There Is No Need To Worry About The Decline In Trade Surplus.

The latest customs statistics show that the growth rate of China's exports to the United States slowed significantly last month, and dropped to the single digit for the first time in nearly 7 years. The surplus in the previous 7 months has continued to decline, causing widespread concern in the market.

From the perspective of macroeconomic balance, the trade surplus is a good thing, rather than a bad thing, which is conducive to reducing the pressure of currency supply caused by foreign exchange.

In the first 7 months, exports increased by 22.6% in dollar terms. Even if the conversion into RMB was still growing, China did not have to react too strongly.

China should support the export departments that conform to the industrial policies, instead of focusing too much on the decrease in the trade surplus.

The main reason for the decrease in trade surplus is the sharp rise in import prices of primary products. In the first 7 months, China's primary products imported 221 billion 650 million US dollars, accounting for 32.6% of the total import value of the same period, and the increase was 70.6%.

However, there has been a major turning point in the primary product market. Crude oil futures prices on the New York Mercantile Exchange have been closed at the lowest level in the 3 month closing period of 114.45 dollars on the 11 day. Corn (information market), soybean (information market), wheat (information market) and copper futures prices have fallen more than 20% since the record high this year.

In the next 5 months, the average price of imports of primary products in China is expected to decline, and its contribution to the reduction of China's surplus will be correspondingly reduced.

There is no need for China to increase export incentives in an unselective way, because the export growth rate of our traditional bulk commodities has slowed down obviously because the international market share of such products has been very high, for example, the share of "made in China" such as toys has reached 80% to 90%. Even if we increase export incentives, it is useless to expect that the export volume of such industries will continue to maintain two digit growth.

For such industries, the focus of the measures should be to increase the profits of the export volume and create convenience for them.

The key to improving the export volume of such industries is to cut into the circulation and brand links of high yield. Therefore, it is more important to take measures to help these industries develop cross-border mergers and acquisitions compared with attempts to increase their export volume through export incentives (which may well become a mere increase in subsidies to foreign customers).

Secondly, some factors that impede our export are changing or will change.

There is a saying that the rise in production costs in China leads to the flow of orders to other developing countries such as India and Vietnam. However, China's real competitiveness lies in its large and skilled workforce, sound industrial system, perfect infrastructure and efficient public services, which are not quickly owned by other developing countries, and many overseas customers need to feel the importance of their many things in China after they run into a wall.

Because of this, many previously lost orders have started to flow back.

We do not have to worry too much about the temporary loss of orders. China should and have the ability to pay reasonable prices for all of this. The process of "order outflow and reflux" is an inescapable measure to enhance bargaining power.

The RMB exchange rate appreciation factor may also be reversed.

Although the recent devaluation of the RMB exchange rate against the US dollar for more than ten trading days may be caused by the Chinese government's intervention in the foreign exchange market, but looking at the fundamentals of the economy and the global market, the emerging market currencies that have continued to appreciate for several years have been overshooting. Their appreciation rate has generally slowed down, and the currencies of many new markets have been significantly depreciated. Even the former rupees of India and South Africa Rand have not been spared.

Therefore, we need to pay more attention to the potential problems behind the decrease in the book trade surplus compared with the reduction of the trade surplus itself.

Because a lot of hot money goes by way of trade, and the decrease in book trade surplus is likely to be a manifestation of the withdrawal of hot money.

Moreover, foreign exchange deposits increased by US $5 billion 600 million in July, an increase of US $10 billion over the same period last year (a decrease of US $4 billion 400 million last year), indicating that many market participants have begun to convert renminbi assets into foreign currency assets.

According to the statistics of Ministry of Commerce, the actual amount of foreign investment used in the first 7 months was 60 billion 724 million US dollars, up 44.54% over the same period last year. Generally speaking, a lot of hot money was inflow in the name of "foreign direct investment". However, the foreign direct investment data of the Ministry of Commerce has been significantly lower than that of the Foreign Trade Bureau for 3 consecutive years, and the data of the foreign trade bureau are much higher than that of the Ministry of Commerce. The foreign capital inflow will eventually plate into the increment of foreign exchange reserves. We believe that the data of the safe will be more accurately reflected in the capital inflow under the "foreign direct investment", so we can not claim that the hot money is still accelerating in the light of the Ministry of commerce data.