China will step up use of export credit insurance, which protects an exporter from the risk of nonpayment by a foreign buyer, and raise foreign trade enterprises' risk-hedging capability for the two way fluctuation of the renminbi exchange rate, as part of its holistic efforts to stabilize market entities and spur foreign trade growth, said Gao Feng, a spokesman at the Ministry of Commerce, on Thursday.

China's foreign trade faces multiple uncertainties, and the ministry will join hands with China Export & Credit Insurance Corp to give full play to export credit insurance's function in risk prevention and credit enhancement, Gao said at a news conference.

The ministry will encourage local commerce authorities to intensify cooperation with the branches of China Export & Credit Insurance Corp to roll out specific support measures to deal with the differences in local situations and promote effective implementation of the export credit insurance tools, Gao said.

The aim is to increase foreign trade enterprises' capability to prevent risks and boost their growth confidence, he said.

The ministry and CECIC have already jointly issued a circular that called for full use of export credit insurance, better design of cross-cyclical insurance policies, and more support for foreign trade enterprises.

The two parties will strengthen coordination on policy support, data exchange and information sharing. They will also seek to increase insurance coverage on industrial chain disruptions and bolster support for micro, small and medium-sized enterprises and new foreign trade business formats, like cross-border e-commerce and overseas warehouses, the circular stated.

Gao said measures will be taken to reduce costs for MSMEs to insure better services will be offered to them to claim losses and innovations will be made to provide customized services.

Export credit insurance is a common practice world wide, and better application of insurance tools will provide important help to China's foreign trade enterprises to prevent risks, especially amid current rising global trade risks, said Zhou Mi, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation.

"That's also quite beneficial for the sustained growth of China's foreign trade and investment," Zhou said.

Matt Simpson, a market analyst with GAIN Capital, said more export orders are likely to be transferred to China from other developing countries, as disruption of the COVID-19 pandemic on global supply chains will likely continue.

Yet, foreign trade enterprises in China face multiple challenges, including high-level raw material prices and the fluctuation of the renminbi exchange rate.

Gao said the Commerce Ministry will cooperate with other government departments to push financial institutions to enhance risk-hedging tools, and improve conditions for cross-border renminbi settlement, so that enterprises will become more prepared for the two-way fluctuation of the renminbi exchange rate.

He also said China is willing to join hands with economies in the Asia-Pacific region to combat COVID-19 and actualize the full potential of regional trade and investment cooperation, to safeguard industrial and supply chain stability, promote regional development and make more contributions to global economic recovery.