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Private Businesses Main Contributor to China's Foreign Trade Growth

Chinese private businesses overtook foreign-invested businesses as the largest group of businesses in foreign trade

By Xu Mouquan Updated Jan.28

According to data released by the General Administration of Customs of China on January 14, the total value of China’s import and export of goods in 2019 was 31.54 trillion yuan, up 3.4% from 2018,  reported newspaper the Beijing Youth Daily.

Chinese private businesses’ import and export expanded by 11.4 percent year-on-year in value to 13.48 trillion yuan, accounting for 42.7 percent of the total value, up 3.1 percent from 2018. They overtook foreign-invested enterprises as the largest foreign trade entity in China for the first time, as the latter's foreign trade took up 39.9 percent in value. 

Judging from the development of private businesses in recent years, it is apparent that due to the intensifying oversupply domestically, more private businesses are increasing their efforts to exploit the external market, especially the emerging markets, to seek out larger space, Ai Lin, a commentator, wrote at the newspaper. 

Data show that in 2019, the exports of private enterprises to ASEAN, Latin America, and Africa increased by 25.6 percent, 11.4 percent and 15.6 percent, respectively, all higher than China’s exports to each of them. And 406,000 Chinese private businesses exported and imported in 2019, up 8.7 percent. 

She then dived further into what truly stimulates private enterprises to expand their external markets. 

The first is the favorable national policies. Aside from the large-scale tax and fee reduction policies and the reform of the foreign trade import and export system, China also introduced the tariff guarantee insurance reform in 2019, under which commercial insurance mechanism is applied to the payment of taxes. The largest beneficiary of this reform is private businesses, which also demonstrates that they are more responsive to the market and have a better grasp of policies, according to Ai.

Moreover, after having suffered from low market activity and increasing operational difficulties for several years, private businesses badly need to find opportunities. Export is a relatively easy breakthrough point, she said. With the double effect of favorable policies, private businesses’ enthusiasm for exploring the external market is thus rekindled. 

She went on to point out the implications in the important change in China’s foreign trade structure. “It signals that the confidence of private businesses has been recovering, in investment, entrepreneurship, innovation and exports.” 

She predicted that for a long time to come, private businesses will play a major role in China’s economic growth, foreign trade and employment. Private investors will likely adjust their layout, product mix and investment structure, with a greater focus on technology and production innovations.