2015 This year, the global economy will continue its moderate recovery trend, yet it will remain fraught with instability and uncertainty, and international competition will intensify. China’s economy has gotten off to a steady start, with structural adjustments steadily advancing and new growth drivers accelerating their emergence; however, it still faces downward pressure.

　　 From an international perspective, the global economy continues to grow at a slow pace, risk factors have increased somewhat, and the overall situation has become even more complex and intricate. The global economy remains in a deep adjustment phase following the international financial crisis, with limited growth momentum and significant disparities among countries. The United States is poised to begin raising interest rates, international commodity prices are falling, and geopolitical tensions are intensifying—each of these developments adding new risks to the global economy. The International Monetary Fund (IMF) forecasts that in 2015... Global economic growth of 3.5% this year. The growth rate increased by 0.1 percentage points compared to 2014.

　　 The trends of major economies are diverging. The U.S. economy has made progress in repairing its balance sheets, and its endogenous momentum is gradually recovering. The labor market and financial markets continue to show steady improvement, putting the economy on a path of sustained growth. Meanwhile, the Eurozone remains plagued by persistently high unemployment and fiscal consolidation efforts, making it difficult for economic growth to stage a significant rebound. However, as integration deepens, the likelihood of systemic risks erupting has declined, and quantitative easing monetary policies will also play a role in boosting economic growth. In Japan, the effectiveness of loose monetary policies is waning, and the outlook for structural reforms remains uncertain, leaving the economy stuck in prolonged low growth. Overall, emerging economies continue to outpace developed countries in terms of economic growth—particularly India, where reform efforts are yielding results, with economic growth exceeding 7%. Nevertheless, many emerging economies still face stark structural contradictions, and under the backdrop of a strengthening U.S. dollar, they are facing renewed pressure from capital outflows. As a result, the trend toward slower economic growth will be hard to reverse in the short term.

　　 The appreciation of the U.S. dollar is disrupting global financial markets. As the U.S. economy stabilizes and recovers, U.S. monetary policy is gradually returning to normalcy, November 2014. The U.S. will completely exit its quantitative easing monetary policy, and the next step will be to initiate a rate-hiking process. Meanwhile, the European Central Bank in 2015... Starting in March of this year, Japan officially began implementing a large-scale quantitative easing policy, and the Bank of Japan’s quantitative easing measures are also being intensified. The divergence in monetary policies among major developed economies has prompted the continued appreciation of the U.S. dollar, significantly boosting the relative yields of U.S. dollar-denominated assets. This, in turn, has led to a rise in risk premiums in global financial markets, attracting international capital to flow back into the United States and threatening the stability of international financial markets. In particular, emerging economies that have seen relatively large inflows of short-term capital in recent years will face concentrated capital outflows, putting their macroeconomic and fiscal-financial stability to the test.

　　 Falling commodity prices are increasing the risk of global deflation. 2014 Since the second half of the year, international market prices of energy resources such as oil have fallen sharply. The International Monetary Fund’s commodity price index fell by 34.5% over the half-year period, with the energy price index dropping by 39.5%. The decline in commodity prices is the result of a combination of factors, including weak demand, the release of capacity from earlier investments and construction, and the appreciation of the U.S. dollar. These factors are unlikely to undergo any fundamental changes in the short term. 2015 In the first quarter of the year, the International Monetary Fund’s commodity price index fell further by 10.2%. Against the backdrop of sluggish economic growth, the sharp decline in commodity prices has heightened the risk of global deflation. In the eurozone, the consumer price index has declined year-on-year for four consecutive months, and inflation rates in the United States and Japan have also dropped significantly. Energy-exporting countries have been particularly hard hit: some of these nations have seen their economies stall or even enter recession, with substantial declines in corporate profits, household incomes, and government revenues, and a notable rise in financial risks.

　　 The heightened geopolitical tensions are making economic recovery more difficult. 2015 In February, Germany, Russia, France, and Ukraine reached the Minsk Agreement, leading to a temporary easing of the conflict in Ukraine. However, the warring parties have yet to achieve a full ceasefire, and there remains a risk that tensions could escalate once again. Sanctions imposed by the United States and the European Union have dealt a severe blow to Russia’s economy, plunging it into recession, causing sharp contraction in markets, and hampering its foreign economic and trade cooperation. The economies of some EU member states have also been affected. Geopolitical conflicts in the Middle East remain intricate and multifaceted. Recently, negotiations on Iran’s nuclear issue have reached a framework agreement, bringing initial signs of hope for a resolution. Yet, the threat posed by extremist forces continues to grow, and the situation in Yemen has taken a sudden turn for the worse, potentially jeopardizing the safety of nearby international shipping lanes.

　　 From a domestic perspective, the fundamental trend of China’s economy remaining on a long-term upward trajectory has not changed; however, downward pressure is currently continuing to intensify, and difficulties and challenges are on the rise. China’s economic development has entered a new normal, characterized by enormous potential, resilience, and room for maneuver. Since 2015, the national economy has generally maintained stable operations, structural adjustments have steadily advanced, and new growth drivers are accelerating their emergence. In the first quarter, the country’s gross domestic product (GDP)... ) Increased by 7% which remains within the expected reasonable range. The Chinese government remains committed to promoting structural adjustments through comprehensive deepening of reform, continuously pushing forward with streamlining administration and delegating power while combining deregulation with regulation, thereby removing various constraints that hinder market vitality and innovative development. It is fostering a dual-engine approach—encouraging mass entrepreneurship and innovation by all citizens, and enhancing the supply of public goods and public services—while advancing the “Internet Plus” initiative, implementing the “Made in China 2025” strategy, promoting the internationalization of Chinese equipment and international capacity cooperation, strengthening information infrastructure construction, and developing modern service industries—all of which will unleash tremendous domestic demand potential. In particular, the government is actively pushing ahead with a new round of broader opening-up: expanding the scope of the Shanghai Free Trade Zone, establishing free trade zones in Guangdong, Tianjin, and Fujian, and issuing the “Vision and Actions for Jointly Building the Silk Road Economic Belt and the 21st-Century Maritime Silk Road.” These efforts will create new growth space for China’s economy, especially for its foreign economic and trade relations (see Column Three). However, contradictions related to overcapacity in industry remain prominent; difficulties and high costs in corporate financing have intensified; and the real estate market adjustment has deepened, adding to downward pressure on the economy. Meanwhile, fiscal revenue growth has slowed significantly, and banks’ non-performing loan ratios continue to rise, increasing fiscal and financial risks.

　　Taking into account both the international and domestic environments, China’s foreign trade—especially its exports—possesses the foundational conditions for growth in 2015. However, the severity and complexity of the situation have not fundamentally changed, and challenges and pressures continue to mount. This is particularly evident in the following aspects:

　　 First, external demand remains unstable. Against the backdrop of slow global economic growth, consumer and investment demand in various countries has generally been sluggish, and the momentum for international trade growth has weakened. Some multinational corporations, driven by considerations such as proximity to consumer markets and the desire to avoid supply chains that are too long and thus vulnerable to shocks, have shifted from offshore production to nearshore and onshore production. As a result, the global geographic layout of industrial chains has contracted to some extent, thereby impacting, to a certain degree, the deeper development of global trade. Under the combined influence of cyclical and structural factors, globalization has entered a phase of adjustment. Since 2012, the growth rate of global trade volume has been declining for three consecutive years. Growth rate below that of the global economy. World Trade Organization (WTO) ) It is projected that global trade volume will grow by 4% in 2015, an acceleration of 0.9 percentage points compared to 2014. However, this growth rate remains significantly lower than the average growth rate of 5.1% since 1990, and the forecast still faces the risk of being revised downward. In the first two months of 2015, exports from the 70 major economies monitored by the World Trade Organization fell by 9.1% year-on-year—a decline not seen since 2009.

　　 Second, China’s export industries are facing a dual challenge to their competitiveness. In the high-end industrial sector, developed economies have leveraged their technological and talent advantages to seize the forefront of emerging technologies, promote “reindustrialization,” and tap into international markets, achieving remarkable results. Over the past five years, U.S. exports have grown at an average annual rate of 9%. The EU's exports have grown at an average annual rate of 8.2%. All of these exceeded the global average growth rate of exports. In the mid- and low-end industrial sectors, neighboring emerging economies, leveraging their advantages in low costs of production factors such as labor and land, have introduced preferential investment policies and proactively taken on the relocation of manufacturing industries, thereby boosting rapid export growth. Over the past five years, India’s exports have grown at an average annual rate of 14.2%, while ASEAN’s exports have expanded at an average annual rate of 9.8%. China’s high-end export industries are facing increasing competitive pressures from developed countries, while its mid- and low-end export industries are being closely pursued by neighboring emerging economies. As a result, some enterprises that have invested in China are shifting their production capacity back to developed countries or diverting it toward neighboring emerging economies, leading to a gradual erosion of their competitive edge.

　　 Third, international competitive tactics are constantly evolving and becoming more sophisticated. In the context of economic downturn, some countries have used exchange rates as a key tool to boost exports and stimulate their economies, aggressively pushing for their currencies to depreciate. As a result, the renminbi has been passively appreciating significantly, severely undermining the competitiveness of China’s export products in international markets. In 2014, the renminbi’s real effective exchange rate appreciated by 6.4%. , 2015 In the first quarter of the year, it appreciated further by 4.2%. Regionally integrated economic blocs are gaining momentum worldwide, which will play a positive role in promoting globalization. However, some free trade agreements tend to discriminate against and exclude products from non-member countries, creating regulatory barriers and generating significant trade diversion effects. This could potentially erode the market share of non-member countries within the member states of these free trade agreements. Protectionism remains rampant, with trade restrictions continuing to increase rather than decrease. According to statistics from the World Trade Organization, as of mid-October 2014, the G20 was implementing 962 trade restriction measures—a 12.4% increase over the previous year—impacting imports worth a total of 757 billion U.S. dollars. According to monitoring by the Centre for Economic Policy Research (CEPR), a UK-based think tank, more than one-quarter of global protectionist measures have affected China’s exports.

　　In the coming period, China’s foreign trade development will face numerous challenges, including weak external demand, a gradual erosion of traditional competitive advantages, and an increase in external restrictive measures. Moreover, given that China’s share of the global market is already at a relatively high level, further expanding its market share will become increasingly difficult. As a result, China’s foreign trade is likely to maintain moderate-to-low growth rates and become more vulnerable to short-term factors such as changes in market demand and fluctuations in exchange rates, leading to more frequent and larger swings in performance. However, it is also important to recognize that China’s foreign trade development still enjoys a number of favorable factors and conditions. First, China boasts a solid industrial foundation for exports. As the world’s largest manufacturing country, China has a well-developed export industry chain and infrastructure. In recent years, the equipment manufacturing and high-tech industries have grown rapidly, significantly enhancing China’s international competitiveness; consequently, exports of capital goods and intermediate goods are poised to enter a period of robust growth. Second, outward investment and cooperation are playing an increasingly significant role in driving trade. China’s outbound investment and cooperation have entered a phase of rapid development, and the launch of international capacity cooperation will strongly boost exports of large-scale complete sets of equipment, parts, and engineering materials. Third, enterprises are accelerating their transformation and upgrading. Faced with profound changes in both domestic and international environments, import and export enterprises are becoming more aware of the need for transformation and upgrading, proactively cultivating new competitive advantages centered on technology, brands, quality, and services. In particular, new trade models such as cross-border e-commerce, integrated foreign trade service providers, and market procurement trade have lowered the barriers to entry for small and medium-sized enterprises, enabling them to leverage China’s strengths as a major manufacturing nation and potentially becoming key drivers of export growth. Fourth, the Chinese government continues to intensify its policy support for foreign trade development. The Chinese government remains committed to developing foreign trade, continuously improving trade facilitation (see Box Four), actively fostering new competitive advantages in foreign trade, enhancing fiscal and financial services, and helping enterprises tap into international markets through initiatives such as establishing free trade zones—policies that will strongly promote the development of foreign trade. Overall, barring any major changes in the external environment, China’s imports and exports are expected to achieve relatively stable growth throughout 2015.