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Thirteenth Five-year Plan for Boosting Foreign Trade (2016-2020)

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Note: Thirteenth Five-year Plan for Boosting Foreign Trade (2016-2020)

Thirteenth Five-year Plan for Boosting Foreign Trade (2016-2020)

On 9 January 2017, the Chinese Ministry of Commerce released the Thirteenth Five-year Plan for Boosting Foreign Trade (the “Plan”), clarifying the context, guiding strategy, missions /objectives and supportive measures for boosting China’s foreign trade during its 13th five-year plan period (2016-2020). The Plan will guide all levels of foreign trade administrative departments in China and provide references to trade enterprises to properly guide their trading operations and activities.

According to the Plan, China will face severe challenges in foreign trade during the 13th five-year plan period. Following a steep market correction, the global economy has showed signs of recovery among twists and turns, making international economic and trade cooperationincreasingly complicated. In China, as the economic growth has slowed down, it has lost the comparative advantages it previously had with its traditional sectors, and as a result a multiple sectors have started to shift production facilities and production activities overseas. Despite of the above drastic changes in international and domestic environments, China has still maintained a position to boost its foreign trade in the long run. Its industry mix is still a complement to that of the developed and developing countries, it has been able to maintain an accelerate pace in transforming and optimizing its foreign trade structure. The Plan calls for a deep understanding and comprehension of the new situation, so as to seize every opportunity to boost foreign trade and tackle  challenges.

As pointed out in the Plan, to boost foreign trade, China needs to fulfill the new development concepts proposed by President Xi Jinping to transform its economy. Specifically, China needs to put forward its supply-side structural reform, and renew its efforts in exporting and importing “high-end”produces and technologies with higher added value. only with such structural reform efforts can China grow into a strong trading nation.

The Plan sets forth major tasks, which can be summarized into “improvements in five aspects” and “shifts (or reforms) in five aspects”.

Such improvements are:

  • international market penetration (more exports and imports from emerging countries along the “One Belt, One Road” Initiative); 
  • regional distribution of domestic traders (in addition to the Eastern coastal area, the Middle and Westernareas shall play a larger role in boostingforeign trade); 
  • structure of trade commodities/goods (to export more brand products and high technology products); 
  • composition of trade entities (equal focus on trade entities of all sizes and all ownership patterns); 
  • trading patterns (to diversify means of trading); 

Such shifts (or reforms) are:

  • the form of exporting (from commodities to a combination of commodities, services, technologies and capitals);
  • the competitive advantages (from in price to in a combination of technology, brand, quality and service); 
  • the growth pattern (from factor driven to innovation driven); 
  • business environment (from a policy guidance environment to the one under policy regulation, ruled by law with international level of trade convenience); 
  • China’s standing in the internationaleconomic governancecommunity (from a rule follower to rule maker).

The Plan also sets forth eight missions to boost China’s foreign trade:

  • Create more competitive advantages in China’s foreign trade by improving the quality of its export produces, growing capabilities in forming international rules, fostering proprietary brands, increase exports of produces incorporating cutting-edge technologies and to establish service systems for export produces.
  • Promote exports of high-end and quality products by using modern technologies to transform traditional industries, growing machinery manufacturing and other export-oriented industries as well as overseas expansion of its strategic emerging industries.  
  • Promote capabilities of China’s trading entities in trans-national operations by cultivating trans-national trade entities and supports to small and medium sized trading companies. 
  • Boost trade with countries along the route of the “One Belt, One Road” Initiative.
  • Boost processing trade and cross-border trade in an innovative manner.
  • Promote new forms of foreign trade, including cross-border e-commerce, procurement trade, and formation of a number of comprehensive foreign trade service providers); 
  • Adopt more aggressive policies to encourage imports of cutting-edge equipment and key components, encourage imports of energy resource products and increase the imports of general consumer goods. 
  • Push ahead with the construction of structural-transformation-targeting trade bases, trade platforms and international marketing networks.

The Plan also includes supporting measures to boost foreign trade:

  • To improve foreign trade policy system. This includes measures to deepen reforms on trade administration system, fine tunefinancial and taxation policies, provide better financial services and improve public services capabilities;
  • Leverage two-way investment to boost trade. Chinese investors are encouraged to export products, services and technologies in their overseas operations, while domestic entities are encouraged to make use of foreign capitals more efficiently.
  • Develop a well-organized trade regime to create a fair, rule-of-law doing business environment with an international level of trade conveniences; 
  • Deepen international economic and trade cooperation to pursue win-win results. To achieve this, efforts shall be made to push aheadthe implementation of the free trade zone strategy, positively cope with trade frictions, and win more say in forming international trading rules. 
  • Develop and maintain a well-organized leadership and implementation team.

In comparison with previously adopted plans, the Plan underlines:

  • a focus on structural reformin its development strategy, so asto gain momentum while serving its goal of a steady growth. Instead of setting volume growth targets, the Plan clarifies more specific structural adjustment objectives, which is in line with China’s current economic situation;
  • the importance of the two-way investmentsand all its industries in boosting foreign tradewhen setting out the main tasks and supporting measures.
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