News Analysis: Why China Ranks Sixth in World Trade

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Last updated at: (Beijing Time) Saturday, July 27, 2002

News Analysis: Why China Ranks Sixth in World Trade

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Despite the global economic downturn, China's foreign trade in 2001 grew 7.5 percent to 509.8 billion US dollars, making it the sixth biggest trading nation in the world, World Trade Organization (WTO) figures show.

Compared with 1978 when its exports and imports totaled only 20.6 billion US dollars and it ranked 32nd in world trade, China has achieved an historic success in boosting its foreign trade in just two decades.

The first reason for China's surging trade is its domestic political stability and continued rapid growth of the national economy. Benefiting from the reform and opening-up policy, China, with an annual economic growth rate of over 9 percent, now ranks the sixth among world economies.

Lasting economic prosperity, the establishment of market systems and improvement in gross economic efficiency are fostering tens of thousands of competitive enterprises which provide a strong boost for export growth.

In addition, better living standards and purchasing power have not only stimulated home-based manufacturing, but also guaranteed an increase in imports to China at the same time.

China's industry restructuring is also contributing to its rocketing foreign trade. Twenty years ago, foreigners would think of tea, silk and mushrooms when Chinese goods were mentioned. Today mobile phones, DVD players, jet printers and other products from China are changing traditional images of Chinese goods.

In 2001 China's exports of machinery and electronic products were worth 118.8 billion US dollars, 44.6 percent of total exports,while back in 1985, the same industries produced exports worth only 1.6 billion US dollars, just 6 percent of total exports.

The Chinese government values the establishment of new foreign trade rules and systems in accordance with international customs. China allows more privately-owned and foreign-funded enterprises to directly handle foreign trade businesses, guarantees tax rebates are reimbursed back to exporters and has simplified customclearance procedures.

Currently non-state-owned enterprises have become the main force propelling China's exports. China owes over 50 percent of its exports to foreign-funded companies, and an increasing proportion to the private sector.

Market diversification is another driving force. Compared with scant international markets 20 years ago, China now enjoys a wide range of staple trading partners including the United States, Japan, Hong Kong region, the European Union, the Association of Southeast Asian Nations (ASEAN) and the Republic of Korea.

Booming foreign trade meanwhile is playing a significant role in promoting China's economy. Nowadays over 40 percent of China's economic development depends on foreign trade growth, much higher than the 7.8 percent in 1978.

Despite its ranking in world trade, China still has a long way to go to become a mighty trading nation. However, with its WTO membership, healthy domestic economy and government support, Chinawill have huge growth potential in its exports and imports.

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