period last year.

The acceleration of export growth in newly industrialized countries is the main reason why China's export growth has remained high since 2007.

In 2007, China's export growth to Russia, India and Brazil reached 79.9%, 64.7% and 54.1% respectively, which partly offset the decline in US exports.

The global financial crisis is also not a blessing for newly industrialized nations.

First of all, as the newly industrialized countries are export oriented economies, the financial crisis has led to problems in the developed economies, which will inevitably affect the export of newly industrialized countries, resulting in slower economic growth and increased unemployment. Secondly, the financial crisis has led to credit contraction in developed economies, which will return capital to developed economies.

Any withdrawal of international capital from developing economies will be fatal to these economies.

Because the dollar's monetary purchasing power is more stable and its inflation is lower, it usually leads to currency mismatches in developing economies, that is, bonds issued by these economies and bonds issued by some enterprises are usually valued in dollars, but their assets are usually measured in local currency.

Once international capital escapes, it will cause its currency exchange rate to depreciate rapidly and bring about a currency crisis, and the real economy will suffer a rapid recession.

The rapid economic recession will inevitably reduce the demand for imported products, leading to a slowdown in China's exports.

Although the global economic downturn will have a significant impact on China's exports, the growth rate of exports will remain double-digit growth next year.

According to the forecast of global economic growth next year by IMF in November and the export elasticity coefficient between China and our main trading partners in recent years, we predict that the actual export growth in 2009 will be around 8.5%.

First, despite the decline in aggregate demand caused by the global economic recession, China's exports are mainly low and medium consumer goods, and the relative elasticity of economic growth is smaller than that of high-end consumer goods, and exports to developed economies are relatively less affected.

From 2005 to 2007, the elastic coefficient between China's actual export growth rate to the EU and Japan and its economic growth had always been negative (the European Union and Japan were -0.4 and -0.2 respectively), indicating that when the economy was booming, people were biased towards high-end consumer goods and had a certain inhibitory effect on China's products.

Since 2008, the Japanese economy has declined, but our country's actual export growth has risen, and its elasticity coefficient has reached -0.6. This shows that the economic situation is not good, and everyone's preference for low and middle consumer goods is enhanced.

For the relatively developed economies, the demand for imports of Chinese products will also decline sharply as the overall consumption level is low in newly industrialized countries.

The elastic coefficient between China's actual export growth rate of Russia, India and Brazil and its economic growth increased from 3.2 in 2005 to 2007, -0.5 and 0.4 to 6.7, 1.3 and 6.3 in 2008, indicating that the 3 countries are more sensitive to the import of our products and their domestic economic situation.

But so far, China's exports to these 3 countries account for only 5.8% of our total exports, and the impact on total exports is limited.

Secondly, the increase of the export tax rebate rate, the relaxation of the foreign trade policy and the slowing down of the RMB appreciation rate will enhance the competitiveness of some export enterprises and ease the export predicament.

We will not consider the impact of the decline in import and export growth on the upstream and downstream industries. We can only see that the net export to China's economic growth in the 1-9 months of this year is -0.6% from the perspective of the net exports to the economy itself. It is estimated that next year will be about -1.6%.

70% of the current net exports, or surplus, are made up of import processing trade and incoming processing and assembling trade. This structure results in a sharp decline in the growth rate of imports when the export growth rate declines rapidly.

In October this year, the export growth rate dropped from 21.9% in the first half to 19.2%, and the import growth rate dropped faster, from 30.6% in the first half to 15.6%. Even if the factor in the import price index dropped sharply, it can be seen that import growth slowed down as export growth slowed down.

Taking into account the rapid growth of domestic investment next year, the correlation coefficient between domestic investment and imports is 1.3 since 2005. We predict that the actual import growth next year will remain at around 10%.

Editor in charge: Yang Jing