Cabinet focuses on shoring up trade

Meeting urges greater strides in reform and opening-up to cope with impact of pandemic

China has scaled up efforts to stabilize foreign trade and investment amid the rapid global spread of the novel coronavirus, with experts calling for bigger tax cuts to help the country's export-oriented businesses ride out the outbreak.

The State Council said in a statement after its executive meeting on March 10 that China must make greater strides in reform and opening-up to cope with the impact of the pandemic and adopt a multipronged approach to stabilize foreign investment and trade.

The government will ensure that all export tax rebates will be made in full to all businesses, apart from heavily polluting producers and energy-and resource-intensive ones, the statement said.

The Cabinet also pledged to encourage financial institutions to increase foreign trade loans, including measures to offer businesses deferment of principal and interest payments.

To further attract foreign investment, the meeting decided on measures to shorten the negative list for foreign investment and widen market access for foreign businesses. The government will ensure that its aid packages to help businesses through the outbreak will be enjoyed by both foreign businesses and their domestic counterparts, the statement said.

China's foreign trade in goods dropped 11 percent year-on-year in the first two months of this year to $592 billion amid disruptions caused by the outbreak, according to the General Administration of Customs.

Overseas shipments dipped 17.2 percent year-on-year to $292.5 billion. Trade with the European Union was down 14.2 percent, while that with the United States was down 19.6 percent, and Japan 15.3 percent, the administration said.

The novel coronavirus has been reported in 146 countries, with the number of confirmed cases exceeding 153,000 by Sunday, according to the World Health Organization.

Wang Zuping, chairman of Anhui Liangliang Electronic Technology, an exporter of light-emitting diode bulbs, said it had resumed full production but he was very worried about the outlook for the company's international markets.

He said Anhui Liangliang had received notice from clients in Saudi Arabia and Iraq last week to stop shipping products and they were not placing any new orders.

"The biggest problem we face is that no one is buying our products, and the chances are the situation will only get worse and worse," he said.

Wang said the lockdown imposed by many countries had made it impossible for his clients to make payments at banks, which made transactions impossible.

"Nor can we go overseas to help our clients explore new markets and establish sales networks," he said, adding that it would be a lengthy process for his company to switch its focus to the domestic market.

Li Xingqian, head of the Ministry of Commerce's Department of Foreign Trade, told a news briefing on Friday that the ministry will make all-out efforts to help export-oriented manufacturers get back to business, and also accelerate the establishment of free trade zones and meet the financing demands of businesses.

"In the meantime, we need to see the huge potential, strong resilience and stable industry chains of China's foreign trade sector. Our businesses are innovative and highly capable in exploring new markets," he said, adding that exporter's long-term positive fundamentals remained unchanged.

Miao Yinzhi, an associate professor of financial law at Central University of Finance and Economics, said stabilizing foreign trade and investment is of paramount importance to a steady job market.

With the outbreak hitting the trade sector hard, he said the government should offer private businesses, which accounted for most foreign trade last year, more tax and fee cuts to help them cut expenditure and restore vitality.

As for foreign investment, China saw its inflow drop to $19.4 billion in the first two months of the year, down 10.4 percent year-on-year, largely as a result of the outbreak, the extended Spring Festival holiday and factory standstills, the Ministry of Commerce said.

However, a survey released on Friday by the American Chamber of Commerce found that China remains a top long-term priority for most US companies despite slowing growth, China-US trade tensions, and the novel coronavirus pneumonia pandemic.

Over half the chamber's members said they would increase investment in China if markets were to open up to the same degree as in the US, with half saying the investment environment in China had improved last year, up from 38 percent in 2018.

The chamber said member companies remained committed to the China market despite expecting a significant shock from the impact of pandemic.