Diversifying markets to avoid losses

The Chinese mainland should beef up efforts to diversify its export markets in a bid to slash trade risks and ward off mounting trade protectionism globally.

The goal of the efforts is to construct a reasonable international layout for Chinese exports and enhance their competitiveness in a free-trade but friction-packed era, thus to sustain the mainland's trade development in coming decades.

The mainland should also establish sales networks and diversify trade relations in newly explored markets.

Past development The mainland initiated a strategy of diversifying export destinations in the early 1990s, aiming to expand export volumes.

Profound changes have taken place since the strategy was carried out. At present, China has preliminarily realized an international layout for its exports, which has turned out to be increasingly reasonable.

Its exports to new markets such as Africa, Latin America, East Europe, and neighbouring nations and regions have been on a rise in the past decade, reducing the reliance on the traditional markets such as the United States, Japan and developed European countries.

In 1991, about 77 per cent of Chinese mainland's exports flowed into the United States, Japan, Europe and Hong Kong four traditional markets.

Hong Kong alone took up 44.7 per cent of the total exports.

At that time, less than 6 per cent of the mainland's exports went to Latin America, Africa, East Europe, the former Soviet Union and Oceania.

The imbalance has been greatly improved.

In 2003, the percentage of the four traditional markets dropped to 68 per cent.

Meanwhile, exports distribution among the four was stabilized and adjusted to be more balanced.

Comparing the figures of 1991 with that of 2003, the United States' proportion rose from 8.6 to 21.1 per cent, and the European Union from 9.8 to 16.5 per cent. Japan underwent a slight decline from 14.3 to 13.5 per cent. Hong Kong witnessed a large drop from 44.7 to 17.4 per cent.

Moreover, exports to new markets increased at a brisk pace in the past decade, and its exports grew vastly.

Exports to South Korea, Taiwan, Latin America, Middle East and Association of Southeast Asian Nations surged four to eight times in the past 10 years.

Their proportions of the mainland's total exports also increased.

For example, 2.3 per cent of the mainland's exports went to Africa in 2003, compared with 1.4 per cent in 1991.

However, their shares are still small.

Adjustments in new times The new situation calls for some adjustments to the strategy.

The Chinese mainland has been increasingly integrated into the world trade system in the past years.

After entering into the World Trade Organization (WTO), the mainland liberalized trading rights for market players.

Trade volume also surged substantially.

The mainland is poised to become the world's third largest trading power by the end of this year.

However, more anti-dumping and safeguard measures have been imposed upon the mainland as its exports soar.

In 2003, it witnessed a record of 59 such charges, involving US$2.2 billion.

In face of all these changes, the mainland needs to deepen the diversification of exporting markets.

First of all, it should consolidate and further explore traditional markets, trying to maintain the balance among them.

Second, the government should highly support exports to new markets with great potential.

These markets are usually developing countries and regions with relatively stable trade climates. Mexico, Argentina, Brazil, India, Indonesia, Poland, Turkey and South Africa are some examples.

Developed countries have launched big inroads into these markets. They have even forged regional economic blocs.

The mainland cannot afford any lack of advances in exporting to these markets.

It should explore the markets based on a selective, gradual principle.

Third, the mainland should also pay sufficient attention to currently undeveloped markets.

These markets are crucial to soak up the excessive production capacity of some sectors in the mainland in the future.

In addition, enhancing the competitiveness of the mainland's overseas trade is at the core of the strategy of diversifying exporting destinations.

Enterprises are the major force pushing for the strategy.

The governments should focus efforts on giving preferential and supportive policies to enterprises, small and medium-sized ones in particular.

Meanwhile, exploring inter-national markets should also be diversified.

The mainland usually enters into these markets simply through goods trade.

Other efficient and advanced methods, such as investment and trade of service, should be encouraged.

Source: China Daily