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The upcoming Canton Fair has once again witnessed the "hard to find" scene, reflecting a surge in demand and activity. As China's foreign trade recovers, the voice of stable external demand policies should be gradually withdrawn, yet the RMB exchange rate is facing significant pressure for appreciation. Despite this, China’s foreign trade remains in a phase of recovery and growth, though its future trajectory remains uncertain.
Industry experts suggest that foreign trade policies, including those related to the exchange rate, need to remain stable to support the current rebound in exports and prevent a potential double dip. Since last year, foreign demand has not shown a strong recovery, prompting China to implement measures such as maintaining the RMB’s stability and increasing export tax rebates. These policies have yielded positive results.
With the recent recovery in exports, there is growing debate over whether these stabilization policies should be phased out and when. The U.S. has recently raised concerns about the RMB’s appreciation, intensifying the discussion. According to the Import and Export Chamber of Commerce of Machinery, Textiles and Light Industry, the recent export rebound is mainly due to short-term factors rather than a true recovery in external demand. For example, importers have largely cleared their inventory, leading to increased stock replenishment. Additionally, companies are rushing to export before the RMB appreciates further, and some product prices have seen a temporary rise.
Zhang Yujing, President of the China Chamber of Commerce for Import and Export of Mechanical and Electrical Products, noted that although export data has improved, most orders are short-term, with over 80% of orders within 60 days. Long-term contracts remain limited.
Li Jian, a researcher at the Ministry of Commerce’s Trade Research Institute, pointed out that global uncertainties—such as the Dubai crisis, European debt issues, and rising trade protectionism—continue to pose challenges for China’s foreign trade. Domestically, rising labor and raw material costs, along with difficulties in industry relocation and domestic market access, are also creating pressures on exporters.
Li Wenfeng, Vice President of the China Chamber of Commerce for Import and Export of Light Industrial Products, highlighted that the current environment is challenging for many businesses. Liang Yaowen from the Guangdong Provincial Foreign Trade Department emphasized the need for steady development and transformation amid the old and new contradictions.
Experts agree that maintaining policy stability is crucial. Zhang Yujing warned that sudden changes in the RMB exchange rate could severely impact profits for manufacturers. A 3% appreciation could lead to losses of up to 50% for home appliance and mobile phone producers, while textile firms would face similar risks.
Zhang Yansheng from the Development and Reform Commission noted that while RMB appreciation can drive enterprise restructuring, it must be managed carefully to avoid pushing vulnerable businesses into crisis. Small and medium-sized enterprises, which play a vital role in employment, are particularly at risk.
Li Wenfeng suggested that the RMB exchange rate should remain stable in the near term, with a gradual and slow appreciation if conditions improve. Financial tools should also be developed to help businesses hedge against currency fluctuations.
In addition, maintaining export tax rebate policies and reducing the cost of export credit insurance is essential. Experts also stress that while stability is important, China must also focus on transforming its trade model. With rising costs and competition from countries like Vietnam and India, the need for innovation, higher value-added products, and better quality is more urgent than ever.
Huo Jianguo from the Ministry of Commerce’s Trade Research Institute proposed that policies should be both stable and flexible, supporting structural upgrades and exploring new markets. He also urged greater investment in R&D, brand building, and overseas expansion.
Overall, the path forward requires a balance between stability and transformation, ensuring that China’s foreign trade continues to grow in a sustainable and resilient manner.
July 23, 2025