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Cabinet tackles virus' impact on trade

Xu Wei
Updated: Mar 31,2020 09:09 AM    China Daily

The central government has pledged stronger measures to safeguard China's industrial and supply chains from the impact of the novel coronavirus pneumonia pandemic, with steps to ensure the production and export of globally important services and products.

At its executive meeting on March 24, the State Council said the global spread of the disease has dealt a severe blow to the global economy and brought about major challenges to the Chinese economy.

The Cabinet highlighted the importance of expanding domestic demand, aiding businesses and stabilizing employment, with proactive efforts to help the manufacturing and distribution sectors get back to business.

As the pandemic has seen export orders dwindle, the meeting decided on measures to support businesses to conduct trade talks and exhibit their products online and to take more initiatives to secure foreign orders.

The Cabinet said it is weighing up plans to delay this year's China Import and Export Fair or hold the fair online instead.

The government will prioritize efforts to expand the growth of new business models in the retail sector, with plans to boost the growth of online retailing, catering, diagnostic and education services, in addition to measures to develop e-commerce in rural areas to facilitate the sale of farm products, the Cabinet said.

Financial institutions will be guided to offer more unsecured loans, refinancing and medium-to long-term loans while bolstering the availability of new loans to small and medium-sized enterprises obtaining credit for the first time.

The World Trade Organization has warned that the pandemic, which had hit 202 countries or territories by March 29, could result in a very sharp decline in trade.

Zheng Pengfei, general manager of Shunmei Group, an exporter of ceramics in Fujian province, said his company has seen half its export orders either delayed or canceled by buyers due to the pandemic.

"We are barely taking any new purchasing orders," he said. "And many customers are asking to suspend the ones they have already placed.

"That is largely because the pandemic has resulted in widespread store closures in our destination markets. Our customers are facing difficulties selling their products as well."

The company, which exports 80 percent of its products to the European and United States markets, now relies on online channels for business consultations and exhibiting products as the pandemic also crippled international passenger flows.

Despite all the measures the company is taking, Zheng said hopes for a rebound in export orders ultimately rely on effective containment of the virus overseas.

Liu Changyu, an official with the Ministry of Commerce's Department of Foreign Trade, told a news briefing on March 26 that emergency epidemic containment efforts in China's major trading partners had dealt a blow to the country's export sector.

The postponement or cancellation of exhibitions and trade fairs due to the curtailment of international travel had also made it difficult for businesses to obtain new orders, he said.

However, Liu said China's foreign trade sector remained well-structured and highly competitive in its industrial chains and its businesses were highly innovative and capable of turning the crisis into opportunities.

Some economists have warned of severe blows to the country's economy and labor market from worsening external demand and have urged the authorities to step up aid.

Lu Ting, chief China economist at Nomura Securities, wrote in a research note on March 26 that the recession among developed economies and emerging Asian economies could hit China's exports hard.

The worsening of external demand could be more clearly felt in the later stage of the second quarter, and the longer the pandemic lingered in developed economies, the more time it could take to restart the global value chain, he wrote.

In an ideal scenario, in which the curve of the pandemic is flattened by mid-April, China's exports could slide by 20 percent year-on-year in the first quarter and by 30 percent in the second quarter, he predicted.

To counter the impact of the pandemic and stabilize foreign trade, the government could scale up exports of epidemic containment materials and improve their international certification, he said.

Lu said the government must ensure that monetary policy plays a key role, with targeted quantitative easing by the central bank to increase the supply of money, while using fiscal policies to help businesses and families affected by the epidemic.

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