Market Research: How Foreign Trade Enterprises Respond To Tariff Shocks

The global situation is complex and changeable, and the second quarter is generally regarded as the key window period that affects the economic trend of the whole year. Against this background, the meeting of the Political Bureau of the Central Committee was held on April 25 to make the latest deployment for economic work.

Continuing the main tone of "more active" macro policy since last year, the meeting stressed that we should make full use of more active fiscal policy and moderately loose monetary policy. The reserve ratio and interest rate should be cut in due time, and the incremental reserve policy should be introduced in time according to the changing situation.

"For enterprises greatly affected by tariffs, increase the proportion of unemployment insurance fund returning to stable posts." This sentence mentioned at the meeting made many people see bright. Recently, foreign trade enterprises have held symposiums intensively in many places to discuss the way for enterprises to "seek opportunities in danger". The economists interviewed generally believe that the relevant deployment of the Politburo meeting reflects the central government's active response to external shocks, highlighting the smooth transition of foreign trade enterprises, and also focusing on expanding domestic demand and new external markets.

It can be expected that a new round of incremental policies will be implemented quickly, and the policy of interest rate and reserve ratio reduction is expected to be introduced in the second quarter.

While ensuring that foreign trade enterprises will not be strongly impacted, actively exploring other markets and improving product competitiveness is the main way to improve the resilience of foreign trade. In fact, many foreign trade enterprises have made corresponding preparations for high tariffs in recent years. In the first quarter, China's foreign trade import and export also showed strong resilience.

In the first quarter, China's import and export of goods amounted to 10.3 trillion yuan With a year-on-year growth of 1.3%, exceeding 10 trillion yuan for eight consecutive quarters. Among them, exports reached 6.13 trillion yuan, up 6.9%. Sheng Laiyun, deputy director of the National Bureau of Statistics, said that in the short term, the United States would impose high tariffs on China's economy and foreign trade, but it would not change the long-term trend of China's economy.

We should increase the income of low-income groups, vigorously develop service consumption, and enhance the role of consumption in stimulating economic growth. We should clear up restrictive measures in the consumption field as soon as possible, and set up service consumption and pension refinancing. Increase financial support, expand the scope and improve the quality, implement the "two new" policy, and strengthen the implementation of the "dual" construction.

Service consumption, characterized by high consumption frequency, strong multiplier effect and sustainable growth, is regarded as an important starting point for expanding domestic demand. Since this year, "vigorously developing service consumption" has been repeatedly emphasized. In the first quarter, the retail sales of services increased by 5.0% year on year, 0.4 percentage points faster than the retail sales of goods. Consumer markets such as catering, film and cultural tourism may continue to welcome favorable policies.

The role of expanding service consumption in stabilizing employment also deserves attention. Under the influence of tariffs, export enterprises will suffer from the impact of equivalent tariffs, which will lead to orders reduction and business contraction. According to Lu Zhe, chief economist of Soochow Securities, under neutral circumstances, the US side may moderately lower the tariff parity in the third quarter.

Therefore, it is suggested to implement service consumption subsidies as soon as possible, which can stimulate more employment than durable goods consumption subsidies. At present, China's consumption subsidies mainly focus on the trade in of old products for new ones, which drives the growth of industries such as household appliances and automobiles. If the service consumption subsidies are implemented, it is expected to absorb more jobs.

In terms of cultivating new quality productivity, the meeting mentioned that we should continue to vigorously promote the key core technology research, and innovatively launch the "science and technology board" of the bond market.

The "technology board" of the bond market is a product system that supports financial institutions, technology-based enterprises, private equity investment institutions and other three types of entities to issue scientific and technological innovation bonds and enrich scientific and technological innovation bonds.

During the National Two Sessions this year, the Central Bank has mentioned the "technology board" when introducing the 2025 financial measures. This meeting of the Political Bureau stressed that it may mean that relevant products will be launched more quickly, and the financing of technology enterprise bonds will usher in an institutional window period.