In 2023, exports exceeded one trillion yuan for the first time. How to further expand exports of the 'new three' products in 2024?

After the export of "new three" products first exceeded one trillion yuan, a new round of growth is building momentum. On January 15, Economic Daily published an article by a relevant person in charge of the Ministry of Commerce discussing the implementation of the spirit of the Central Economic Work Conference. Among them, Li Xingqian, Director-General of the Department of Foreign Trade of the Ministry of Commerce, mentioned that in 2024, China will support the expansion of exports of green products such as the "new three" and competitive smart products. At the same time, to stabilize foreign trade and promote its high-quality development, the Ministry of Commerce is researching and reserving a new round of trade policy measures, which will be introduced at an appropriate time. Relevant analysis indicates that to expand the export of the "new three," China has advantages in industrial chain and supply chain, technological level, and the scale of the domestic market. It is predicted that the export of the "new three" will continue to maintain rapid growth in 2024.

Support the expansion of exports of "new three" products

Li Xingqian stated that products like the "new three" and energy storage products, which lead the green and low-carbon transformation and upgrading, align with global energy development needs. Digital-enabled smart products such as robots and robot vacuum cleaners are deeply loved by consumers, and their market space remains vast. In 2024, China will support the expansion of exports of green products such as the "new three".

It is worth noting that recently, when the State Council Information Office held a press conference on the overall import and export situation in 2023, Wang Lingjun, Deputy Commissioner of the General Administration of Customs, introduced that in 2023, China's export of mechanical and electrical products reached 13.92 trillion yuan, an increase of 2.9%, accounting for 58.6% of the total export value. During the same period, exports of labor-intensive products reached 4.11 trillion yuan, accounting for 17.3% of the total export value. Among mechanical and electrical products, electric manned vehicles, lithium-ion batteries, and solar cells – these "new three" products – totaled 1.06 trillion yuan in exports, breaking the one-trillion-yuan mark for the first time, an increase of 29.9%.

Breaking it down, among the "new three," the export performance of electric manned vehicles is particularly outstanding. At the aforementioned press conference, Lyu Daliang, spokesperson for the General Administration of Customs and Director-General of the Department of Statistics and Analysis, introduced that in 2021 and 2022, China's car exports successively surpassed 2 million and 3 million units. In 2023, it further leaped across two million-unit milestones, exporting 5.221 million units, a year-on-year increase of 57.4%. Among these, China vigorously promoted the green and low-carbon transformation and upgrading of the automotive industry, with new energy vehicle exports adding a distinct highlight to the industry. Currently, one out of every three cars exported from China is an electric manned vehicle, with annual exports reaching 1.773 million units, an increase of 67.1%.

Furthermore, regarding lithium-ion batteries and solar cells, according to Wang Lingjun, in 2023, China's exports of lithium batteries to the United States and Germany achieved double-digit growth. At the same time, Lyu Daliang mentioned that China's exports of lithium batteries and solar cells to ASEAN, and imports of audio and video equipment parts, all experienced rapid growth.

Advantages and challenges coexist

The export scale of the "new three" is gradually expanding, and behind this lies China's multiple advantages in these products.

The complete and perfected industrial chain and supply chain, rapid technological advancement, economies of scale brought by the large domestic market, and continuously advancing policy support are the sources of competitiveness for China's 'new three' exports," said Peng Bo, a researcher at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, in an interview with Beijing Business Daily."

Hong Yong, a think tank expert at the China Digital-Real Integration 50 Forum, further explained to Beijing Business Daily that China's new energy vehicle industry has formed a complete chain from R&D to production to sales, with electric vehicle products offering high cost-effectiveness and rapid iteration. The lithium-ion battery industry is globally leading in both scale and technology, possessing a group of internationally competitive enterprises. In the solar cell field, China's photovoltaic industry chain is complete, continuously reducing production costs and improving product performance through technological advancements, making it stand out in the global market with both price and quality advantages.

However, the superposition of multiple advantages and the continuous expansion of export scale do not mean that one can 'lower their guard'. Peng Bo believes that entering the new year, challenges such as trade protectionism from other countries, the US containment, 'decoupling', and 'de-risking' efforts against China, pressure from a relatively shrinking market due to global economic slowdown, and China's own insufficient growth momentum will still exist.

Hong Yong also pointed out that, firstly, international competition for new energy products is becoming increasingly fierce, with other countries and regions actively developing their local new energy industries, which may reduce China's product market share. Secondly, technical standards and regulatory environments vary across countries, requiring enterprises to adapt to and meet different market access requirements, which will increase the complexity and cost of the export process. Finally, the unstable international trade environment and trade protectionist measures may lead to unfavorable factors such as increased tariffs and more anti-dumping investigations, posing potential threats to the export of relevant Chinese products.

A new round of trade policies will be introduced

We must fully acknowledge the difficulties and challenges facing foreign trade development, but at the same time, we must also see that some positive factors indicating stabilization and improvement are continuously accumulating," said Li Xingqian."

Next, how will China's foreign trade leverage its advantages and address challenges? Li Xingqian stated that in 2024, the Ministry of Commerce will mainly stabilize foreign trade and promote its high-quality development from four aspects: First, introduce new policies. The Ministry of Commerce is researching and reserving a new round of trade policy measures, which will be introduced at an appropriate time to help enterprises reduce costs and increase efficiency. Second, explore new markets. Continue to host important exhibitions such as the China International Import Expo (CIIE) and the Canton Fair, and support enterprises in participating in overseas exhibitions. This involves both exploring emerging markets and expanding into segmented areas of traditional markets. Third, cultivate new drivers. Empower China's foreign trade with digitalization and green initiatives, accelerate the cultivation of new forms and models of foreign trade, support the expansion of exports of green products such as the "new three", and support the expansion of exports of competitive smart products. Fourth, actively expand imports. Promote deep integration and efficient linkage between imports and industries to better meet people's needs for a better life.

At the same time, Yu Benlin, Director-General of the Department of International Economic and Trade Relations of the Ministry of Commerce, mentioned in the article that in 2024, the Ministry of Commerce will further intensify free trade agreement (FTA) negotiations, striving to conclude the China-ASEAN Free Trade Area 3.0 negotiations and FTA negotiations or upgrade negotiations with Honduras and Peru. A batch of new FTA negotiations with relevant countries will be launched. Furthermore, free trade cooperation with the GCC, Norway, New Zealand, South Korea, Switzerland, Bangladesh, and other countries will continue to be promoted. "We will use this as our goal to continuously contribute to a global network of high-standard free trade zones."

According to Yu Benlin, the Ministry of Commerce will also further enhance the level of openness in free trade agreements. Leveraging FTA negotiations, it will increase the proportion of zero-tariff products in goods trade. Additionally, it will further improve the utilization rate of FTAs, promote the free and convenient flow of goods, services, and investments within FTAs, and deepen the integration of China's industrial and supply chains with its FTA partners.

With multiple measures in place, Hong Yong predicts that the export performance of the "new three" products in 2024 is expected to maintain a growth trend. However, against the backdrop of a high base and rapid growth in 2023, achieving further growth faces pressure. Peng Bo also believes that the export of the "new three" will continue to maintain rapid growth in 2024, but it will relatively slow down compared to 2024.

“However, if we can effectively address challenges such as intensifying market competition, technological barriers, and trade protectionism, and fully utilize the opportunities presented by digital transformation and the green economy, and deepen the synergy between domestic and international markets, then the ‘new three major products’ still have the potential to overcome pressure and maintain stable export growth,” Hong Yong said.