China sees significant drop in biz confidence, goods exports in 2022

Meanwhile, industry insiders feel the number of China-Europe freight trains is expected to surge now on the back of China's optimised COVID-19 response and the shopping season in the West.

Let us take a look at some of the major developments.

Trade & Policy

China's business confidence has dropped to its lowest since January 2013, according to a survey by World Economics. The index related to the same fell to 48.1 in December 2022 from 51.8 in November. "The survey suggests strongly that the growth rate of the Chinese economy has slowed quite dramatically, and may be heading for recession in 2023," World Economics said.

In May, China's exports jumped by 15.3 per cent year on year (YoY), while industrial output grew by 0.7 per cent YoY, rebounding from a 2.9 per cent decline in April. Goods exports in dollar terms contracted by 8.7 per cent YoY in November after shrinking by 0.3 per cent in October. It was the largest drop since February 2020 and the figures continue to lag. Retail sales fell by 5.9 per cent in November from a year ago, the National Bureau of Statistics said.

Foreign direct investment to the Chinese mainland, in actual use, surpassed 1 trillion yuan ($140.18 billion) in 2021 for the first time—up by 62.9 per cent from the 2012 level and ranking second globally. Despite a global economic slowdown, the flow of foreign funds into the country expanded by 14.4 per cent YoY to nearly 1.09 trillion yuan in the first 10 months this year.

The State Council in May unveiled 33 measures to stabilise the economy, covering policies on investment, consumption, food and energy security, industrial and supply chains, as well as people's livelihoods.

Its executive meeting in September emphasised on implementing reform measures to improve the economy and delimit the exercise of government power. It also agreed that irregularities like arbitrary charges and excessive taxes and fees will be investigated. Regulatory administration will be reinforced, and the manufacture and sale of counterfeit and substandard goods will be prevented to ensure fair competition.

The country’s National Development and Reform Commission (NDRC) said in December that the domestic economy will continue to recover next year with the optimisation of COVID-19 containment measures and stimulus policy measures gradually taking effect.

NDRC will further expedite financing of projects via policy-based and developmental financial instruments and speed up infrastructure construction. Due to a more complicated and grimmer external environment and a cloudy global outlook, the top economic regulator said more efforts will be made to proactively expand effective investment, spur consumption in key fields and increase support for micro, small and medium enterprises and self-employed households.

The protocol signed on January 26, 2021, on upgrading the free trade agreement (FTA) between China and New Zealand came into effect from April 7. The FTA was signed on April 7, 2008, and implemented on October 1 the same year. The protocol further expands market access for goods, services, investment and other areas.

The People's Bank of China (PBOC) decreased the foreign exchange reserve requirement ratio for banks from 8 per cent to 6 per cent starting September 15. The announcement led to the strengthening of the onshore and offshore exchange rates of the renminbi against the dollar. The decision followed the renminbi's exchange rate reaching 6.94—a two-year low, against the dollar then.

China and Thailand signed memoranda of understanding in Bangkok in November on cooperation in e-commerce, strategic issues, academia, science, technology and the Silk Road Economic Belt and the 21st Century Maritime Silk Road. Both sides also agreed to promote connectivity, especially via rail freight.

The office of the US trade representative (USTR) in March announced its determination to reinstate certain previously granted and extended product exclusions in the China Section 301 Investigation. The determination reinstates 352 of the 549 eligible exclusions. The reinstated product exclusions were applied as of October 12, 2021, till December 31, 2022. Products include textile items. In December, a further nine-month extension to the 352 product exclusions was announced. The extension will help align further consideration of these exclusions with the ongoing comprehensive four-year review.

Starting from December 1 this year, China allowed zero-tariff benefits for 98 per cent of taxable items from Uganda. China had earlier decided to extend such treatment to 10 least-developed countries that have diplomatic ties with it to reach $300 billion in total imports from Africa in the next three years.

With its coming into force on June 21, the US Uyghur Forced Labour Prevention Act required US firms to prove that goods imported from China’s Xinjiang are not made with forced labour, or else the Customs and Border Protection can seize those goods. The act was signed into law by President Joe Biden on December 23, 2021.

In the first quinquennial valuation review of the special drawing right (SDR)−an international reserve asset—since the renminbi was included in the SDR basket in 2016, the International Monetary Fund in May raised the weight of the renminbi by 1.36 percentage points to 12.28 per cent in the basket. The decision was effective from August 1.

Textile & Apparel

In July, the government unveiled plans to support 200 demonstration smart manufacturing factories in a variety of sectors, including textiles and apparel. It also aspires to develop 50 demonstration cities that will help accomplish notable digitalisation progress, product variety, quality, and branding. Smart manufacturing is part of a new road map unveiled by China to accelerate the digitalisation of the consumer goods industry.

The country also plans to develop 15 high-level home furnishing industry clusters with various characteristics and construct 500 smart experience centres by 2025 so that the sector can meet growing domestic demands. The country released its development strategy for creating environment-friendly and smart home furnishings in August.

E-commerce

The State Council in February approved setting up more cross-border e-commerce pilot zones in 27 cities and regions to stabilise foreign trade and investments. The zones, including those in Erdos in Inner Mongolia and Yangzhou in Jiangsu province, will replicate and advance the experience learned from the previous five batches of pilot zones.

In November, it agreed to set up pilot zones for cross-border e-commerce in 33 cities and areas. It also stressed on upgrading and transforming traditional industries with cross-border e-commerce and promoting industrial digitalisation and foreign trade. The newly approved pilot zones for cross-border e-commerce include Langfang, Yuncheng, Baotou, Anshan, Lhasa, and the Kazak autonomous prefecture of Ili.

Sustainability

The China Cotton Association (CCA) in March unveiled the industry standard for sustainable production that focuses on the management and use of agricultural chemicals in cotton planting, ecological and environmental protection, cotton quality and other core issues related to sustainable agriculture. The standard became effective from April 1.

CCA said the standard aims to help cotton producers adopt sustainable production and operation methods, meet the demands for high-quality cotton products and raise farmers’ income.

The country aims to recycle 25 per cent of its textile waste and produce 2 million tonnes of recycled fibre by 2025 as part of its push to peak its carbon emissions by 2030 and turn carbon-neutral by 2060, a government document released in April said. It hopes to have a waste textile recycling system established by 2025.

In June, the government unveiled measures to boost its climate change monitoring and risk prevention capabilities. It seeks to build a climate-resilient society by 2035, with significant improvements in its abilities, according to the National Climate Change Adaptation Strategy 2035, jointly released by 17 departments.

By 2035, the country’s climate change monitoring and early warning capability will reach an advanced level globally, while the climate risk management and prevention system will mature.

NDRC allocated $355 million in July to save energy and reduce carbon emissions to boost efforts to shift to a greener economy. The funds will be used to develop innovative low-carbon, zero-carbon, carbon removal and energy-saving technologies, and to promote a circular economy. China aims to achieve carbon neutrality by 2060 and a balanced development across regions is being considered, it said.

The government in November announced that its renewable energy momentum has sustained growth, with the country’s installed capacity of solar power up by 29.2 per cent YoY to 360 million kilowatts in the first ten months of 2022.

The country’s installed solar power capacity was 350 million kilowatts—up 16.6 per cent compared to the corresponding period of the last year, as per the data from the National Energy Administration. The country’s total investment of major power generation companies in solar power soared 326.7 per cent YoY to 157.4 billion yuan ($22 billion).

Logistics

Operations at China’s first professional cargo hub airport officially started after a Boeing 767-300 cargo plane took off from Ezhou Huahu Airport in Hubei province in July. The new airport features a cargo terminal of 23,000 square metres, a freight transit centre of almost 700,000 square metres, 124 parking stands and two runways.

The airport will reportedly enable goods to be transported to anywhere inside the country overnight and to overseas destinations in two days. It is also expected to launch about 10 international cargo routes and 50 domestic routes by 2025.

Data from China Railway show a total of 15,162 China-Europe freight trains ran between January and November this year, transporting 1.48 million standard containers of commodities. In addition, the New International Land-Sea Trade Corridor trains facilitated 687,000 standard containers over the period, up by 18.9 per cent YoY.

The Shanghai port’s empty container transportation centre, which began operations late this year, is anticipated to increase domestic and foreign trade and enhance the port’s handling capacity. The centre boasts of an annual throughput of 3 million twenty-foot equivalent units. The centre is situated in the Yangshan Special Comprehensive Bonded Zone and was built by the Shanghai International Port Group in collaboration with the shipping lines of Maersk, CMA CGM, MSC, and Evergreen.

Fibre2Fashion News Desk (WE)