Trade needs support
Updated: 2013-08-05 09:11
China's poor trade data in June, with both exports and imports falling year-on-year, has unambiguously brought home the message that the trade sector will not repeat the high-rate growth enjoyed during the past decade. Instead, exporters will have to face the turbulence resulting from the global economic woes.
Although the economy of the United States, a major buyer of Chinese products, shows initial signs of solid improvement, it will hardly offset the adverse impact of the overall weak global economy on Chinese traders.
Moreover, trade protectionism, which tends to be more active during a global downturn, will further add to the pains of Chinese exporters, who are already suffering from decreasing new orders and slumping profit margins.
Domestic policymakers are well aware of the difficulties exporters face. In the past month, as the country's economic slowdown has become more entrenched, they introduced a range of measures to shore up the battered sector.
The trade authorities have vowed to streamline charges on exporters, facilitate customs clearance procedures and provide more financial support. Exporters will also be encouraged to tap new trade methods, such as cross-border e-commerce, to increase their revenues. Innovation and technological upgrading is another focus of government support.
While these measures, if promptly and effectively implemented, will provide a timely shot in the arm for the country's exporters, the authorities should pay special attention to the issue of providing better financial services for them.
As part of its trade stimulus scheme, the government should devise special policies to encourage financial institutions, especially the smaller ones, to provide more targeted lending services to exporters. During an economic downturn, exporters often go bankrupt because of broken cash chains.
As the world's largest exporter, China also needs to establish more special funds - cosponsored by the government, trade enterprises and relevant industries - to hedge the various risks facing exporters and provide guarantees so companies can secure credit from financial institutions. Similar State funds have proven unable to meet the demand from the sector, especially the demand from the more fragile small exporters.
Such financial initiatives should not be just expedient measures to combat the current woes. They are the long-term lifeline for the sustainable growth of the sector.