China vows more steps to stabilize trade as economic risks grow

China vowed more measures to stabilize trade as pressure builds on the government to bolster the economy amid worsening domestic Covid outbreaks.

The country will optimize an imported retail goods list for cross-border e-commerce and expand import categories to increase consumer goods imports, according to guidelines issued by the nation’s cabinet. China will also ensure a stable supply chain for trade and encourage financial institutions to offer greater support to small trade companies.

The State Council asked financial institutions to further increase credit support to firms, while the guidelines reaffirmed that China will keep the yuan exchange at a relatively stable equilibrium to boost trade companies’ ability to cope with foreign exchange risks. 

Keeping the economy on track has become a more difficult task with a second major Chinese city locked down due to the spread of the Omicron variant. Earlier this week, the cabinet vowed to accelerate investment in more than 100 key national projects and boost domestic consumption to help stabilize growth. The latest guidelines come weeks after a vice commerce minister said that China faced “unprecedented” difficulty in stabilizing trade during 2022 as favorable conditions that boosted export growth last year won’t be sustainable this year. 

Last year, China’s exports remained resilient, providing some support for an economy that’s been weighed down by regulatory crackdowns and repeated virus outbreaks and citywide lockdowns. But the current trade outlook is less certain as overseas appetite for Chinese goods is likely to weaken if the global economic recovery fails to materialize. Chinese exporters are also battling high raw material prices and surging labor and freight costs.