Five positive factors to fix foreign trade slump: analyst

• Source: Global Times
• [22:30 June 14 2009]
• Comments

Although the decrease of imports and exports in the first half of 2009 is certain, five positive factors indicate that China would soon emerge from the current foreign trade slump, according to Liu Nenghua, a researcher with Bank of Communications.

Liu said that despite the fact that the financial crisis has expanded into the real economy, with major international retailers recently filing for bankruptcy and the world’s governments issuing financial rescue packages, China’s foreign trade is still expected to recover in the second half of the year, thanks to five positive factors.

The first factor is that there have been positive signals that the Chinese economy will probably bottom out after the third quarter of the year with recovery possible at the beginning of next year, according to Liu’s analysis.

Second, although exports are down, market share is up. Liu said that according to data released by the United Nations, China’s foreign trade dropped by 24.9 percent, lower than the 40 percent global average decrease, a positive indicator.

Third, in addition to stimulating domestic demand, Liu said that the government has made efforts to stabilize foreign demand.

He said that the State Council introduced six major measures in May including raising tax rebates, credit insurance and financing to encourage enterprises to seek overseas development and investment.

The fourth positive factor, according to Liu, is that China’s purchasing managers index (PMI), a major gauge for economic activity, has been above 50, the distinction between expansion and contraction, for three months in a row.

Finally, Liu said that China’s fourth quarter figures for 2008 were relatively low and this will make this year’s year-on-year export growth data positive in comparison.