Inflation in many countries hits record high, global demand is squeezed

Foreign trade enterprises must strengthen their coping capabilities

At present, the rapid rise in global inflation has not been effectively curbed. Experts interviewed believe that the impact of global inflation on China's economy is generally limited, but its impact on foreign trade is increasingly apparent. People in many European and American countries have to pay a higher cost of living for this. While accelerating the adjustment of the demand structure, inflation has also had a considerable impact on the supply side. Faced with rising prices, overseas buyers directly requested to postpone the delivery of finished products, while others delayed the delivery of orders. Therefore, Chinese foreign trade companies need to deal with more uncertainties.

Limited impact on China's economy

Recently, a number of economies have successively released inflation data for July, and the momentum of rapid inflation has generally not been curbed. The French National Institute for Statistics and Economic Research said on August 12 that the inflation rate in France was 6.1% in July, reaching the highest level since 1985. Data released by the German Federal Statistical Office showed that although the inflation rate in Germany fell slightly to 7.5% in July, it was still at a high level and has exceeded 7% for five consecutive months. Inflation in the UK hit a 40-year high in June, and the market expects it to remain relatively high in July. Grocery prices in the U.S. have remained high and are accelerating over the past 12 months, with household food prices hitting the biggest jump since March 1979, data from the U.S. Department of Labor showed recently.

From a global perspective, according to statistics, there are more than 40 economies with a year-on-year increase of more than 10% in the consumer price index (CPI), and more than 80 economies with a year-on-year increase of more than 5%.

Wang Jianhui, a senior industrial economics researcher, said in an interview with a reporter from the International Business Daily that the causes of inflation are comprehensive, mainly due to the long-term monetary easing policies adopted by some foreign economies, especially the flooding of US dollar liquidity, and the conflict between Russia and Ukraine. The stimulating effect of rising food prices on prices quickly emerged. At the same time, with the gradual economic recovery of some economies, market demand has been further released, but the sluggish global industrial chain and supply chain have led to a relative shortage of supply, resulting in an imbalance between supply and demand, which has exacerbated global inflation.

Wang Jianhui said that on the whole, the current impact of imported commodity prices on China is relatively limited, because the proportion of imported commodities in CPI is not large, and China's current inflation rate is relatively low. However, if foreign inflation continues to intensify, it will continue to drive up the prices of some bulk commodities and raw materials, and the imported inflationary pressure will increase, which may bring certain cost pressures to the production of enterprises.

According to statistics from the General Administration of Customs, in the first seven months, China's imports of crude oil, coal, natural gas and soybeans fell in price. Among them, imported crude oil was 290 million tons, a decrease of 4%; the average import price was 4736.1 yuan per ton, an increase of 58.3%.

Fu Linghui, a spokesman for the National Bureau of Statistics, said that China's CPI growth rate is significantly lower than that of European and American countries. Facing the risk of international imported inflation, China has increased its efforts to ensure supply and price stability in the domestic market, which is conducive to the overall stability of the CPI. In July, the CPI rose by 2.7% year-on-year. Although the increase was 0.2 percentage points higher than that in June, it still remained within a reasonable range. From the perspective of PPI, in July, among the 40 major industrial sectors surveyed by the National Bureau of Statistics, 35 saw a year-on-year increase in prices, 2 less than in June.

Enterprises should enhance their international competitiveness

Foreign trade connects domestic production with foreign markets, and changes in external demand have a direct impact on foreign trade. What impact will the rising inflation in foreign economies have on China's foreign trade?

Wang Jianhui said that in terms of imports, continued inflation will curb import demand, but it will also lead to an increase in companies’ expectations for imports of bulk commodities, especially crude oil and other essential and high-consumption commodities. The import demand for related products and raw materials will be released in advance. On the export side, inflation will continue to have an impact on orders.

Zhao Ping, vice president of the Research Institute of the China Council for the Promotion of International Trade, said in an interview with a reporter from the International Business Daily that as inflationary pressures increase abroad, the adjustment of the demand structure will accelerate, and international competition will also intensify. In this regard, foreign trade enterprises need to strengthen their research and judgment on the market and make arrangements as soon as possible.

Wang Jianhui further analyzed that due to the high level of inflation in Europe and the United States, the demand for more cost-effective commodities will increase, especially for rigid demand commodities, fast-moving consumer goods, and low-end durable consumer goods, so orders in these areas will increase. Theoretically, it will have a greater driving effect on exports, and play a supporting role in the recent development of foreign trade, which is one of the reasons why China's exports continue to maintain rapid growth.

This analysis can be supported by the data. According to customs data, in the first seven months of this year, China's exports of goods traded 13.37 trillion yuan, a year-on-year increase of 14.7%; imports were 10.23 trillion yuan, a year-on-year increase of 5.3%.

"But it is worth noting that the main driving factor of this inflation is not the strong recovery of the economy, so the growth of actual demand is relatively limited." Wang Jianhui said that foreign trade enterprises need to actively promote the adjustment and upgrading of product structure, and not be affected by the rise in short-term demand. Confused, qualified enterprises should better improve the layout of the global supply chain network, and achieve stable growth with maximum efficiency and enhance market competitiveness by developing diversified markets and strengthening logistics and transportation cooperation.