Yicai editorial: Cold thinking is still needed after the recovery of trade

According to data released by the General Administration of Customs on the 9th, China's exports denominated in US dollars in April increased by 14.1% year-on-year, higher than the market estimate of 8.4% and also higher than the previous value of 2.5%; Imports increased by 25.3%, higher than the market estimate of 20% and slightly lower than the previous value of 27.8%. The trade surplus for the month was $84.82 billion, higher than the market estimate of $83.65 billion.

The trade growth in April was achieved under the trend of RMB appreciation, coupled with the background of the obstruction of maritime transportation in the Strait of Hormuz caused by the Middle East conflict, which was hard won. This reflects the full resilience and stable supply capacity of China's international industrial and supply chains, highlighting the shock absorption and stabilization effect of China's supply on the global economy.

The optimization of China's export structure is currently outstanding. On the one hand, the export value of mechanical and electrical products in the first four months reached 5.92 trillion yuan, a year-on-year increase of 17.6%, accounting for 63.5% of China's overall exports. This reflects that China's export structure is climbing along the industrial smile curve, and the added value of the supply chain is becoming increasingly rich. This obviously helps to enhance the bargaining power and risk resistance of China's industrial chain and supply chain in the international market; On the other hand, the concentration risk of trade partner structure has been improved. In the first four months, the total trade value between China and ASEAN, the European Union, and the United States was 2.75 trillion yuan, 2.01 trillion yuan, and 1.25 trillion yuan, respectively. The balance of trade partner structure helps to balance and digest the risk of market fluctuations.

This relatively balanced trade structure provides China with considerable room for maneuver in dealing with external conflicts and enhances its risk management capabilities in the trade sector.

The recovery of trade benefits from the synergistic effect of the concerted efforts of various parties such as the government and enterprises. Currently, what makes people perceive the heat of trade is not only the practical data from the trade department, but also the gathering of people of different skin colors in major cities in China. China's unilateral visa free policy, coupled with the predictable security of the domestic environment, provides systematic support for bilateral and multilateral exchanges and transactions, and offers increasingly lower institutional costs for building trust in transactions. This is an important supportive framework system for China's trade sector to once again strive for stable growth.

A prominent feature of the current trade recovery is that there are opportunities in the short term and stories in the long term. Regional conflicts provide a substitution effect for China's industrial and supply chains in the short term, while the capital expenditure cycle driven by AI transformation has become an important support for stabilizing supply in China's industrial and supply chains.

However, the capital expenditure cycle driven by AI transformation presents both opportunities and challenges for China's industrial and supply chains. As AI reshapes and reconstructs various industries, the reset cost of international industrial chains and supply chains becomes increasingly low, which improves the efficiency of distributed layout of international industrial chains and supply chains, and enables the manufacturing industry in developed countries and regions to return from simple political will initiatives to achievable commercial motivations. In April, the growth rate of exports of capital goods, intermediate goods, and energy resources slowed down. China needs to pay enough attention to this, because supply chain substitution is not a long-term risk, but a realistic challenge accompanied by opportunities.

At the same time, the capital expenditure cycle under the AI revolution not only brings intelligent support and upgrading to the economy, society, and various industries, but also includes open supply. With the increasing intelligence of the supply system, cross-border flow of industrial data, industrial data, and process data will become more and more realistic. How to form a standardized trade structure system in the field of data, and how to define data security and data property rights, will be cutting-edge areas that must be given sufficient attention. This obviously requires the system to provide a more favorable definition framework for transactions in the data world.

In addition, the current rebound in trade provides important support for stable economic growth, which also triggers concerns in the market about insufficient domestic effective demand and private investment willingness. Therefore, it is necessary to issue a clear and credible commitment framework to the economy and society, which means that the pace and urgency of internal reform will not be relaxed. After all, for the comprehensive deepening of reform, there always exists a practical problem of either advancing or falling behind, as well as a problem of inertia in tackling difficulties.

Therefore, from the perspective of economic internal stability, the recovery of trade provides a strategic space for all parties to carry out sweeping reforms on the basis of insufficient effective demand, and this is a convergence function based on time. The current internal reform campaign is racing against time. At this time, various reforms launched in various fields of the economy and society not only need to delegate power and benefits based on the boundaries between the government, the market, and society, but also need to maximize the freedom of action of economic and social entities within a security framework. This is also the practical wisdom explored by China's more than 40 years of reform and opening up, the more free it is, the more developed it is, and the more secure it is.

Those who are good at treating illnesses must treat their affected areas; Those who are good at saving evil must eliminate the source of their wrongdoing. China's industrial and supply chains can benefit from the AI capital expenditure cycle due to the increasingly free and open economic ecology. To treat the internal stability of the economy and resolve the insufficient effective demand, what is also needed is institutional openness. The recovery of trade provides a buffer space for addressing the insufficient domestic effective demand, comprehensively promoting reforms, and making good use of the favorable opportunity of AI capital expenditure. Only then can the internal stability of the economy radiate from the inside out, and the economy and society can light up and embrace the arrival of the AI era.