Lu Zhe S0120521070001 Chief Macroeconomist. [Debon Macro Lu Zhe] Inflation Chapter of Economic Research Methodology Series. [Debon Macro Lu Zhe] Tariffs on China: China and the United States have different stories, and the impact of cancellation is limited.

Lu Zhe S0120521070001 Chief macroeconomist

related reports

[Debon Macro Lu Zhe] Economic Research Methodology Series - Inflation Chapter (Part 2)

[Debon Macro Lu Zhe] Economic Research Methodology Series - Inflation Chapter (Part 1)

[Debon Macro Lu Zhe] Tariffs against China: China and the United States have different stories, and the impact of cancellation is limited

[Debon Macro Lu Zhe] International division of labor, global value chain reconstruction and industrial transfer

[Debon Macro Lu Zhe] How will exports be in the second half of the year? look?

Investment Points

· Dismantling Analysis of my country's Import and Export Structure

From the perspective of exports, since 2001, my country's five largest trading partners for mainland exports are the United States (18.02%), the European Union (16.90%), China Hong Kong (13.51%), ASEAN (11.51%) and Japan (6.93%), the total exports to these five countries and regions account for nearly 67% of my country’s total exports; from the perspective of imports, since 2001 , my country's mainland's five largest trading partners for imports are the EU (12.3%), ASEAN (12.1%), Japan (10.1%), South Korea (9.5%) and the United States (7.5%). For these five countries and regions Total imports account for about 52% of total imports in mainland my country. Compared with exports, my country's import concentration is low, which is directly related to my country's implementation of the import diversification strategy in recent years.

· Predicting import and export trends from leading indicators

As far as exports are concerned, PMI new export orders are one of the more commonly used indicators to predict export trends. In addition, since a country's exports are affected by the economic conditions and demands of other countries, it is possible to predict my country's future export trends based on the import demand of my country's major trading partners. -related observable indicators include a country's PMI and its import-related index, OECD comprehensive leading indicators, etc. Since my country exports a large number of mechanical and electrical products, high-tech products, and textiles and clothing, etc., mainly through container transportation, can pass the China Export Container Freight Index (CCFI) released by the Shanghai Shipping Exchange and The Shanghai Export Container Freight Index (SCFI) and other indicators predict the trend of my country's exports ; As far as imports are concerned, PMI and its import sub-items are important indicators to predict the trend of imports . In terms of freight price index, due to the Imported coal, grain, etc. are mainly transported in dry bulk cargo. Therefore, changes in my country's imports can be predicted in advance through changes in dry bulk shipping prices.

· Use high-frequency data to predict changes in imports and exports

Taking exports as an example, Since about 95% of my country's international trade is completed by sea, high-frequency data related to shipping prices are mainly selected to estimate the total export volume. Combined prediction . The main modes of shipping include dry bulk cargo transportation, crude oil and refined oil transportation, and containerized cargo transportation. We can select high-frequency data on the freight rates of the above freight modes to effectively track the status of exports. In addition, as the most typical export-oriented economy in the world, South Korea's export growth rate is highly consistent with global demand, and it will release the export growth rate for the first 10 and 20 days of each month in real time. Data can also be used as one of the important high-frequency indicators for predicting my country's export growth rate.

· Look at the export trend in the second half of the year from the three major effects

Looking at the follow-up, the total volume effect in the second half of the year may trend back with the decline in global demand. Currently, expectations for a global economic recession continue to rise. As far as the United States is concerned, the traditional peak season for gasoline demand is far less than the same period in history due to the surge in oil prices, but this part of the demand may not have a direct impact on my country's exports. From the perspective of U.S. consumption, overall goods are still overheated, but the impact of price factors has become increasingly prominent. Specifically, in terms of durable goods, electronic product consumption has benefited from the normal development of working from home after the epidemic and is still at a high level . This part of the demand is for our country The structural effect of exports may have a certain boost. The main pressure may come from Europe. In the context of continued high energy prices, the industrial production in the Eurozone has been weak, and the demand side is also difficult to resist the decline. The trade balance of the 27 EU countries in April recorded a record high of 43.625 billion. Germany's seasonally adjusted trade balance in May recorded a deficit for the first time in nearly 20 years. The sharp drop in demand for in the Eurozone may disrupt the total volume effect of my country's exports, but at the same time it may increase the share effect to a certain extent. Taken together, demand factors will be the key to my country's export trends in the second half of the year.

· Risk reminder

Uncertainty about the epidemic is still high; demand in Europe and the United States has dropped sharply; bulk commodity prices continue to remain high.

Contents

1. Dismantling analysis of my country’s import and export structure

1.1. From a country perspective: ASEAN is gradually becoming my country’s largest foreign trade partner

1.2. From a product classification perspective: mechanical and electrical products occupy the core position of my country’s import and export.

2. Forecasting and prediction of import and export trends

2.1. Predicting import and export trends from leading indicators

2.2. Using high-frequency data to predict import and export changes

3. Looking at the export trend in the second half of the year from three major effects

4. Risk warning

Text

This article is the second article in the Debon Macroeconomic Research Methodology Series - Foreign Trade. In the first article, we conducted a detailed analysis and forecast of inflation. In this article, we focus on the net export of , , one of the "Troika", and explore the impact of the demand side on economic growth.

Import and export trade is an important part of my country's economic structure. From the perspective of imports, on the one hand, the supply-side bottleneck problem in my country's economic growth can be solved by importing domestic scarce resources, equipment and technology. At the same time, the introduced technology also It will drive innovation in related domestic industries; on the other hand, import trade can improve the production quality and efficiency of enterprises, effectively expand domestic demand and stimulate economic growth. From the perspective of exports, on the one hand, the expansion of export scale has driven the optimization and upgrading of my country's industrial structure, effectively improving my country's productivity by promoting the development of high-tech industries; on the other hand, the growth of exports has also effectively boosted investment and employment in my country. , my country's labor-intensive industry has created a large number of job opportunities for our country's workers.

Therefore, it is necessary to conduct in-depth analysis and forward-looking predictions on my country's import and export situation, so as to provide reference information for the adjustment of my country's industrial structure and the optimization of the export structure.

1. Dismantling analysis of my country's import and export structure

In terms of total volume, my country surpassed Germany for the first time in 2009 to become the world's largest trade exporter, and it continues to this day; and also in 2009, my country surpassed Germany and became the world's largest trade exporter. The world's second largest importing country, after the United States. Since joining the WTO in 2001, my country has always maintained a net export trend. In 2021, my country's net exports reached US$676.43 billion, setting a record high. From January to May this year, my country's exports and imports increased by 13.5% and 6.6% year-on-year respectively, maintaining a relatively stable growth trend.

Even in 2020, which was the hardest hit by the epidemic, and global trade was hit hard and showed negative growth, China's exports still recorded a positive growth of 3.6%. The global demand for Chinese goods has increased, thanks to China The trade status in the global value chain continues to improve. In our previous report "International Division of Labor, Global Value Chain Restructuring and Industrial Transfer" we also mentioned that China has replaced Japan as the regional trade center in Asia, forming a new three-tier global trade network with Germany and the United States. Big center.

1.1. From a country perspective: ASEAN is gradually becoming my country’s largest foreign trade partner

From an export perspective, since 2001, my country’s five largest trading partners for mainland exports are the United States (18.02%) and the European Union (16.90 %), Hong Kong, China (13.51%), ASEAN (11.51%) and Japan (6.93%). The total exports to these five countries and regions account for nearly 67% of my country’s total exports in mainland China.

Lu Zhe S0120521070001 Chief macroeconomist

related reports

[Debon Macro Lu Zhe] Economic Research Methodology Series - Inflation Chapter (Part 2)

[Debon Macro Lu Zhe] Economic Research Methodology Series - Inflation Chapter (Part 1)

[Debon Macro Lu Zhe] Tariffs against China: China and the United States have different stories, and the impact of cancellation is limited

[Debon Macro Lu Zhe] International division of labor, global value chain reconstruction and industrial transfer

[Debon Macro Lu Zhe] How will exports be in the second half of the year? look?

Investment Points

· Dismantling Analysis of my country's Import and Export Structure

From the perspective of exports, since 2001, my country's five largest trading partners for mainland exports are the United States (18.02%), the European Union (16.90%), China Hong Kong (13.51%), ASEAN (11.51%) and Japan (6.93%), the total exports to these five countries and regions account for nearly 67% of my country’s total exports; from the perspective of imports, since 2001 , my country's mainland's five largest trading partners for imports are the EU (12.3%), ASEAN (12.1%), Japan (10.1%), South Korea (9.5%) and the United States (7.5%). For these five countries and regions Total imports account for about 52% of total imports in mainland my country. Compared with exports, my country's import concentration is low, which is directly related to my country's implementation of the import diversification strategy in recent years.

· Predicting import and export trends from leading indicators

As far as exports are concerned, PMI new export orders are one of the more commonly used indicators to predict export trends. In addition, since a country's exports are affected by the economic conditions and demands of other countries, it is possible to predict my country's future export trends based on the import demand of my country's major trading partners. -related observable indicators include a country's PMI and its import-related index, OECD comprehensive leading indicators, etc. Since my country exports a large number of mechanical and electrical products, high-tech products, and textiles and clothing, etc., mainly through container transportation, can pass the China Export Container Freight Index (CCFI) released by the Shanghai Shipping Exchange and The Shanghai Export Container Freight Index (SCFI) and other indicators predict the trend of my country's exports ; As far as imports are concerned, PMI and its import sub-items are important indicators to predict the trend of imports . In terms of freight price index, due to the Imported coal, grain, etc. are mainly transported in dry bulk cargo. Therefore, changes in my country's imports can be predicted in advance through changes in dry bulk shipping prices.

· Use high-frequency data to predict changes in imports and exports

Taking exports as an example, Since about 95% of my country's international trade is completed by sea, high-frequency data related to shipping prices are mainly selected to estimate the total export volume. Combined prediction . The main modes of shipping include dry bulk cargo transportation, crude oil and refined oil transportation, and containerized cargo transportation. We can select high-frequency data on the freight rates of the above freight modes to effectively track the status of exports. In addition, as the most typical export-oriented economy in the world, South Korea's export growth rate is highly consistent with global demand, and it will release the export growth rate for the first 10 and 20 days of each month in real time. Data can also be used as one of the important high-frequency indicators for predicting my country's export growth rate.

· Look at the export trend in the second half of the year from the three major effects

Looking at the follow-up, the total volume effect in the second half of the year may trend back with the decline in global demand. Currently, expectations for a global economic recession continue to rise. As far as the United States is concerned, the traditional peak season for gasoline demand is far less than the same period in history due to the surge in oil prices, but this part of the demand may not have a direct impact on my country's exports. From the perspective of U.S. consumption, overall goods are still overheated, but the impact of price factors has become increasingly prominent. Specifically, in terms of durable goods, electronic product consumption has benefited from the normal development of working from home after the epidemic and is still at a high level . This part of the demand is for our country The structural effect of exports may have a certain boost. The main pressure may come from Europe. In the context of continued high energy prices, the industrial production in the Eurozone has been weak, and the demand side is also difficult to resist the decline. The trade balance of the 27 EU countries in April recorded a record high of 43.625 billion. Germany's seasonally adjusted trade balance in May recorded a deficit for the first time in nearly 20 years. The sharp drop in demand for in the Eurozone may disrupt the total volume effect of my country's exports, but at the same time it may increase the share effect to a certain extent. Taken together, demand factors will be the key to my country's export trends in the second half of the year.

· Risk reminder

Uncertainty about the epidemic is still high; demand in Europe and the United States has dropped sharply; bulk commodity prices continue to remain high.

Contents

1. Dismantling analysis of my country’s import and export structure

1.1. From a country perspective: ASEAN is gradually becoming my country’s largest foreign trade partner

1.2. From a product classification perspective: mechanical and electrical products occupy the core position of my country’s import and export.

2. Forecasting and prediction of import and export trends

2.1. Predicting import and export trends from leading indicators

2.2. Using high-frequency data to predict import and export changes

3. Looking at the export trend in the second half of the year from three major effects

4. Risk warning

Text

This article is the second article in the Debon Macroeconomic Research Methodology Series - Foreign Trade. In the first article, we conducted a detailed analysis and forecast of inflation. In this article, we focus on the net export of , , one of the "Troika", and explore the impact of the demand side on economic growth.

Import and export trade is an important part of my country's economic structure. From the perspective of imports, on the one hand, the supply-side bottleneck problem in my country's economic growth can be solved by importing domestic scarce resources, equipment and technology. At the same time, the introduced technology also It will drive innovation in related domestic industries; on the other hand, import trade can improve the production quality and efficiency of enterprises, effectively expand domestic demand and stimulate economic growth. From the perspective of exports, on the one hand, the expansion of export scale has driven the optimization and upgrading of my country's industrial structure, effectively improving my country's productivity by promoting the development of high-tech industries; on the other hand, the growth of exports has also effectively boosted investment and employment in my country. , my country's labor-intensive industry has created a large number of job opportunities for our country's workers.

Therefore, it is necessary to conduct in-depth analysis and forward-looking predictions on my country's import and export situation, so as to provide reference information for the adjustment of my country's industrial structure and the optimization of the export structure.

1. Dismantling analysis of my country's import and export structure

In terms of total volume, my country surpassed Germany for the first time in 2009 to become the world's largest trade exporter, and it continues to this day; and also in 2009, my country surpassed Germany and became the world's largest trade exporter. The world's second largest importing country, after the United States. Since joining the WTO in 2001, my country has always maintained a net export trend. In 2021, my country's net exports reached US$676.43 billion, setting a record high. From January to May this year, my country's exports and imports increased by 13.5% and 6.6% year-on-year respectively, maintaining a relatively stable growth trend.

Even in 2020, which was the hardest hit by the epidemic, and global trade was hit hard and showed negative growth, China's exports still recorded a positive growth of 3.6%. The global demand for Chinese goods has increased, thanks to China The trade status in the global value chain continues to improve. In our previous report "International Division of Labor, Global Value Chain Restructuring and Industrial Transfer" we also mentioned that China has replaced Japan as the regional trade center in Asia, forming a new three-tier global trade network with Germany and the United States. Big center.

1.1. From a country perspective: ASEAN is gradually becoming my country’s largest foreign trade partner

From an export perspective, since 2001, my country’s five largest trading partners for mainland exports are the United States (18.02%) and the European Union (16.90 %), Hong Kong, China (13.51%), ASEAN (11.51%) and Japan (6.93%). The total exports to these five countries and regions account for nearly 67% of my country’s total exports in mainland China.As of the first five months of this year, my country's exports to the United States, the European Union and ASEAN have increased by 14.9%, 19.3% and 14.1% respectively year-on-year. Under the influence of last year's high base, my country's exports have still maintained a strong growth trend, thanks to a certain extent. High global inflation this year has pushed up the prices of our country's exports.

From the perspective of changes in the export structure, my country's export share to Europe, the United States and Japan is in a fluctuating downward trend, while the share of exports to ASEAN continues to increase. Since China and ASEAN signed a zero-tariff trade agreement in 2010, it has shown a trend of rapid growth. . Especially since the outbreak of the new coronavirus in 2020, China and ASEAN have performed relatively well in epidemic prevention and control, maintained good economic growth vitality, and cooperated increasingly closely in the global industrial chain. It is expected that with the continuous implementation of the RCEP agreement, , ASEAN is expected to replace the United States as my country's largest export trading partner in the next few years.

From the perspective of imports, since 2001, my country’s five largest trading partners for imports are the European Union (12.3%), ASEAN (12.1%), Japan (10.1%), South Korea (9.5%) and the United States (7.5%) ), the total imports from these five countries and regions account for approximately 52% of the total imports from mainland my country. Compared with exports, my country's import concentration is low, which is directly related to my country's implementation of the import diversification strategy in recent years. Through the import diversification strategy, my country can be protected to a certain extent from uncertainties such as export destination policies and output changes. Impact. As of the first five months of this year, my country's major import trading partners have shown polarization. Imports from South Korea (5.6%), ASEAN (5.8%) and the United States (4.1%) have all maintained positive growth, while imports from Japan (-6.0%) have maintained positive growth. Imports from China and the EU (-7.1%) showed a shrinking trend.

Judging from the structural changes in imports, ASEAN surpassed the EU to become my country's largest import trading partner in 2019, and its share has continued to increase. Especially since the outbreak of the new coronavirus pneumonia, my country's trade with ASEAN countries has become closer.

1.2. From the perspective of product classification: mechanical and electrical products occupy the core position of my country's import and export.

From the perspective of export product categories, the products with the highest proportion of my country's exports since 2001 are mainly mechanical and electrical products. This part of exports mainly comes from my country imports, processes and re-exports to Japan, South Korea and other countries and regions. The export proportion of labor-intensive products such as furniture and textiles is also at the forefront. Mechanical and electrical products and seven categories of labor-intensive products are the two most important components of my country's exports.

Comparing the changes in the export share of each category before and after the epidemic, it can be seen that, benefiting from my country's excellent performance in epidemic prevention and control, the share of exports related to epidemic prevention materials has increased significantly. In addition, the advancement of the global "stay-at-home economy" has greatly increased global demand for my country's advantageous products such as toys and furniture, driving an increase in its share. Clothing and accessories have been most significantly affected by the epidemic, and their share of exports has dropped significantly.

From the perspective of imported product categories, my country's imports with the highest proportion since 2001 are mainly mechanical and electrical products. As we mentioned above, this part of the imports will be reprocessed and converted into my country's exports. In addition, important upstream resource products for industrial production such as iron ore, crude oil and copper are also my country's main imports. Although my country's iron ore and copper production ranks among the top in the world, the huge demand for industrial production and the cost-effectiveness of imports are The main reason why my country imports large amounts of upstream resource products.

Comparing the changes in the import share of each category before and after the epidemic, it can be seen that the import share has increased significantly in upstream resource products and consumer goods, while the import share of medical equipment has decreased significantly.

2. Prediction and prediction of import and export trends

Net exports in the usual sense refer to the net exports of goods and services in the expenditure method , while the data released by the General Administration of Customs only includes the import and export amounts of goods trade. However, since net exports of service trade account for a small proportion of GDP, we usually only focus on changes in imports and exports of goods trade, that is, judging and forecasting changes in imports and exports of goods trade, in order to obtain the possible impact of external demand on economic growth. Impact.

In forecasting, the import and export amounts denominated in US dollars are usually used.On the one hand, the U.S. dollar accounts for more than 80% of international trade settlements. Using U.S. dollars for forecasting can better reflect the changes in my country's import and export in international trade. On the other hand, my country's current import and export trade is mainly conducted in U.S. dollars. For settlement, using U.S. dollar denominated forecasts for imports and exports can reduce data errors caused by fluctuations in the RMB exchange rate against the U.S. dollar.

2.1. Predicting import and export trends from leading indicators

Compared with other macro indicators, it is difficult to accurately predict the import and export data of goods. On the one hand, the indicator itself is easily affected by special circumstances such as false trade declarations and concealment. On the other hand, imports and exports fluctuate violently due to the impact of the international economic situation, and it is difficult to capture real-time changes in imports and exports only through historical data and experience summaries. Therefore, it is usually possible to make a rough prediction of the subsequent trend of imports and exports by observing some economic indicators that are highly relevant to foreign trade.

As far as exports are concerned, PMI new export orders are one of the more commonly used indicators to predict export trends. From a month-on-month perspective, the month-on-month changes in PMI's new export orders and export amounts are highly synchronized, and the probability of them changing in the same direction during the sample period reached 64%. Since the PMI new export orders data is released earlier, to a certain extent, it can play a certain role in predicting the month-on-month changes in the export amount that month.

Judging from the trend of PMI new export orders and export value year-on-year changes, PMI new export orders have a leading effect of 2 to 3 months on year-on-year changes in export value, but this leading effect has not been significant since the outbreak of the new coronavirus. . The main reason is that the epidemic has had a certain impact on my country's export structure, and the sample structure and weights in the PMI index have not been adjusted accordingly. Therefore, extreme data on export changes in some industries will cause obvious disturbances to PMI new export order data. .

In addition, since a country's exports are affected by the economic conditions and demands of other countries, it is possible to predict my country's future export trends based on the import demand of my country's major trading partners. Relevant observable indicators include a country's PMI and its import-related index, OECD comprehensive leading indicators, etc.

Taking the United States, which has the largest trade surplus with my country, as an example, we found through observation that the U.S. ISM manufacturing PMI import index leads the month-on-month change in my country's exports to the United States by about one quarter, and the year-on-year changes in the U.S. OECD comprehensive leading indicator also have an impact on predictions. The year-on-year changes in the amount of my country's exports to the United States have a certain guiding role.

Due to the large scale of transportation and relatively low transportation costs, shipping is the most important mode of transportation in international trade. According to trade volume statistics, more than 85% of the transportation modes in international trade are completed by shipping, and our country is the main mode of transportation in the world. A major shipping and shipbuilding country, it occupies a pivotal position in global maritime trade. According to data released in the "China Maritime Day Announcement 2021", my country's seaborne import and export volume accounts for 30% of global seaborne trade volume. Therefore, we can have a general sense of the warmth and coldness of our country's exports by observing shipping-related transportation prices.

Since my country exports a large number of mechanical and electrical products, high-tech products, textiles and clothing, etc., mainly through container transportation, it can be measured through the China Export Container Freight Index (CCFI) and Shanghai Export Container Freight Index published by the Shanghai Shipping Exchange. (SCFI) and others to predict the trend of my country's exports.

The selection of leading indicators for imports is logically consistent with that for exports. At the export level, we consider the impact of the external economy and demand, while at the import level, we focus on the impact of domestic economic prosperity. Therefore, PMI and its import sub-items are An important indicator for predicting import trends.

In terms of freight price index, since my country imports a large amount of coal, grain, etc., which are mainly transported in dry bulk cargo, changes in dry bulk cargo transportation prices can be used to predict changes in my country's imports in advance. The Baltic Shipping Index published by Baltic Shipping Exchange is one of the most authoritative indices reflecting shipping conditions in the world, and is also one of the leading indicators that international trade pays most attention to.The Baltic Exchange first released the shipping comprehensive freight index BFI (BALTIC FREIGHT INDEX) in 1985, and then released the Baltic Dry Bulk Index BDI in 1999, replacing BFI and becoming the most authoritative comprehensive measure of international trade freight rates. One of the sexual indexes.

Judging from the calculation results, the correlation coefficient between the year-on-year change in the Baltic Dry Bulk Index and the year-on-year change in import amount is as high as 75%. Therefore, the year-on-year change in import amount can be predicted through the real-time change trend of the Baltic Dry Bulk Index.

In addition, freight indexes including China Import Dry Bulk Freight Index (CDFI), China Import Tanker Freight Index (CTFI) and China Import Container Freight Index (CICFI) can also have an impact on my country’s future import trends. certain indicative effect.

2.2. Use high-frequency data to predict changes in imports and exports

Based on the previous analysis of leading indicators, we can make real-time predictions of changes in imports and exports by selecting high-frequency data related to imports and exports.

Take export as an example. Since about 95% of my country's international trade is completed by sea transportation, high-frequency data related to sea transportation prices are mainly selected to fit and predict the total export volume. The main modes of shipping include dry bulk cargo transportation, crude oil and refined oil transportation, and containerized cargo transportation. We can select high-frequency data on the freight rates of the above freight modes to effectively track the status of exports.

For containerized goods, the Shanghai Shipping Exchange will publish the Shanghai Export Container Freight Index and China Export Container Freight Index and other freight indexes every Friday, which can effectively track the export situation of my country's containerized goods; for dry bulk cargo For cargo, the Baltic Dry Bulk Index published by the Baltic Shipping Exchange is recognized as the most authoritative index for measuring changes in dry bulk freight rates. my country's Shanghai Shipping Exchange will also release the weekly China Coastal Bulk Freight Index.

In addition, as the most typical export-oriented economy in the world, South Korea's export growth rate is highly consistent with global demand, and it will publish real-time export growth for the first 10 and 20 days of each month. Speed ​​data can also be used as one of the important high-frequency indicators for predicting my country's export growth rate.

Based on the above analysis, and combining the correlation between each indicator and the year-on-year change in my country's export value, we finally selected the Shanghai export container freight index, Southeast Asia container freight index, Baltic dry bulk index, China coastal bulk freight index and South Korea's export growth rate in the first 10 days (20th, the whole month) is used as high-frequency data to predict year-on-year changes in my country's total exports.

The high-frequency indicators we selected are mainly daily and weekly high-frequency data, while the export amount is monthly data. First, we need to convert the daily and weekly data into monthly data by calculating their average. After obtaining the monthly data of the selected indicators, we use these indicators as explanatory variables and the year-on-year changes in export amounts as the explained variables. We use the rolling linear regression method to fit the year-on-year changes in export amounts with the monthly data corresponding to high-frequency indicators. .

Judging from the fitting results, the accuracy of the year-on-year change in export amount obtained through high-frequency data fitting and the actual year-on-year change in export amount reached 82%, and the accuracy in the direction of change was 62%. It can be Better to make accurate predictions about changes in exports.

On the basis of fitting, the seasonal characteristics of month-on-month changes in export amounts can be further combined to make certain corrections to the forecast results. Judging from the seasonal characteristics of month-on-month changes, affected by the Spring Festival holiday and the National Day holiday, the month-on-month decline in exports in January, February and October was more obvious, which will also make the month-on-month rebound in March and November. This can also explain why the predicted values ​​obtained through model fitting tend to be significantly higher than the actual values ​​in January and February. At the same time, the export value base problem caused by the misalignment of the Spring Festival will also cause a certain degree of disturbance to the forecast of year-on-year export changes in January and February.

Based on the above analysis, by combining the changes in leading indicators, high-frequency data forecasts and the seasonal characteristics of month-on-month changes, we can best predict future export changes as a whole.In addition, some small data patterns can also help us verify the prediction results. For example, the total exports in the first half of the year often account for about 45% of the total exports for the whole year. The logic of the import prediction method and the export prediction method is relatively consistent, but the difference lies in the selection of specific indicators.

3. Looking at the export trend in the second half of the year from three major effects

In order to accurately predict the current and future export trends from the fundamental level at home and abroad, we further disassemble the export growth rate into three parts - total volume effect, Structural effects and share effects.

The total volume effect refers to the boosting effect of the increase in the total volume of overseas imports on my country's exports. The increase in the total volume of overseas imports represents relatively strong overseas demand. The increase in external demand will increase my country's exports.

Structural effect refers to the boosting effect on my country's exports caused by an increase in the matching between my country's export structure and overseas demand structure. When overseas demand happens to correspond to my country's main export products (such as mechanical and electrical products, seven major labor-intensive products, etc.), it will directly drive my country's exports. improvement. And if overseas demand does not correspond to my country's export structure, ineffective external demand will not cause the growth of my country's exports.

The share effect refers to the proportion of my country's exports of goods to a certain country to the country's imports of the goods. The higher the ratio, the higher the proportion indicates that my country's exports to other countries have a substitution effect. The main reason for the substitution effect is that overseas epidemics have caused Insufficient production capacity.

The total volume effect and the structural effect are both caused by changes in overseas demand, so the sum of the two can be recorded as a demand factor; while the share effect is mainly affected by overseas supply and can be recorded as a supply factor. Due to space limitations, this article does not show the calculation formulas of the three effects in detail. The samples studied in this article are G7 and South Korea, and the product classification is subdivided into HS encoding 4 bits.

Judging from the impact of the three major effects since the epidemic, the main impact on my country's exports is the total volume effect. After experiencing the early downturn of the epidemic, the stimulus policies of overseas countries have led to a continuous increase in residents' consumer demand, and a large amount of external demand has driven my country's export scale continues to grow.

From the perspective of structural effects, the structural effects were the main driving force for my country's export growth in the early stages of the epidemic. At that time, the overseas service industry was severely impacted, and demand for transportation fuel continued to be sluggish, while for epidemic prevention materials, mechanical and electrical products, and furniture (starting in May 2020 The demand for products such as the real estate sales boom has increased significantly. This exactly matches my country's export structure. Structural effects continue to promote the growth of my country's exports in the context of leveraging strengths and avoiding weaknesses. However, since the major European and American economies (the United States, Germany, Spain, France, etc.) gradually opened up internally and externally in May 2021, the continuous repair of the service industry has gradually restored its import structure, and the impact on my country's exports has also changed from positive to positive. Negative, the negative impact on my country's exports has remained at around 10% since the beginning of this year.

From the perspective of share effect, there is no obvious pattern in the impact of share effect on my country's exports since the epidemic. For example, the increase in share effect brought about by the increase in exports of medical supplies and home office supplies is limited to the short term. In the long term, my country has not yet European and American countries have achieved export substitution capabilities.

Looking forward, the total effect in the second half of the year may decline with the decline in global demand. Currently, expectations for a global economic recession continue to rise. As far as the United States is concerned, the traditional peak season for gasoline demand is far less than the same period in history due to the surge in oil prices. However, this part of the demand may not have a direct impact on my country's exports. From the perspective of U.S. consumption, overall goods are still overheated, but the impact of price factors has become increasingly prominent. Specifically, in terms of durable goods, U.S. electronic product consumption has benefited from the normalization of working from home after the epidemic. The demand for this part is still high for our country. The structural effect of exports may have a certain boost. The main pressure may come from Europe. In the context of continued high energy prices, the industrial production of the Eurozone is weak, and the demand side is also difficult to resist the decline. The trade balance of the 27 EU countries in April recorded the largest deficit in history of 43.625 billion, while Germany's seasonally adjusted trade balance in May recorded its first deficit in nearly 20 years.The sharp fall in demand in the Eurozone may cause disturbances to the total volume effect of my country's exports, while the share effect may be improved to a certain extent. Taken together, demand factors will be the key to leading my country's export trends in the second half of the year. It is expected that my country's exports will maintain strong resilience in the second half of the year.

4. Risk warning

(1) Uncertainty about the epidemic is still high;

(2) Demand in Europe and the United States has dropped sharply;

(3) Bulk commodity prices continue to remain high.

Report information

Securities research report : [Debon Macro Lu Zhe] Economic Research Methodology Series Foreign Trade Chapter - Also on the export situation in the second half of the year

Research report writer: Lu Zhe (S0120521070001, Chief Macroeconomist)

Public release time: July 13, 2022

Report issuing organization: Debon Securities Co., Ltd.

(Securities investment consulting business qualifications licensed by China Securities Regulatory Commission )

Important instructions

Appropriateness instructions: 《 "Measures for the Suitability Management of Securities and Futures Investors " will be officially implemented on July 1, 2017. The opinions and information published through this WeChat subscription account/this account are only for the reference of professional investors of Debon Securities . Complete investment Views should be based on the full report issued by Deppon Securities Research Institute. If you are not a professional investor among Debon Securities clients, in order to control investment risks, please cancel your subscription, receive or use any information in this subscription number/account. It is difficult to set access permissions for this subscription number/account. We apologize for any inconvenience caused to you. Market risk, the investment need to be cautious.

Analyst Commitment: I have the securities investment consulting qualification granted by the Securities Association of China and issue this report independently and objectively with a diligent professional attitude, professional and prudent research methods, and using legal and compliant information. The data and information used are all from public market information. I do not guarantee the accuracy or completeness of this information, nor do I guarantee that the information and suggestions contained will not change in any way. The information and opinions in the report are for informational purposes only. I have not been, am not, and will not receive any form of compensation, directly or indirectly, for the specific recommendations or opinions in this report, and I hereby certify that the analytical conclusions are not inspired or influenced by any third party.

Disclaimer

Debon Securities Co., Ltd. has been approved by the China Securities Regulatory Commission and has qualified for securities investment consulting business. The information in this report comes from compliance channels. Deppon Securities Research Institute strives to be accurate and reliable, but it does not make any guarantees about the accuracy and completeness of this information. If you invest based on this, you are responsible for your own responsibility. This report does not constitute personal investment advice and does not take into account the special investment objectives, financial situation or needs of individual clients. Clients should consider whether any opinions or recommendations in this report are appropriate for their particular circumstances. Deppon Securities and its affiliates may hold and trade securities issued by the companies mentioned in the report, and may also provide investment banking or other services to these companies.

This report is only delivered to specific clients. No part of this research report may be copied, duplicated or reproduced in any form, or redistributed to any other person without the written authorization of Deppon Securities Research Institute. or used in any other manner that infringes the copyright of the Company. If you wish to quote or reprint the content of this article, you must contact Debon Securities Research Institute and obtain permission. The source must be indicated as Debon Securities Research Institute, and this article must not be quoted or deleted contrary to the original intention. If this report is reprinted or forwarded privately without the authorization of our company, all consequences and legal liabilities arising therefrom will be borne by the person who reprinted or forwarded it privately. The company reserves the right to pursue legal liability.

This subscription account is not a publishing platform for Debon Securities research reports. The content contained in this subscription account comes from the research reports officially released by Debon Securities, or the compilation and interpretation of the research reports. Therefore, under any circumstances, the content in this subscription account The information or opinions expressed do not constitute investment advice to anyone.

On the one hand, the U.S. dollar accounts for more than 80% of international trade settlements. Using U.S. dollars for forecasting can better reflect the changes in my country's import and export in international trade. On the other hand, my country's current import and export trade is mainly conducted in U.S. dollars. For settlement, using U.S. dollar denominated forecasts for imports and exports can reduce data errors caused by fluctuations in the RMB exchange rate against the U.S. dollar.

2.1. Predicting import and export trends from leading indicators

Compared with other macro indicators, it is difficult to accurately predict the import and export data of goods. On the one hand, the indicator itself is easily affected by special circumstances such as false trade declarations and concealment. On the other hand, imports and exports fluctuate violently due to the impact of the international economic situation, and it is difficult to capture real-time changes in imports and exports only through historical data and experience summaries. Therefore, it is usually possible to make a rough prediction of the subsequent trend of imports and exports by observing some economic indicators that are highly relevant to foreign trade.

As far as exports are concerned, PMI new export orders are one of the more commonly used indicators to predict export trends. From a month-on-month perspective, the month-on-month changes in PMI's new export orders and export amounts are highly synchronized, and the probability of them changing in the same direction during the sample period reached 64%. Since the PMI new export orders data is released earlier, to a certain extent, it can play a certain role in predicting the month-on-month changes in the export amount that month.

Judging from the trend of PMI new export orders and export value year-on-year changes, PMI new export orders have a leading effect of 2 to 3 months on year-on-year changes in export value, but this leading effect has not been significant since the outbreak of the new coronavirus. . The main reason is that the epidemic has had a certain impact on my country's export structure, and the sample structure and weights in the PMI index have not been adjusted accordingly. Therefore, extreme data on export changes in some industries will cause obvious disturbances to PMI new export order data. .

In addition, since a country's exports are affected by the economic conditions and demands of other countries, it is possible to predict my country's future export trends based on the import demand of my country's major trading partners. Relevant observable indicators include a country's PMI and its import-related index, OECD comprehensive leading indicators, etc.

Taking the United States, which has the largest trade surplus with my country, as an example, we found through observation that the U.S. ISM manufacturing PMI import index leads the month-on-month change in my country's exports to the United States by about one quarter, and the year-on-year changes in the U.S. OECD comprehensive leading indicator also have an impact on predictions. The year-on-year changes in the amount of my country's exports to the United States have a certain guiding role.

Due to the large scale of transportation and relatively low transportation costs, shipping is the most important mode of transportation in international trade. According to trade volume statistics, more than 85% of the transportation modes in international trade are completed by shipping, and our country is the main mode of transportation in the world. A major shipping and shipbuilding country, it occupies a pivotal position in global maritime trade. According to data released in the "China Maritime Day Announcement 2021", my country's seaborne import and export volume accounts for 30% of global seaborne trade volume. Therefore, we can have a general sense of the warmth and coldness of our country's exports by observing shipping-related transportation prices.

Since my country exports a large number of mechanical and electrical products, high-tech products, textiles and clothing, etc., mainly through container transportation, it can be measured through the China Export Container Freight Index (CCFI) and Shanghai Export Container Freight Index published by the Shanghai Shipping Exchange. (SCFI) and others to predict the trend of my country's exports.

The selection of leading indicators for imports is logically consistent with that for exports. At the export level, we consider the impact of the external economy and demand, while at the import level, we focus on the impact of domestic economic prosperity. Therefore, PMI and its import sub-items are An important indicator for predicting import trends.

In terms of freight price index, since my country imports a large amount of coal, grain, etc., which are mainly transported in dry bulk cargo, changes in dry bulk cargo transportation prices can be used to predict changes in my country's imports in advance. The Baltic Shipping Index published by Baltic Shipping Exchange is one of the most authoritative indices reflecting shipping conditions in the world, and is also one of the leading indicators that international trade pays most attention to.The Baltic Exchange first released the shipping comprehensive freight index BFI (BALTIC FREIGHT INDEX) in 1985, and then released the Baltic Dry Bulk Index BDI in 1999, replacing BFI and becoming the most authoritative comprehensive measure of international trade freight rates. One of the sexual indexes.

Judging from the calculation results, the correlation coefficient between the year-on-year change in the Baltic Dry Bulk Index and the year-on-year change in import amount is as high as 75%. Therefore, the year-on-year change in import amount can be predicted through the real-time change trend of the Baltic Dry Bulk Index.

In addition, freight indexes including China Import Dry Bulk Freight Index (CDFI), China Import Tanker Freight Index (CTFI) and China Import Container Freight Index (CICFI) can also have an impact on my country’s future import trends. certain indicative effect.

2.2. Use high-frequency data to predict changes in imports and exports

Based on the previous analysis of leading indicators, we can make real-time predictions of changes in imports and exports by selecting high-frequency data related to imports and exports.

Take export as an example. Since about 95% of my country's international trade is completed by sea transportation, high-frequency data related to sea transportation prices are mainly selected to fit and predict the total export volume. The main modes of shipping include dry bulk cargo transportation, crude oil and refined oil transportation, and containerized cargo transportation. We can select high-frequency data on the freight rates of the above freight modes to effectively track the status of exports.

For containerized goods, the Shanghai Shipping Exchange will publish the Shanghai Export Container Freight Index and China Export Container Freight Index and other freight indexes every Friday, which can effectively track the export situation of my country's containerized goods; for dry bulk cargo For cargo, the Baltic Dry Bulk Index published by the Baltic Shipping Exchange is recognized as the most authoritative index for measuring changes in dry bulk freight rates. my country's Shanghai Shipping Exchange will also release the weekly China Coastal Bulk Freight Index.

In addition, as the most typical export-oriented economy in the world, South Korea's export growth rate is highly consistent with global demand, and it will publish real-time export growth for the first 10 and 20 days of each month. Speed ​​data can also be used as one of the important high-frequency indicators for predicting my country's export growth rate.

Based on the above analysis, and combining the correlation between each indicator and the year-on-year change in my country's export value, we finally selected the Shanghai export container freight index, Southeast Asia container freight index, Baltic dry bulk index, China coastal bulk freight index and South Korea's export growth rate in the first 10 days (20th, the whole month) is used as high-frequency data to predict year-on-year changes in my country's total exports.

The high-frequency indicators we selected are mainly daily and weekly high-frequency data, while the export amount is monthly data. First, we need to convert the daily and weekly data into monthly data by calculating their average. After obtaining the monthly data of the selected indicators, we use these indicators as explanatory variables and the year-on-year changes in export amounts as the explained variables. We use the rolling linear regression method to fit the year-on-year changes in export amounts with the monthly data corresponding to high-frequency indicators. .

Judging from the fitting results, the accuracy of the year-on-year change in export amount obtained through high-frequency data fitting and the actual year-on-year change in export amount reached 82%, and the accuracy in the direction of change was 62%. It can be Better to make accurate predictions about changes in exports.

On the basis of fitting, the seasonal characteristics of month-on-month changes in export amounts can be further combined to make certain corrections to the forecast results. Judging from the seasonal characteristics of month-on-month changes, affected by the Spring Festival holiday and the National Day holiday, the month-on-month decline in exports in January, February and October was more obvious, which will also make the month-on-month rebound in March and November. This can also explain why the predicted values ​​obtained through model fitting tend to be significantly higher than the actual values ​​in January and February. At the same time, the export value base problem caused by the misalignment of the Spring Festival will also cause a certain degree of disturbance to the forecast of year-on-year export changes in January and February.

Based on the above analysis, by combining the changes in leading indicators, high-frequency data forecasts and the seasonal characteristics of month-on-month changes, we can best predict future export changes as a whole.In addition, some small data patterns can also help us verify the prediction results. For example, the total exports in the first half of the year often account for about 45% of the total exports for the whole year. The logic of the import prediction method and the export prediction method is relatively consistent, but the difference lies in the selection of specific indicators.

3. Looking at the export trend in the second half of the year from three major effects

In order to accurately predict the current and future export trends from the fundamental level at home and abroad, we further disassemble the export growth rate into three parts - total volume effect, Structural effects and share effects.

The total volume effect refers to the boosting effect of the increase in the total volume of overseas imports on my country's exports. The increase in the total volume of overseas imports represents relatively strong overseas demand. The increase in external demand will increase my country's exports.

Structural effect refers to the boosting effect on my country's exports caused by an increase in the matching between my country's export structure and overseas demand structure. When overseas demand happens to correspond to my country's main export products (such as mechanical and electrical products, seven major labor-intensive products, etc.), it will directly drive my country's exports. improvement. And if overseas demand does not correspond to my country's export structure, ineffective external demand will not cause the growth of my country's exports.

The share effect refers to the proportion of my country's exports of goods to a certain country to the country's imports of the goods. The higher the ratio, the higher the proportion indicates that my country's exports to other countries have a substitution effect. The main reason for the substitution effect is that overseas epidemics have caused Insufficient production capacity.

The total volume effect and the structural effect are both caused by changes in overseas demand, so the sum of the two can be recorded as a demand factor; while the share effect is mainly affected by overseas supply and can be recorded as a supply factor. Due to space limitations, this article does not show the calculation formulas of the three effects in detail. The samples studied in this article are G7 and South Korea, and the product classification is subdivided into HS encoding 4 bits.

Judging from the impact of the three major effects since the epidemic, the main impact on my country's exports is the total volume effect. After experiencing the early downturn of the epidemic, the stimulus policies of overseas countries have led to a continuous increase in residents' consumer demand, and a large amount of external demand has driven my country's export scale continues to grow.

From the perspective of structural effects, the structural effects were the main driving force for my country's export growth in the early stages of the epidemic. At that time, the overseas service industry was severely impacted, and demand for transportation fuel continued to be sluggish, while for epidemic prevention materials, mechanical and electrical products, and furniture (starting in May 2020 The demand for products such as the real estate sales boom has increased significantly. This exactly matches my country's export structure. Structural effects continue to promote the growth of my country's exports in the context of leveraging strengths and avoiding weaknesses. However, since the major European and American economies (the United States, Germany, Spain, France, etc.) gradually opened up internally and externally in May 2021, the continuous repair of the service industry has gradually restored its import structure, and the impact on my country's exports has also changed from positive to positive. Negative, the negative impact on my country's exports has remained at around 10% since the beginning of this year.

From the perspective of share effect, there is no obvious pattern in the impact of share effect on my country's exports since the epidemic. For example, the increase in share effect brought about by the increase in exports of medical supplies and home office supplies is limited to the short term. In the long term, my country has not yet European and American countries have achieved export substitution capabilities.

Looking forward, the total effect in the second half of the year may decline with the decline in global demand. Currently, expectations for a global economic recession continue to rise. As far as the United States is concerned, the traditional peak season for gasoline demand is far less than the same period in history due to the surge in oil prices. However, this part of the demand may not have a direct impact on my country's exports. From the perspective of U.S. consumption, overall goods are still overheated, but the impact of price factors has become increasingly prominent. Specifically, in terms of durable goods, U.S. electronic product consumption has benefited from the normalization of working from home after the epidemic. The demand for this part is still high for our country. The structural effect of exports may have a certain boost. The main pressure may come from Europe. In the context of continued high energy prices, the industrial production of the Eurozone is weak, and the demand side is also difficult to resist the decline. The trade balance of the 27 EU countries in April recorded the largest deficit in history of 43.625 billion, while Germany's seasonally adjusted trade balance in May recorded its first deficit in nearly 20 years.The sharp fall in demand in the Eurozone may cause disturbances to the total volume effect of my country's exports, while the share effect may be improved to a certain extent. Taken together, demand factors will be the key to leading my country's export trends in the second half of the year. It is expected that my country's exports will maintain strong resilience in the second half of the year.

4. Risk warning

(1) Uncertainty about the epidemic is still high;

(2) Demand in Europe and the United States has dropped sharply;

(3) Bulk commodity prices continue to remain high.

Report information

Securities research report : [Debon Macro Lu Zhe] Economic Research Methodology Series Foreign Trade Chapter - Also on the export situation in the second half of the year

Research report writer: Lu Zhe (S0120521070001, Chief Macroeconomist)

Public release time: July 13, 2022

Report issuing organization: Debon Securities Co., Ltd.

(Securities investment consulting business qualifications licensed by China Securities Regulatory Commission )

Important instructions

Appropriateness instructions: 《 "Measures for the Suitability Management of Securities and Futures Investors " will be officially implemented on July 1, 2017. The opinions and information published through this WeChat subscription account/this account are only for the reference of professional investors of Debon Securities . Complete investment Views should be based on the full report issued by Deppon Securities Research Institute. If you are not a professional investor among Debon Securities clients, in order to control investment risks, please cancel your subscription, receive or use any information in this subscription number/account. It is difficult to set access permissions for this subscription number/account. We apologize for any inconvenience caused to you. Market risk, the investment need to be cautious.

Analyst Commitment: I have the securities investment consulting qualification granted by the Securities Association of China and issue this report independently and objectively with a diligent professional attitude, professional and prudent research methods, and using legal and compliant information. The data and information used are all from public market information. I do not guarantee the accuracy or completeness of this information, nor do I guarantee that the information and suggestions contained will not change in any way. The information and opinions in the report are for informational purposes only. I have not been, am not, and will not receive any form of compensation, directly or indirectly, for the specific recommendations or opinions in this report, and I hereby certify that the analytical conclusions are not inspired or influenced by any third party.

Disclaimer

Debon Securities Co., Ltd. has been approved by the China Securities Regulatory Commission and has qualified for securities investment consulting business. The information in this report comes from compliance channels. Deppon Securities Research Institute strives to be accurate and reliable, but it does not make any guarantees about the accuracy and completeness of this information. If you invest based on this, you are responsible for your own responsibility. This report does not constitute personal investment advice and does not take into account the special investment objectives, financial situation or needs of individual clients. Clients should consider whether any opinions or recommendations in this report are appropriate for their particular circumstances. Deppon Securities and its affiliates may hold and trade securities issued by the companies mentioned in the report, and may also provide investment banking or other services to these companies.

This report is only delivered to specific clients. No part of this research report may be copied, duplicated or reproduced in any form, or redistributed to any other person without the written authorization of Deppon Securities Research Institute. or used in any other manner that infringes the copyright of the Company. If you wish to quote or reprint the content of this article, you must contact Debon Securities Research Institute and obtain permission. The source must be indicated as Debon Securities Research Institute, and this article must not be quoted or deleted contrary to the original intention. If this report is reprinted or forwarded privately without the authorization of our company, all consequences and legal liabilities arising therefrom will be borne by the person who reprinted or forwarded it privately. The company reserves the right to pursue legal liability.

This subscription account is not a publishing platform for Debon Securities research reports. The content contained in this subscription account comes from the research reports officially released by Debon Securities, or the compilation and interpretation of the research reports. Therefore, under any circumstances, the content in this subscription account The information or opinions expressed do not constitute investment advice to anyone.