Foreign trade provides an important external impetus for the long-term development of a country's economy, but while deeply participating in the global trade division of labor, it is also inevitably affected by external market risks. Compared with the traditional division of trade, the current international trade risk diffusion is increasingly showing the phenomenon of "risk superposition", that is, the short-term economic fluctuations generated in local regions or individual industries continue to spread and spill over to trading partner countries through the complex trade network and value chain division system, resulting in local and short-term sudden risks and eventually evolving into global economic turmoil. Obviously, the impact of this new superposition phenomenon on the economies of various countries far exceeds that of traditional international trade, which not only profoundly changes the mode of choice of export enterprises to participate in the division of labor in the global value chain, but also puts forward new issues for the mainland's macroeconomic operation and risk prevention.
A combination of factors exacerbates trade risks
Generally speaking, the superposition effect of trade risks in the new era is mainly manifested in the following two aspects. First, multiple risk factors coexist. First of all, under the influence of anti-globalization, trade frictions caused by geopolitical conflicts and trade protectionism have seriously affected the stable and orderly operation of international trade, and trade uncertainty has become an important factor that plagues the normal operation of import and export enterprises. Second, various new trade risks coexist with international economic risks in other fields, and together with the risks of international trade barriers, the uncertainty of the current international trade operating environment is exacerbated. For example, green barriers have become a new source of risk in the operation of modern international trade, and have also formed a new challenge for enterprises to participate in the international division of labor. Carbon tariffs have a profound impact on the operating costs and competitiveness of international trade under green barriers, and the differences in the behavior of different trading partner countries and industries in imposing carbon tariffs will become a new source of trade uncertainty. In addition, there has always been a close intertwined role between financial development and international trade, a country's healthy and efficient financial system provides convenient financing support for enterprises to participate in international trade, and provides an important external financing guarantee for alleviating the financial constraints usually faced by export enterprises, and the stability of the financial environment is of great significance for maintaining the stable operation of global trade. The current frequent financial risk events have also exacerbated the risks of international trade operations, especially since 2022, the Fed's new round of interest rate hike cycle has had a huge impact on the financial markets of other countries through the cross-border spread of monetary policy.
Second, a variety of risks are intertwined. Due to the diversification of risk components in the current international economic operating environment, a complex linkage relationship has been formed between various risks, which not only significantly affects the operation order of international trade, but also profoundly changes the industrial structure, trade interests and long-term economic development trend within a country. For example, international financial risks not only directly affect international trade, but also affect the money market, financing costs and liquidity of trading partner countries through the spillover effect of monetary policy, and affect the investment and financing decisions, production behavior and supply chain stability of other countries. At the same time, international economic risks are often closely intertwined with the domestic economic environment and operational order, which jointly determine the transmission effect and defensive capability of trade risks. A sound and healthy business environment is conducive to attracting foreign investment and promoting trade development, and also forms an important internal barrier and environmental support for effectively coping with the impact of international trade risks. From the perspective of trade risk prevention, a country may not only benefit from a good business environment, but also suffer more serious risk losses due to the relatively lagging construction of a business environment.
The division of labor in international trade is showing a new trend
Today's international trade presents a new feature of risk superposition, which stems from two basic new trends in the pattern of international trade division of labor. On the one hand, the division of labor in the global value chain is becoming increasingly complex. In this networked production chain, enterprises from different countries provide value-added services in R&D and design, manufacturing, assembly and processing, marketing and other links according to their respective comparative advantages, forming a global value chain layout. The value chain division system is the key to determining the economic operation and trade relations of various countries today, and it has also profoundly changed the production organization mode and business model of micro enterprises. However, in a value chain division system with orderly division of labor and effective operation, different countries can fully enjoy the convenience of international division of labor through close cooperation between upstream and downstream industries, but it will also intensify the interdependence and relationship stickiness in the process of production organization of enterprises in various countries. In recent years, the importance of "stuck neck" technology and the existence of the risk of "supply interruption" have reminded us that the decision-making adjustment from upstream suppliers will cause unpredictable disruption and loss to the production of downstream industries.
On the other hand, the pattern of international trade relations is becoming increasingly networked. With the deepening of the division of labor in the global value chain, the trade relations between countries are increasingly networked. The widespread existence of indirect trade relations means that even if the two countries do not have direct trade relations, they will interact with each other through the correlation of trade network nodes, which in turn will lead to the risk diffusion of remote trade networks. In terms of risk prevention, the international trade network means that a country needs to pay attention not only to the adjustment of its own trade relations, but also to pay close attention to the dynamic changes in the trade environment of trading partner countries, so as to respond to indirect trade risk shocks in a timely manner. At the same time, the status of trade networks plays a key role in trade risk prevention. Compared with countries on the periphery of the international trade network, countries in the center of the trade network have more information on international markets and have more extensive trade relations, but they are also more vulnerable to the contagion of local risks in the trade network: any indirect risks from the trade network will converge on the countries of the trade center, exposing them to the severe shock of the overlapping trade risks.
Actively prevent and resolve the superposition of trade risks
Whether it is the complexity of the global value chain division of labor system or the networking of the pattern of international trade relations, the emergence of the new feature of trade risk superposition has brought severe challenges to mainland enterprises to participate in the international division of labor, and it is necessary to build a prevention mechanism and measures that are different from the traditional trade risks.
First of all, we should accelerate the construction of a new development pattern and rely on the advantages of the domestic market to prevent international trade risks. The advantage of the domestic market is not simply to reduce the dependence on export trade, but to establish effective connectivity and interaction between the domestic and foreign markets, so as to better play the advantages of economies of scale. Only when the domestic market has formed a complete market system and business rule environment that operates effectively can it provide a real market foundation for enterprises to participate in export competition. A mature, good, open and cooperative business environment is not only the key to promoting domestic market integration and fair competition, but also of great significance for mainland enterprises to deeply participate in the global division of labor and effectively prevent international trade risks, and is a strong guarantee for maintaining good international economic and trade relations and establishing a more fair and just new international economic order.
Second, we should strengthen the dynamic tracking of international trade networks and further consolidate regional economic cooperation. Due to the evolution trend of international trade networking, we should strengthen the overall tracking of the distribution characteristics, trade location, node relationship and other characteristics of the entire international trade network, and scientifically assess the risk transmission direction and impact amplitude in this complex network, especially those changes in the relationship between remote trade networks that are more hidden and difficult to directly foresee, so as to better prevent and resolve the risk impact caused by indirect trade linkage. At the same time, we also need to pay attention to the dynamic adjustment of the risk exposure of the international trade network, update the network status information of key trading partner countries and key industries in a timely manner, and actively respond to the impact of the adjustment of the "center-edge" position of the international trade network on risk prevention. In addition, building a diversified trade partnership also plays an important role, which requires high-quality Belt and Road cooperation and the Regional Comprehensive Economic Partnership as bridges and links, taking the initiative to set high standards of international economic and trade rules, carrying out diversified regional economic cooperation in a targeted manner, and then deeply integrating into the global trade network system.
Finally, the division of labor in the global value chain and the prevention of international trade risks should be strengthened under new forms and new models. With the continuous development of digital technologies such as the Internet, big data, artificial intelligence, and cloud computing, as well as the steady progress of the mainland's institutional opening-up, new forms and models of foreign trade represented by cross-border e-commerce have developed rapidly, becoming a new force leading the development of global trade and an important starting point for the mainland to expand high-level opening up. As far as the participation of large enterprises in the value chain division of labor is concerned, the micro basis of the connection between the domestic and international markets is the division of labor and effective interaction between the domestic value chain and the global value chain, and the dual embedding model is constructed through the docking and integration of the two value chains. Therefore, mainland enterprises need to choose a reasonable division of labor between different value chains, make full use of the opportunities brought by new technologies to innovate the industry, and enhance their position and added value in the global value chain system, so as to build a new pattern of opening up that can effectively deal with the superposition of trade risks.
(The author is a professor at the School of Economics, Nankai University)
Source: "China Social Science Daily" April 10, 2024 Issue 2869 Author: Bao Qun