China sees growing downward pressure on trade

BEIJING — Downward pressure on China’s trade is growing due to various destabilising factors, said a Commerce Ministry official, Zhang Ji, yesterday.

Mr Zhang, an Assistant Minister, did not elaborate on the destabilising factors, but stressed that global demand remained sluggish and “impossible” to change fundamentally this year, though January-August trade figures showed positive signs.

“We must have a rational understanding of the situation,” he said, adding that the latest figures from a recent report from the World Trade Organization (WTO) also showed that global trade is struggling.

China is Singapore’s largest trading partner. However, non-oil domestic exports to China have been on a decline, with shipments down 5.4 per cent in August, after a 16.6 per cent fall in July.

The WTO estimated global trade volume is set to grow just 1.7 per cent in 2016, a much lower forecast compared with April’s 2.8 per cent. It marks the first time in 15 years that international commerce has grown more slowly than the world economy.

The senior official said the government will step up efforts to develop a differentiation strategy in processing trade to improve competitiveness, and will continue to cut costs for Chinese companies by ensuring transparency.

Meanwhile, Mr Fan Gang, a member of China’s central bank monetary committee, was cited by the official Xinhua news agency as saying that China’s slowing economy and problems with industrial overcapacity have reduced investment opportunities.

Mr Fan said eliminating ineffective policies, strengthening property rights and raising the confidence of private companies will help stimulate investment, according to Xinhua.

Private investment grew just 2.1 per cent in the first eight months of the year, the same pace as in January-July and remaining at record lows.

China cannot solely drive reforms regardless of the cost to economic growth because that would create many problems for the world’s second-biggest economy, including unemployment, said Mr Fan.

Industrial overcapacity remains one of the main drags on economic growth. Beijing has pledged to quicken the pace of its industrial capacity cuts, particularly in steel, after falling behind earlier in the year. It produces half of the world’s steel. Agencies