context: China saw a double-digit decline in trade volume in Jan-Feb 2020 due to COVID-19, and the worst is yet to come as the pandemic unravels. 'Stabilising the fundamentals of trade' has increasing prominence in official statements since early March.
Policy should shift from 'stabilising trade' to 'stabilising the fundamentals of trade', says Yu Chunhai 于春海 Renmin University of China School of Economics professor, by maintaining the fundamental function of trade in the economy which is to supplement domestic demand in achieving supply-demand balance,
It is unrealistic and unnecessary to aim for positive growth in export volumes, according to Yu. The pandemic is restraining China's exports in two ways: overseas demand is inevitably shrinking, while the pressure of containing imported cases of COVID-19 will also limit China's production output. China should not blindly stimulate capacity expansion and export growth, as this will result in overcapacity. Instead, it should adapt to domestic supply and overseas demand situations.
The focus now should be on securing import channels and supplies, which is crucial for 'new infrastructure' projects, adds Yu.