Why is the key to promoting stability and improving quality in Sichuan’s foreign trade ＂intermediate trade＂？
Dean’s business card
Bai Xuejie, Vice President, Institute of Economic and Social Development, Nankai University
Vice President of xihua university School of Economics, Cheng Yingying
Former Deputy Director of International Market Research Institute of Bai Ming Ministry of Commerce
Main point
Expand the trade of intermediate goods. There is a large room for growth in Sichuan’s exports.
● Stabilizing intermediate products is the basic disk for stabilizing trade, that is, stabilizing the supply chain of industrial chain.
● Need to pay close attention to intermediate products with higher added value and higher technical content.
Expanding the trade of intermediate goods, Sichuan has obvious comparative advantages
● Have a relatively complete industrial chain and supply chain, a good international logistics foundation and a strong scientific research team.
● Improve independent research and development capabilities and high-level communication and cooperation capabilities, and "clear the family"
Foreign trade is one of the "Troika" that drives economic growth. At the end of last year, the Central Economic Work Conference mentioned that "it is necessary to accelerate the cultivation of new kinetic energy of foreign trade". In the specific deployment, "expanding the trade of intermediate goods" was not only put forward for the first time, but also ranked in the forefront of the work related to accelerating the cultivation of new kinetic energy of foreign trade. In the "Government Work Report" of Sichuan Province in 2024, "accelerating the development of intermediate goods trade" was also listed as one of the key points of efforts to stabilize foreign trade and foreign investment.
What effect will expanding the trade of intermediate goods have on Sichuan’s foreign trade? What new requirements have been put forward for foreign trade? To this end, Chuanguan think tank invited Bai Xuejie, vice president of the Institute of Economic and Social Development of Nankai University, Cheng Yingying, vice president of xihua university School of Economics, Bai Ming, former deputy director of the International Market Research Institute of the Ministry of Commerce, Shi Huimin, a researcher at the Yangtze River Economic Belt Research Institute of China Renmin University and a professor at the School of Economics, Jian Jian, a researcher at the Yangtze River Industrial Economic Research Institute of Nanjing University, Li Yunong, a professor at the International Business School of Southwestern University of Finance and Economics, and KeLing, a professor at Wuhan College and director of the Hubei Private Enterprise Innovation and Development Research Center, to analyze the above issues.
Expand the trade of intermediate goods. There is a large room for growth in Sichuan’s exports.
According to the production process or use principle of products, commodities are divided into primary products, intermediate products (intermediate products) and final products. The international trade before the production of primary raw materials to the final products required by consumers is "intermediate trade".
At present, there is much room for expansion in the trade of intermediate goods in our province. Chuanguan think tank learned from Chengdu Customs that the total value of import and export intermediate goods in Sichuan last year was 596.57 billion yuan, of which the total value of export intermediate goods was 278.55 billion yuan, accounting for 46% of the total value of Sichuan’s trade exports, slightly lower than the national average of 47.3%. From the development history of foreign trade developed areas such as Europe, America, Japan and South Korea, during the period of rapid trade development, the proportion of intermediate products in exports reached 65% to 75%. In other words, from the perspective of exports, Sichuan’s intermediate trade still has a lot of room for expansion.
"Promoting the stable quality and quantity of foreign trade" is the primary task put forward by the State Council’s Government Work Report this year. So how much role can expanding the trade of intermediate goods play in Sichuan’s foreign trade? Many interviewed experts believe that expanding the trade of intermediate goods is a key link to promote the stable quality and quantity of Sichuan’s foreign trade.
Experts believe that the "steady volume" of intermediate trade can be understood from two aspects. On the one hand, stabilizing intermediate products is the basic disk for stabilizing trade. Sichuan’s intermediate goods trade accounts for about 62% of the total import and export value, and it is also the product with the closest cooperation with international industrial chain and supply chain. Cheng Yingying pointed out that Sichuan’s intermediate trade is becoming an extremely important link in the international industrial chain supply chain. For example, last year, Sichuan exported 1.94 billion yuan, 11.09 billion yuan and 5.64 billion yuan of lithium carbonate, lithium hydroxide and lithium-nickel-cobalt-manganese oxide respectively, ranking first, second and third in the country, and the "new three" products such as lithium-ion batteries, solar cells and electric manned vehicles exported 16.18 billion yuan, an increase of 46.7%, which became an important part of the international industrial chain supply chain. Some studies further show that if the supply of intermediate goods is interrupted or stagnated, it will cause a very serious exogenous impact on the stability of the international industrial chain supply chain, and the efficiency of the supply and circulation of intermediate goods will also affect the resilience and safety level of the global industrial chain supply chain. It is worth mentioning that Sichuan also guarantees the stable operation of the industrial chain supply chain of all industries in the province by importing a large number of intermediate products. Therefore, stabilizing the intermediate trade in Sichuan is also stabilizing the industrial chain supply chain.
On the other hand, expanding the trade in intermediate goods can further promote stability. Bai Xuejie said that at present, the complexity, severity and uncertainty of the external environment are rising, which may change Sichuan’s current traditional trading partners, and then lead to the transfer of traditional commodities and market advantages, which will reduce the kinetic energy generated by traditional trade models. From this point of view, intermediate products can play a role in stabilizing the market and consolidating its position. Qi Jian believes that there are many kinds of intermediate goods in Sichuan, and accelerating the development of intermediate goods trade can broaden sales channels, and then develop some non-traditional countries with markets and expand export destinations. Li Yunong, KeLing and other interviewed experts also mentioned that compared with exporting finished products directly, Sichuan’s intermediate products are relatively better at "finding buyers", which can make up for the weak brand effect of Sichuan’s finished products and the problem that some emerging industries (such as photovoltaics) are "subject to people" to some extent. Bai Ming emphasized that if Sichuan wants to participate in the international industrial division of labor, it must find the key links that suit it in the intermediate products.
How to understand that expanding the trade of intermediate goods is the key to "improving quality" First of all, from the perspective of trade structure, Sichuan is a province with processing trade as its main trade mode, but the advantage of low labor cost is gradually weakening, and it is urgent to enhance the added value of products. Data show that Sichuan imported and exported 399.62 billion yuan in processing trade last year, accounting for 41.7% of the total import and export of goods in the province. However, Cheng Yingying, KeLing and other experts said that Vietnam, India and other countries have gradually become the main destinations for processing trade in the world. At this stage, the advantage of lower labor costs in Sichuan is also weakening, so it is necessary to pay close attention to intermediate products with higher added value and higher technology content. They believe that there are many kinds of intermediate products in Sichuan, involving a wide range of enterprises, and they are also the most empowered by scientific and technological innovation, thus enhancing added value. Bai Xuejie, for example, is also a sensor. "For elevators and cars, the latter must have higher added value." Therefore, if enterprises want to increase profits, they need to choose to develop intermediate products with higher technical content, which can also enhance the technology spillover effect and increase the domestic value-added rate of exports. Secondly, the export of intermediate goods means that it is in line with international standards, and the requirements for manufacturing industry are naturally higher. According to Cannikin Law, the final quality and quality level of a product depend on the lowest quality part of all its components. According to experts such as Cheng Yingying and Shi Huimin, this also puts forward higher requirements for Sichuan’s manufacturing industry. If Sichuan wants to move closer to knowledge-intensive industries, it needs reliable supply guarantee, otherwise it will affect the safety of the industrial chain supply chain. Bai Ming also mentioned that,Behind the expansion of intermediate goods trade is the transformation and upgrading of China’s manufacturing industry and the improvement of its level, and so is Sichuan.
Expanding the trade of intermediate goods, Sichuan has obvious comparative advantages
The importance of expanding the trade in intermediate goods is self-evident. Wei Jianguo, former vice minister of the Ministry of Commerce, previously mentioned three conditions needed to make the intermediate trade bigger and stronger: First, he has a relatively complete industrial chain and supply chain, and is moving from the low-end to the high-end in the global value chain; Second, it has a good international logistics foundation; The third is to have a strong scientific research team.
Judging from the reality, Sichuan has the above conditions. First, Sichuan is one of the few provinces in China with all 41 industrial categories and 31 manufacturing categories. Shi Huimin said that this has provided an important foundation for exports. In addition, in recent years, Sichuan’s characteristic and advantageous industries have been growing. Last year, the export growth of "new three kinds" products also showed to some extent that Sichuan is moving towards the high end of the global value chain. Second, Sichuan has a good logistics foundation, such as the main channel of the new land and sea channel in the west, Chengdu has dual international airports and runs China-Europe trains. Last year, the volume of goods transported by air in Sichuan accounted for 47.2% of the total import and export, and railway transportation increased by 28.1% year-on-year. Third, Sichuan has strong scientific and technological strength. According to the latest data, Sichuan’s regional innovation capability increased by 2 places last year, ranking 10th in the country. In addition, Sichuan has the only national laboratory in the west, with 137 universities and 369 scientific research institutes, and its comprehensive innovation capability ranks first in the west.
On the basis of basic conditions, Sichuan also has obvious comparative advantages. The interviewed experts all mentioned the following examples: First, under the background of promoting the strategy of developing the western region in the new era, the eastern production capacity is shifting to Sichuan, which includes many industries involving intermediate products; Second, since the Regional Comprehensive Economic Partnership Agreement (RCEP) came into effect, the import and export of Sichuan and RCEP member countries have maintained a rapid growth trend. Studies have shown that the implementation of RCEP is conducive to promoting the trade and investment activities of intermediate products in the region and promoting the deepening development of the regional value chain industry chain; Third, although Sichuan is located inland, it is not closed. Li Yunong believes that remarkable achievements have been made in the construction of Sichuan Pilot Free Trade Zone and inland open highland, and the total trade volume from west (Europe) to south (Southeast Asia) has increased rapidly. Bai Xuejie also added that by building the Belt and Road Initiative and speeding up the construction of the new land and sea corridor in the west, Sichuan "has more traffic location advantages than some port cities along the eastern coast" in expanding the trade of intermediate goods.
At present, what new requirements are put forward for Sichuan enterprises and the government to expand the trade of intermediate goods?
For enterprises, the most important thing is to improve their independent research and development capabilities and high-level communication and cooperation capabilities. For the former, according to the data, the import of intermediate goods in Sichuan last year was 318.02 billion yuan, accounting for the majority of the intermediate goods trade. Li Yunong and other experts said that at present, Sichuan relies on imports for some high-tech and key intermediate products. However, with the upgrading of industrial structure, the ability to produce intermediate products has been continuously improved, and expanding the trade of intermediate products, especially exporting high value-added and high-tech intermediate products, is an inevitable requirement for the high-quality development of Sichuan’s foreign trade. In Bai Xuejie’s view, the technical content of intermediate products largely determines the industrial competitiveness and export capacity of a region. Therefore, enterprises in Sichuan need to intensify research and development, realize the innovation and upgrading of their own technologies and products, and produce intermediate products with higher added value, so as to turn the disadvantages of relying on technology and product imports into export advantages of enterprises. For the latter, based on the opinions of the interviewed experts, the key difference between expanding the trade of intermediate goods and the traditional trade of finished goods and processed goods is that the sales model is no longer a single TOC (consumer-oriented), but more importantly a TOB (enterprise-oriented), so enterprises need to participate in the whole process of transnational production cooperation at a high level and depth. Data show that there were 8,250 enterprises with import and export performance in Sichuan last year, including 7,328 private enterprises, accounting for nearly 90%. This requires that enterprises, especially private enterprises, must be able to purchase upstream products, innovate product design, produce, transport and sell,Maintain high-level communication and cooperation with overseas suppliers, manufacturers and customers. In addition, Jian Jian also mentioned that small and medium-sized enterprises need to have a keen sense of smell to explore new markets. For example, some businesses selling electronic components in Shenzhen have already smelled new business opportunities from the Middle East and started to label products in Chinese, English and Arabic in large quantities, which has increased sales.
For the government, the urgent task is to do a good job of "clearing the family’s finances". Shi Huimin said that only by doing a good job in trade accounting and statistics can we better grasp Sichuan’s position in the global value chain. Bai Xuejie also mentioned that due to the trivial classification of intermediate products, Sichuan should comprehensively and deeply sort out and master the development of local manufacturing enterprises, especially specialized and innovative enterprises, and their specific roles in the division of global value chains, so as to provide more targeted guidance and support for their development. In addition, Li Yunong added that the intermediate trade needs to be deeply involved in transnational cooperative production, and the government should do more services to "add icing on the cake", such as further improving the customs clearance efficiency of intermediate trade, and doing a good job in communication between international business people and long-distance travel services.
Economic outlook
China enterprises have entered the stage of "brand going out to sea" from "product going out to sea"
A few days ago, IBM Business Value Research Institute released the report "Mission in Hand, Integration into the World: New Momentum for China Enterprises to Go to Sea" (hereinafter referred to as "Report"). According to the Report, China enterprises have gradually developed from export-oriented labor-intensive industries into global integrated enterprises with international influence and continuously extended value chains. But at present, China enterprises are also facing certain challenges.
First, there is a lack of in-depth research on the needs of customers in regional markets and the design and operation of localized products. According to the Report, in the past, China enterprises often provided standardized products and sold them through local channels, but now it is no longer enough to rely solely on standardized products. Enterprises need to improve the global R&D capability of products, so as to further balance the strategies of localization and standardization, and make flexible decisions according to the needs and characteristics of different markets, which means that enterprises need to localize and customize some potential categories, while maintaining core values and brand recognition.
Second, the brand power and consumer experience of China enterprises in the international market have become more important. According to the Report, China enterprises have gone from "products going out to sea" to "brands going out to sea". Besides traditional social media, China enterprises need to explore other publicity channels. China enterprises can tap the value of CTV (Connected TV) and expand their brand power through all channels. CTV refers to TV equipment connected through the Internet, and users can watch streaming media content on TV. In the United States, CTV is growing exponentially. According to the data, it is estimated that by 2025, the number of CTV users in the United States will reach 201 million, and 76% of American marketers have also included CTV in the mandatory strategy. In addition, the immersive big screen experience can enhance the brand impression of the audience by 15%-35%. By strengthening brand experience, China enterprises can establish stronger brand recognition and differentiation advantages in the international market, and further consolidate the long-term development of their strategy of going to sea.
In addition to the above two points, the Report also mentions that China enterprises should strengthen their insight into the international market, establish a global integrated operation system, establish channels and ecological partners, improve the spare parts guarantee system and after-sales service system, and formulate long-term globalization strategies and development plans.
Xu Yeqing, a researcher at Chuanguan Think Tank, finishing
Learn some economics
Intermediate trade
Intermediate goods refer to products used to produce other goods and services, such as raw materials and spare parts in the production process, and are the products with the closest cooperation in the international industrial chain and supply chain. Among the "new three kinds" of foreign trade in recent years, the batteries used in the production of lithium batteries and the tin-coated copper strips used in the production of photovoltaic panels are intermediate products. Intermediate trade refers to the trade activities in which raw materials, spare parts or semi-finished products are imported from one country or region to another, then processed, assembled or synthesized, and finally exported to a third country or region.
processing trade
Processing trade refers to the business activities in which an enterprise imports all or part of raw and auxiliary materials, spare parts, components and packaging materials, and then re-exports the finished products after processing or assembly, that is, "raw materials are imported from the outside and products are exported", including processing with supplied materials and processing with imported materials. (Xu Yeqing, a researcher at Chuanguan Think Tank)