China’s Foreign Trade
(December 2011)
People’s Republic of China (PRC) the State Council press office
Catalogue
Foreword
I. Historical progress of China’s foreign trade
Second, the reform and improvement of China’s foreign trade system
Third, the contribution of China’s foreign trade development to the world
Fourth, promote the basic balanced growth of foreign trade
V. Building all-round mutually beneficial cooperative economic and trade relations
VI. Realizing the Sustainable Development of Foreign Trade
Concluding remarks
Foreword
Peace, development and cooperation are the trends of the world today. Since the reform and opening-up, China has followed the trend of economic globalization, continuously opened wider to the outside world, and actively carried out economic and trade cooperation with other countries on the basis of equality and mutual benefit. After years of development, foreign trade has become one of the most active and fastest growing parts of China’s economy, and China has also become one of the top trading countries in the world. The development of China’s foreign trade has closely linked China with the world, which has strongly promoted the modernization of China and the prosperity and progress of the world.
China joined the World Trade Organization in 2001. In the past 10 years, the integration of China’s economy into the global economy has been accelerated, and the vitality of China’s foreign trade has been further enhanced. On the occasion of the 10th anniversary of China’s accession to the World Trade Organization, the China government issued a white paper, giving a systematic introduction to China’s foreign trade.
I. Historical progress of China’s foreign trade
After the founding of People’s Republic of China (PRC) in 1949, it insisted on independence and self-reliance and gradually carried out foreign economic and trade exchanges. However, due to factors such as the international political environment and the domestic planned economic system at that time, the development of foreign trade was relatively slow.
In 1978, China entered a new period of reform and opening up. Vigorously developing foreign trade has become an important way for China to speed up modernization, change its backward appearance, promote economic development and improve its comprehensive national strength. Over the past 30 years, China has taken advantage of the long-term prosperity of the world economy and the in-depth development of economic globalization to open wider to the outside world, attract foreign investment, introduce advanced technology, transform and upgrade domestic industries, and realize the leap-forward development of foreign trade in full participation in international division of labor and competition.
-The total volume of trade in goods ranks among the top in the world. In 1978, the total import and export volume of goods in China was only US$ 20.6 billion, ranking 32nd in the world trade in goods, accounting for less than 1%. In 2010, the total import and export volume of goods in China reached US$ 2,974 billion, 143 times higher than that in 1978, with an average annual growth rate of 16.8%. Among them, the total export value was US$ 1,577.8 billion, with an average annual growth rate of 17.2%; The total import volume was US$ 1,396.2 billion, with an average annual increase of 16.4%. China’s total exports and imports accounted for 10.4% and 9.1% of the world’s goods exports and imports, respectively, and became the world’s largest exporter and second importer of goods for two consecutive years.
-The trade structure of goods has undergone fundamental changes. China’s export commodity structure changed from primary products to manufactured goods in 1980s, and from textile products to electromechanical products in 1990s. Since the beginning of the new century, the export proportion of high-tech products represented by electronics and information technology has been expanding. In addition to state-owned enterprises, foreign trade business entities also include foreign-invested enterprises and private enterprises, whose total import and export volume has now exceeded that of state-owned enterprises. From 1980s to the beginning of this century, China’s processing trade developed vigorously, accounting for half of its foreign trade. In the development of China’s foreign trade, foreign-invested enterprises and processing trade have played a very important role.
-forming an all-round and diversified import and export market pattern. After the reform and opening up, China has developed its foreign trade in all directions and established trade relations with most countries and regions in the world. Trading partners have grown from dozens of countries and regions in 1978 to 231 countries and regions at present. The European Union, the United States, ASEAN, Japan and BRICS countries have become China’s main trading partners. Since the new century, China’s trade with emerging markets and developing countries has been growing rapidly. From 2005 to 2010, the proportion of goods trade between China and ASEAN increased from 9.2% to 9.8% in China, from 4.9% to 6.9% in other BRICS countries, and from 3.5% and 2.8% to 6.2% and 4.3% in Latin America and Africa respectively.
-The international competitiveness of service trade has been continuously enhanced. After joining the World Trade Organization, China’s service trade has entered a new stage of development, with rapid expansion of scale, gradual optimization of structure and ranking among the top in the world. The service trade in tourism, transportation and other fields is growing steadily, and the cross-border services and service outsourcing in the fields of construction, communication, insurance, finance, computer and information services, exclusive rights use fees and franchise fees, consulting and so on are growing rapidly. From 2001 to 2010, China’s total service trade (excluding government services) increased from $71.9 billion to $362.4 billion, an increase of more than four times. The proportion of China’s service trade exports in the world’s service trade exports increased from 2.4% to 4.6%, reaching $170.2 billion in 2010, rising from 12th to 4th in the world. The proportion of service trade imports increased from 2.6% to 5.5%, reaching $192.2 billion in 2010, rising from the 10th place in the world to the 3rd place.
The development of foreign trade has strongly promoted the modernization of China, and China has grown into an open economy. Participating in international division of labor and competition, introducing advanced technology, equipment and management, and utilizing foreign direct investment have greatly promoted China’s technological progress and industrial upgrading, and improved its management level and market competitiveness. The rapid development of processing trade has brought into play the comparative advantage of abundant labor force in China and accelerated the process of industrialization and urbanization in China. Foreign trade directly drives more than 80 million employed people, of which more than 60% are from rural areas, and the income and life of employed people have been significantly improved. Together with domestic investment and consumption, foreign trade has become the three engines of China’s economic growth.
The historical progress of China’s foreign trade is closely related to the development and changes of the international and domestic situation. Around 1980s, peace and development became the theme of the times. With the continuous advancement of economic globalization, the flow and allocation of capital, technology, products, markets, resources, labor and other factors in the world are more active. Scientific and technological progress led by information and communication has greatly improved production efficiency, and international industrial transfer has been deepened and developed. Economic globalization, scientific and technological progress, international industrial transfer and strengthening cooperation among countries have provided historic opportunities for China to integrate into the world economy. Following the trend of the times, focusing on economic construction, the government of China carried out reform and opening up, developed economic and technological cooperation with other countries, actively utilized foreign capital reasonably and effectively, and gave full play to its comparative advantages, which promoted the deepening of the division of labor in the international industrial chain and created favorable conditions for the development of foreign trade. In this process, foreign enterprises, especially multinational companies from developed countries, have gained a lot of investment opportunities in China, and their capital, technology, management experience and sales channels have increased in value, sharing the fruits of China’s rapid economic growth. The development of China’s foreign trade benefits from the reform and opening-up, from economic globalization, and from adhering to the road of mutual benefit, cooperation and win-win. The development of China cannot be separated from the world, and the prosperity and stability of the world cannot be separated from China.
China is still a developing country. Compared with the world’s trade powers, China’s export industry is still at the low end of the global industrial chain, and the input of resources, energy and other factors and environmental costs are still relatively high, and the international competitiveness of enterprises and the anti-risk ability of some industries are relatively weak. It will be a long-term process to realize the transformation from a big trading country to a powerful trading country, and hard work is still needed.
Second, the reform and improvement of China’s foreign trade system
Before the reform and opening-up, China implemented mandatory planned management of foreign trade and the state was solely responsible for profits and losses. Since the reform and opening-up, China’s foreign trade system has undergone a transformation from mandatory planned management to giving full play to the basic role of market mechanism, from highly monopolized management rights to full liberalization, and from enterprises to independent management and self-financing. In the process of China’s negotiations to regain its status as a contracting party to the General Agreement on Tariffs and Trade and join the World Trade Organization, after China’s accession to the World Trade Organization, China’s foreign trade system gradually integrated with international trade rules and established a unified, open and multilateral foreign trade system.
In the early days of reform and opening up, the reform of China’s foreign trade system was mainly to reform the single planned management system, decentralize foreign trade management and operation rights, implement the foreign exchange retention system and establish a foreign exchange swap market. The absorption of foreign direct investment has enabled foreign-invested enterprises to enter the foreign trade field as new business entities, breaking the monopoly of state-owned foreign trade enterprises. Since then, China has implemented the contract system for foreign trade operations, and gradually replaced mandatory plans with guiding plans. According to the general rules of international trade, the export tax rebate system has been established. In October 1992, China clearly put forward the reform goal of establishing a socialist market economic system. According to this goal, the financial, taxation, finance, foreign trade and foreign exchange systems have been comprehensively reformed. In January, 1994, China government cancelled all financial subsidies for export, and the import and export enterprises became completely self-financing. The official exchange rate of RMB is merged with the market swap rate, and a single and managed floating exchange rate system based on market supply and demand is implemented. In the field of foreign trade management, enterprises have been privatized and the import and export agency system has been piloted. In the same year, the Foreign Trade Law of People’s Republic of China (PRC) was officially promulgated and implemented, which established the principles of maintaining a fair and free foreign trade order and laid the basic legal system for foreign trade. In December 1996, China realized the convertibility of RMB under current account. At the same time, China has on many occasions significantly reduced tariffs and reduced non-tariff measures such as quotas and licenses. These reforms have enabled China to initially establish a market-based economy,Foreign trade management system and regulation system that give full play to economic leverage such as exchange rate, tax, tariff and finance.
On December 11th, 2001, after 16 years of negotiations, China became the 143rd member of the World Trade Organization. According to the commitment of joining the World Trade Organization, China has opened wider to the outside world in the fields of industry, agriculture and service industry, and accelerated trade liberalization and trade and investment facilitation. In the process of fulfilling its commitments, China has deepened the reform of foreign trade system, improved the system of foreign trade laws and regulations, reduced trade barriers and administrative intervention, straightened out the government’s responsibilities in foreign trade management, promoted government behavior to be more open, fair and transparent, and pushed the open economy into a new stage of development.
-accelerating the legalization of foreign economic relations and trade. After joining the World Trade Organization, China concentrated on cleaning up more than 2,300 laws, regulations and departmental rules. Those that do not conform to the rules of the World Trade Organization and China’s commitment to join the World Trade Organization shall be abolished or revised respectively. The newly revised laws and regulations have reduced and standardized the administrative licensing procedures, and established and improved the legal system of trade promotion and trade remedy. According to the Agreement on Trade-related Intellectual Property Rights of the World Trade Organization, China has revised the laws, regulations and judicial interpretations related to intellectual property rights, and basically formed a complete system of laws and regulations for the protection of intellectual property rights, which conforms to China’s national conditions and international practices.
-further reducing tariffs and cutting non-tariff measures. During the transition period of China’s accession to the World Trade Organization, the general tariff level of China’s imported goods gradually decreased from 15.3% in 2001 to 9.9% in 2005. By January 2005, most of China’s tariff reduction commitments had been implemented. According to the commitment, since January, 2005, China has completely abolished the import quotas, import licenses, special tenders and other non-tariff measures for 424 tariff lines, and only retained the license management of products subject to import control according to international conventions and the rules of the World Trade Organization to ensure life safety and protect the environment. In 2010, the general tariff level in China has dropped to 9.8%, of which the average tax rate of agricultural products has dropped to 15.2% and the average tax rate of industrial products has dropped to 8.9%. The tariff binding rate has been maintained at 100% since 2005.
-Fully liberalize the right to operate foreign trade. According to the newly revised Foreign Trade Law of People’s Republic of China (PRC) in 2004, since July, 2004, the China government has changed the foreign trade management right of enterprises from the examination and approval system to the filing and registration system, and all foreign trade operators can engage in foreign trade according to law. The cancellation of the examination and approval of foreign trade management rights has promoted the formation of diversified foreign trade management patterns of state-owned enterprises, foreign-invested enterprises and private enterprises. While the import and export of state-owned enterprises and foreign-invested enterprises continue to grow, the foreign trade of private enterprises has developed rapidly, and the market share of import and export has continued to expand, becoming an important business entity of foreign trade. In 2010, the import and export of state-owned enterprises, foreign-invested enterprises and private enterprises accounted for 20.9%, 53.8% and 25.3% of China’s total import and export respectively.
-Further opening up the service market. China has earnestly fulfilled its commitment to join the World Trade Organization, providing overseas service providers with a wide range of market access opportunities, including finance, telecommunications, construction, distribution, logistics, tourism and education. Among the 160 branches of the World Trade Organization’s service trade classification, China has opened 100 branches, and the scope of opening is close to the average level of developed countries. In 2010, 13,905 foreign-invested enterprises were newly established in China’s service industry, and the actual utilization of foreign capital was US$ 48.7 billion, accounting for 50.7% of newly established foreign-invested enterprises and 46.1% of the actual utilization of foreign capital in the non-financial sector.
-Create a fairer market competition environment. By establishing and perfecting the legal system of fair trade and the law enforcement and supervision mechanisms, China has curbed and cracked down on unfair trade practices such as infringement, dumping, smuggling and disrupting market order in foreign trade operations, and strived to provide a relaxed, fair and stable market environment for domestic and foreign enterprises. In accordance with domestic laws and international trade rules, China government has strengthened early warning and monitoring, and at the same time, it has taken measures such as trade remedy and anti-monopoly investigation to correct unfair trade behaviors of trading partners and safeguard the legitimate rights and interests of domestic industries and enterprises. In response to the international financial crisis, China, together with the international community, resolutely opposes any form of trade protectionism, strictly abides by the relevant provisions of the World Trade Organization, treats domestic and foreign products equally when implementing the economic stimulus plan, and promotes fair competition between domestic and foreign enterprises.
By 2010, China had fulfilled all its commitments to join the World Trade Organization. China’s practical actions of earnestly fulfilling its commitments have been affirmed by most members of the World Trade Organization. In 2006, 2008 and 2010, the government of China accepted three trade policy reviews of the World Trade Organization. The basic principles of non-discrimination, transparency and fair competition advocated by the World Trade Organization have been integrated into the laws, regulations and relevant systems of China. Market awareness, openness awareness, fair competition awareness, the spirit of the rule of law and the concept of intellectual property rights are more deeply rooted in China, which has promoted the further opening of China’s economy and the further improvement of the market economic system.
Third, the contribution of China’s foreign trade development to the world
The development of China’s foreign trade not only promoted the modernization of China’s economy and the promotion of its comprehensive national strength, but also improved the living standards of more than 1.3 billion China people, and made China’s economy a part of the world economy, which promoted the development of economic globalization in a direction conducive to the common prosperity of all countries and regions in the world.
Reform and opening up and active participation in economic globalization have made China one of the fastest growing economies in the world. In recent 10 years, China, together with other emerging economies, has become an increasingly important force to promote world economic growth. According to the data of the World Bank, China’s GDP in 2010 increased by 4.6 trillion US dollars compared with that in 2001, accounting for 14.7% of the increase of the world economy in the same period. China’s GDP accounted for 9.3% of the world economy. According to the data of the World Trade Organization, from 2000 to 2009, the average annual growth rate of China’s export volume and import volume was 17% and 15% respectively, which was much higher than the average annual growth rate of 3% of the world trade volume in the same period.
China’s foreign trade took the lead in stabilizing during the international financial crisis, which promoted the global economic recovery. After the outbreak of the international financial crisis in 2008, the China government adopted a series of policies and measures to stimulate the economy, expand domestic demand and stabilize the scale of import and export. In 2009, the world’s imports of goods decreased by 12.8%, while China’s imports increased by 2.9%, making it the only country among the world’s major economies to maintain growth. The China factor has supported the exports of many crisis-hit countries, stimulated the demand of global commodity markets, boosted people’s confidence, and played a huge role in promoting the recovery and growth of the world economy. During the third trade policy review of China, the World Trade Organization pointed out that during the financial crisis, China played a constructive role in stimulating global demand and made important contributions to world economic stability.
The development of China’s foreign trade has improved the national welfare of China and its trading partners. With the accelerated integration into the world division of labor system, China has gradually developed into a major producer and exporter of industrial products in the world, relying on its labor cost advantage, strong industrial support and processing and manufacturing capabilities, and constantly improving labor productivity, providing inexpensive goods for countries and regions around the world and meeting various demands in the international market. China’s advantages of scale economy and processing cost in the global manufacturing sector partially digested the price increase of upstream production factors, and played a role in curbing global inflation and improving the actual purchasing power of consumers in trading partners.
The development of China’s foreign trade provides a broad market for its trading partners. Since 2001, China’s total import of goods has increased by about five times, with an average annual growth rate of about 20%. China’s rapidly expanding imports have become an important driving force for world economic growth, creating a huge market space for its trading partners to expand their exports. At present, China is the largest export market of Japan, South Korea, Australia, ASEAN, Brazil, South Africa and other countries, the second largest export market of the European Union, and the third largest export market of the United States and India. China’s industrialization and urbanization are advancing rapidly, and domestic demand continues to grow. The expanding and opening market will provide more and more development opportunities for trading partners.
China is one of the developing countries that have opened their markets to the least developed countries to the greatest extent. As of July 2010, China has implemented zero import tariff on more than 4,700 items of goods originating from 36 least developed countries with diplomatic relations, accounting for about 60% of all tariff items. China has promised to continue to expand the scope of preferential treatment to the least developed countries that have established diplomatic relations, so that the goods subject to zero tariff will reach 97% of all tariff items. Zero tariff measures have promoted the exports of the least developed countries to China. Since 2008, China has been the largest export market for the least developed countries. In 2010, China’s total imports of goods from the least developed countries increased by 58% over the previous year, accounting for about a quarter of the total exports of these countries.
China has fully participated in and promoted the reform of global economic governance mechanism. China government actively advocates "balance, mutual benefit and win-win" as the goal of multilateral trading system reform, and strives to promote the establishment of a fair and just new international economic and trade order. As a rapidly growing developing country, China has actively participated in international dialogue and cooperation mechanisms such as the G20 summit, the BRICS leaders’ meeting, and the Doha Round negotiations, and strived to assume international responsibilities commensurate with its own development level and national strength. China has continuously strengthened cooperation with emerging countries in the fields of economy, finance, trade and investment, and promoted the development of the international economic order in a just, rational and win-win direction.
China strictly fulfills its international obligations on export control. China has always advocated the complete prohibition and thorough destruction of all weapons of mass destruction and resolutely opposed the proliferation of such weapons and their means of delivery. The relevant laws of China clearly stipulate that necessary restrictions shall be taken on the import and export of fission and fusion substances or goods and technologies derived from such substances, as well as the import and export related to weapons, ammunition or other military materials. China has earnestly abided by international conventions on export control, fulfilled its non-proliferation commitments and made active efforts for international peace and regional stability. In recent years, the government of China has widely adopted internationally accepted norms and practices, and formed a complete export control system covering sensitive items and technologies such as nuclear, biological, chemical and missiles, which has provided a legal basis and institutional guarantee for better realizing the non-proliferation goal.
Fourth, promote the basic balanced growth of foreign trade
Whether a country’s foreign trade is surplus or deficit is mainly determined by its economic structure and the international competitiveness of its products or services. China does not deliberately pursue a surplus in foreign trade. China’s service trade has been in a certain deficit for a long time. China’s trade in goods was in deficit for most years before 1990. After 1990, with the large-scale undertaking of international industrial transfer, the competitiveness of manufactured goods increased, and the growth rate of exports exceeded that of imports, and China’s trade in goods changed from an overall deficit to an overall surplus. In 2005, China’s trade surplus of goods exceeded 100 billion dollars for the first time, and rose sharply for four years. In 2008, China’s trade surplus in goods reached an all-time high of $298.1 billion, and then gradually narrowed. In 2009 and 2010, the trade surplus of goods in China was US$ 195.7 billion and US$ 181.6 billion, respectively, down by 34.4% and 7.2% compared with the previous year. In 2010, the trade surplus of goods in China accounted for 6.1% of the total import and export volume and 3.1% of the GDP. Among the nine countries with the largest global trade balance (surplus or deficit), these two ratios of China are not on the high side.
China’s trade surplus in goods reflects China’s position in international division of labor at the present stage. At present, China has great advantages in the processing and assembly of manufactured goods, and is the largest producer and exporter of industrial products. The United States and the European Union are the most important end consumer markets. As a large number of labor-intensive processing and assembly links have been transferred from Japan, South Korea, Singapore, Taiwan, China and Hong Kong, China to China, the original surplus of these countries and regions to the United States and Europe has also been transferred to China. As a result, at present, China’s trade surplus of goods mainly exists between China-US trade and China-EU trade, while China has a long-term trade deficit with major producers of industrial intermediate products such as Japan, South Korea and ASEAN. In 2010, China’s trade surplus with the United States and the European Union was US$ 181.3 billion and US$ 142.8 billion respectively, while its trade deficit with Japan, South Korea and ASEAN totaled US$ 141.6 billion. Chinese mainland’s trade deficit with Taiwan Province was $86 billion. China needs to import a large number of primary products to produce and export manufactured goods, so its trade with some primary product exporting countries is in deficit. It is precisely at this stage that China’s manufacturing industry and service industry have different levels and positions in international division of labor, so China’s trade in goods has a large surplus, while the trade in services has a long-term deficit.
China’s trade surplus in goods mainly comes from foreign-invested enterprises and processing trade. In the process of deepening economic globalization, due to the refinement of division of labor and the requirements of economies of scale, more and more international trade is dominated by multinational companies, which is intra-industry trade or processing trade based on the division of labor in the value chain. Since the reform and opening up, China’s absorption of foreign direct investment has increased rapidly. For a long time, the proportion of import and export of foreign-invested enterprises and processing trade mainly operated by foreign-invested enterprises in China’s goods trade has remained at about 50%. Import and export and processing trade of foreign-invested enterprises are the main sources of China’s trade surplus in goods. In 2009 and 2010, the trade surplus of goods of foreign-invested enterprises was US$ 127 billion and US$ 124.3 billion respectively, accounting for 64.8% and 68.4% of the total trade surplus of goods in China in the same period, and the processing trade surplus was as high as US$ 264.6 billion and US$ 322.9 billion respectively, which was much higher than that of China in the same period. While foreign-invested enterprises have a large surplus in import and export and processing trade, state-owned enterprises have a deficit in import and export, general trade and other trade methods.
The restrictions imposed by developed countries on some high-tech trade also affect the trade balance between China and some trading partners. China is in the period of accelerated industrialization, and it has great import demand for advanced equipment and high technology from developed countries. However, some developed countries still adhere to the old thinking and set many restrictions on the export of high-end equipment and high-tech products to China, resulting in a slow growth in the export of their related products to China. This has hindered China’s imports from these countries to some extent, which is not conducive to the balance of bilateral trade.
China’s trade in goods changed from deficit to surplus, which improved China’s balance of payments and strengthened China’s ability to resist external risks. However, the sharp expansion of the surplus has also brought troubles to China’s economy. A large amount of RMB for export settlement has increased the difficulty and complexity of macroeconomic regulation and control. The sharp expansion of the trade surplus of goods has also increased the friction between China and some trading partners, which has exerted a sustained and greater appreciation pressure on the RMB.
China government attaches great importance to the imbalance in the development of foreign trade and has adopted a series of policies and measures to curb the excessive growth of surplus. First, actively adjust the economic structure, strive to expand domestic demand, especially increase investment in improving people’s livelihood and stimulate residents’ consumption growth. Second, introduce a series of import expansion policies, simplify import management and import payment procedures, reduce the provisional import tax rate of some commodities, improve the import promotion system, and improve the degree of import facilitation. Third, adjust the export tax rebate policy, and successively reduce or cancel the export tax rebate for some commodities with high energy consumption, high pollution and resource. Fourth, modify the catalogue of prohibited and restricted categories of processing trade, expand the scope of prohibited categories, and promote the transformation and upgrading of processing trade. Fifth, to change the situation that the fluctuation range of RMB against the US dollar has narrowed since the Asian financial crisis, a managed floating exchange rate system based on market supply and demand with reference to a basket of currencies will be implemented from July 21, 2005. From the reform of exchange rate mechanism in July 2005 to the end of August 2011, the nominal exchange rate of RMB against the US dollar appreciated by about 30%.
China’s measures to promote the balanced growth of foreign trade have achieved remarkable results. The trade surplus of goods has been decreasing continuously since 2009, and the ratio of the surplus to the total value of imports and exports and the gross domestic product has gradually decreased since 2008, and foreign trade is tending to balance. China’s efforts are not only the needs of China’s own economic development, but also the concrete actions to promote the structural adjustment and rebalancing of the world economy.
V. Building all-round mutually beneficial cooperative economic and trade relations
China’s foreign trade is all-round development. China insists on developing pragmatic cooperation and mutually beneficial and win-win economic and trade relations with all trading partners, regardless of size, wealth.
The trade between China and developed countries has been growing steadily, achieving complementary advantages and mutual benefit. Trade between China and EU has developed steadily in recent years. EU exports to China are mainly manufactured goods, among which machinery, electronic products, transport vehicles, complete sets of equipment, core components and precision components with advanced technology are quite competitive in China market. The trade between China and the United States has a solid foundation for development. China exported a variety of consumer goods to meet the needs of American consumers, and at the same time, it continuously expanded its imports of electronics, aviation, biology, medicine, agricultural products and services from the United States, which also met the needs of China’s own development. The trade between China and Japan has the advantage of geographical proximity. Sino-Japanese trade has promoted the continuous cooperation and progress of the industries of the two countries, and also promoted the in-depth development of regional economic division and cooperation in East Asia. China’s trade and investment cooperation with developed countries such as Canada, Australia, Switzerland and New Zealand have maintained a good momentum of development.
China’s trade with emerging markets and developing countries is growing strongly, with great development potential. In 2010, the China-ASEAN Free Trade Agreement was fully implemented, and 90% of the goods achieved zero tariffs, which effectively promoted the rapid growth of bilateral trade between China and ASEAN. China and ASEAN’s own unique and competitive goods freely enter each other’s markets, which meets the needs of both sides. The trade between China and South Korea has maintained sustained and steady growth, and the fields of mutual investment and economic cooperation between the two countries are very broad. The rapid growth of trade between China and other BRICS countries in recent years has promoted the strong development of their respective advantageous industries, showing that emerging economic markets have broad development prospects. In recent years, China’s trade with other developing countries has also increased at a relatively fast speed. The long-standing trade with Arab countries has been further developed, and the fields of economic and trade cooperation with Latin American countries have been continuously expanded. The trade with African countries has given full play to the complementary advantages of their resource conditions and economic structure, and promoted their respective development.
China attaches great importance to the institutionalization of bilateral and regional economic and trade cooperation. At present, more than 150 countries and regions have signed bilateral trade agreements or economic cooperation agreements with China. China has established and maintained high-level economic dialogue mechanisms with major economies such as the United States, Europe, Japan, Britain and Russia. China actively participates in regional and sub-regional economic cooperation mechanisms such as the Asia-Pacific Economic Cooperation, the ASEAN-China-Japan-ROK (10+3) Leaders’ Meeting, the East Asia Summit, the China-Africa Cooperation Forum, the Greater Mekong Subregion Economic Cooperation, the Central Asian Regional Economic Cooperation and the Great Tumen Initiative. China adheres to the policy of "being a good neighbor and partner" and establishes and develops various forms of border economic and trade cooperation with neighboring countries and regions.
China actively participates in and promotes the process of regional economic integration. By the end of 2010, China had negotiated 15 FTAs or CEPAs with 28 countries and regions on five continents, and signed and implemented 10 FTAs or CEPAs. There are five ongoing negotiations on free trade agreements. China proposes to establish East Asia Free Trade Area. In 2010, China’s bilateral trade in goods with 10 partners of free trade agreements or close economic partnership arrangements (ASEAN, Pakistan, Chile, Singapore, New Zealand, Peru, Costa Rica, Hong Kong, China, Macao, China, Taiwan, China) reached 782.6 billion US dollars, more than a quarter of China’s total import and export.
China has deeply participated in and promoted the Doha Round negotiations of the World Trade Organization, and strived to safeguard the authority of the multilateral trading system. China stressed that the negotiations should be conducive to the implementation of the principles of fairness and justice in the multilateral trading system, and reflect the Doha Round as the goal of the development round. China fully participated in the Doha Round negotiations on agriculture, non-agricultural products, services and rules, and submitted more than 40 negotiating texts independently, and more than 100 jointly with other members. In order to push forward the Doha Round negotiations, China has repeatedly expressed its willingness to make constructive contributions to the negotiations, which are commensurate with its own level of development.
When resolving disputes with trading partners, China takes into account the interests of all parties and seeks common ground while reserving differences. Since joining the World Trade Organization, with the continuous growth of import and export, disputes and frictions between China and its trading partners have increased. The products involved are mainly textiles, shoes, tires, auto parts, steel and chemical products, and the controversial issues mainly involve intellectual property rights, trade balance, fair trade, food safety, environmental protection and other fields. China has always believed that dialogue is better than confrontation and cooperation is better than pressure, and efforts should be made to resolve disputes among trading partners through consultation and negotiation. China insists on giving consideration to and balancing the interests of all parties. Within the rules and system of the World Trade Organization, it uses multilateral and bilateral channels to resolve disputes through dialogue, consultation and negotiation. In recent years, China has taken many measures in expanding market opening, protecting intellectual property rights, promoting trade balance, reforming the RMB exchange rate formation mechanism, and regulating the import and export operation order, fully taking care of the concerns of trading partners. In the case that negotiation fails to resolve disputes, China has properly handled trade disputes with its trading partners through the dispute settlement mechanism of the World Trade Organization, thus maintaining the stability of the multilateral trading system.
VI. Realizing the Sustainable Development of Foreign Trade
At present, there are still unbalanced, uncoordinated and unsustainable problems in China’s foreign trade development, which are highlighted as follows: export growth mainly depends on the input and consumption of resources, energy, land, labor and environment, and the input of science and technology, management and innovation is insufficient, and the contradiction between foreign trade development and resource and energy supply and environmental carrying capacity is increasingly prominent; The competitiveness of enterprises in R&D, design, marketing and service is not strong, and the proportion of self-owned intellectual property rights and self-owned brand export products is not large; The contribution of foreign trade development to the three industries is not balanced enough; The scale and level of foreign trade in the central and western regions are still relatively backward; The quality and efficiency of foreign trade growth need to be further improved. China government is clearly aware of these problems and takes active measures to accelerate the transformation of foreign trade development mode and realize the sustainable development of foreign trade.
Strive to cultivate the comprehensive competitive advantage of foreign trade development. Faced with the rising labor costs, the sharp rise in the prices of production factors such as resources and energy, and the weakening of the traditional low-cost advantages of export industries in recent years, the China government has put forward the strategic goal of transforming foreign trade from extensive development to intensive development. During the 11th Five-Year Plan period (2006-2010), the China Municipal Government adjusted the import and export tax policy, implemented the strategy of rejuvenating trade through science and technology, market diversification and winning by quality, carried out the pilot project of transformation and upgrading of processing trade, improved the financing and insurance services for import and export enterprises, promoted enterprises to accelerate technological progress and product structure optimization, and enhanced the comprehensive competitive advantage of foreign trade. Most import and export enterprises have withstood the impact of the international financial crisis, and import and export trade has achieved rapid recovery after the crisis. During the "Twelfth Five-Year Plan" period (2011-2015), China will strive to maintain its existing export competitive advantage, accelerate the cultivation of new advantages centered on technology, brand, quality and service, promote industrial transformation and upgrading, extend the value-added chain of processing trade, and improve the competitiveness and added value of enterprises and products. Vigorously develop trade in services and promote the coordinated development of trade in goods and services. Continue to open the service industry to the outside world, promote the development of service outsourcing, and strive to expand the export of emerging services. Finance and taxation, financial insurance, foreign exchange management, customs clearance, inspection and quarantine, logistics and transportation will further improve and implement relevant national policies, speed up trade and investment facilitation, and strive to promote the stable and healthy development of foreign trade.
Accelerate energy conservation and emission reduction in the development of foreign trade. As early as 1994, the government of China formulated and published China’s Agenda for the 21st Century-China’s White Paper on Population, Environment and Development in the 21st Century, which incorporated energy conservation and emission reduction into national economic and social development goals. Both the Eleventh Five-Year Plan and the Twelfth Five-Year Plan regard reducing energy consumption and carbon dioxide emission intensity as binding indicators. Since 2004, China has repeatedly lowered or even cancelled export tax rebates for some high energy consumption, high pollution and resource commodities, banned and restricted the processing trade of some such products, and encouraged import and export enterprises to keep up with international advanced environmental protection standards. In recent years, the proportion of "two high-tech and one capital" commodities in China’s export commodities has dropped sharply, and the export of new energy and energy-saving and environmental protection products has increased substantially. Most import and export production enterprises that have reached a certain scale have obtained ISO14000 and other standards related to environmental protection. China will strive to adjust the economic structure and industrial structure, accelerate the application of advanced energy-saving and environmental protection technologies, and promote the more coordinated development of foreign trade, resource conservation and environmental protection.
Strengthen trade-related intellectual property protection. Strengthening the protection of intellectual property rights is not only the need for China to fulfill its international obligations, but also the inherent requirement for transforming the mode of economic development and building an innovative country. Over the years, the government of China has done a lot of work in intellectual property protection, and achieved remarkable results in legislation, law enforcement, publicity, training and raising the awareness of intellectual property protection in the whole society. In 2008, China formulated the Outline of National Intellectual Property Strategy, which promoted the protection of intellectual property to the height of national strategy. From 2006 to 2011, China promulgated the China Action Plan for the Protection of Intellectual Property Rights for six consecutive years, and implemented more than 1,000 specific measures in many fields, including legislation, law enforcement, education and training, cultural propaganda and foreign exchange. In 2010, the number of international patent applications filed by China through the Patent Cooperation Treaty reached 12,295, an increase of 55.6% over 2009, ranking first among countries in terms of growth rate, and ranking fourth in the world from fifth. At present, strengthening the protection of trade-related intellectual property rights is a common challenge for all countries in the world, and strengthening dialogue and cooperation has become the trend of intellectual property protection in the world. Under the relevant international conventions and respective legal frameworks, the Government of China will strengthen intellectual property exchange and cooperation with countries and regions around the world, and jointly promote the healthy development of intellectual property.
Improve the quality and safety requirements of export commodities. On the whole, the quality of China’s export commodities is constantly improving, which is welcomed and recognized by consumers all over the world. In 2009 and 2010, there were 11.032 million batches and 13.054 million batches of China’s export goods inspected and quarantined by entry-exit inspection and quarantine institutions, and the unqualified rates were 0.15% and 0.14% respectively. The export value was US$ 429.27 billion and US$ 552.18 billion respectively, and the unqualified rate was 0.12% and 0.13% respectively. In 2010, China exported 127,000 batches of food to the United States, with a qualified rate of 99.53%; 138,000 batches of food were exported to the EU, with a qualified rate of 99.78%. According to the statistical report on the monitoring of imported food in the Ministry of Health and Welfare of Japan, in 2010, food imported from China was sampled at a high rate of 20%, and the qualified rate of sampling inspection was 99.74%, which was higher than that of food imported from the United States and the European Union in the same period. However, there are still a few enterprises in China that ignore the quality and safety of goods in order to reduce costs, and some foreign importers do not pay attention to quality and integrity, depress commodity prices and even directly instruct China producers to use unqualified raw materials. These actions have damaged the reputation of "Made in China". In view of these problems, the China Municipal Government has continuously improved the laws and regulations on commodity quality and safety in recent years, strengthened supervision in all aspects, and severely punished a few enterprises that violate laws and regulations and cause quality problems. In March 2011, China launched the "Year of Improving the Quality of Foreign Trade Commodities".We will further improve the licensing, certification and supervision mechanism for the quality and safety of foreign trade commodities, and improve the efficiency of ensuring the quality and safety of export commodities.
Enhance the sense of social responsibility of import and export enterprises. With the continuous expansion of opening to the outside world, more and more enterprises in China realize that they need to bear corresponding social responsibilities while growing. This is not only conducive to social harmony and progress, but also conducive to improving the competitiveness and sustainable development capacity of enterprises. Governments at all levels in China are promoting enterprises to improve their sense of social responsibility, respect labor rights, safeguard consumers’ rights and protect the ecological environment by advocating the concept of Scientific Outlook on Development and harmonious society. At the same time, China government encourages enterprises to accept relevant social responsibility standards in import and export trade, and strive to obtain necessary social responsibility certification. Since the implementation of the new Labor Contract Law and its implementing regulations in 2008, import and export enterprises have generally established a system of "five insurances and one fund" (pension insurance, medical insurance, unemployment insurance, work injury insurance, maternity insurance and housing provident fund). China government regards enhancing corporate social responsibility as an important task to promote the transformation and upgrading of foreign trade. In the future, it will strengthen the publicity and training of corporate social responsibility, establish and improve the integrity management system of import and export enterprises, improve the supervision of corporate social responsibility by the whole society, carry out international cooperation in the cultivation and management of corporate social responsibility, and promote the import and export enterprises to continuously improve their level of social responsibility.
Promote international cooperation in strategic emerging industries. Developing strategic emerging industries is of great significance to the transformation and upgrading of foreign trade and sustainable development. After more than 30 years of reform and opening up, China’s comprehensive national strength has been significantly enhanced, the level of science and technology has been continuously improved, the industrial system has been gradually improved, and the development of strategic emerging industries has laid a solid foundation. However, compared with developed countries, emerging industries in China are still in the initial stage of development. After the international financial crisis in 2008, all major economies in the world are accelerating the development of emerging industries. China regards the development of strategic emerging industries as an important task of industrial revitalization. In order to promote the development of key areas, while giving play to the basic role of the market in allocating resources, the China Municipal Government has strengthened policy guidance, standardized the market order, improved the investment environment and encouraged enterprises to improve their technological innovation capabilities. China’s basic policy of supporting the development of strategic emerging industries conforms to international trade rules, and it is willing to strengthen exchanges with other countries in scientific research, technological development and capacity building, and make joint efforts to create a new situation of international cooperation and development of emerging industries.
Concluding remarks
At present, the deep-seated impact of the international financial crisis is still emerging, and the long-term, arduous and complex nature of the world economic recovery is more prominent, and the global economic structure and trade pattern are facing profound adjustments. China’s foreign trade will also undergo new adjustments, and strive to realize the transformation from scale expansion to quality and efficiency improvement, from relying mainly on low-cost advantages to enhancing comprehensive competitive advantages, and from a big trading country to a powerful trading country.
The development of China’s foreign trade is still restricted by many uncertain factors and will encounter new difficulties and pressures. During the "Twelfth Five-Year Plan" period, China will further expand its opening-up, promote reform, development and innovation through opening-up, strive to give full play to its own advantages, strengthen all-round international cooperation, and integrate into the world economy on a larger scale, in a wider field and at a higher level. China is willing to work with its trading partners to cope with the challenges facing the world economy and trade development, promote a more balanced, coordinated and sustainable development of foreign trade, and share prosperity with its trading partners to achieve a win-win situation.
