The major direction of China’s foreign trade development
The article examines the main aspects of China’s foreign trade. Special attention is given to China’s participation in the World Trade Organization (WTO), Chinese foreign trade relations with it’s major trade partners. By using historical information and latest statistical dates the author analyzes...
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irk-123456789-239972022-09-29T21:49:01Z The major direction of China’s foreign trade development Kotlyarov, N.N. International and Regional Economics The article examines the main aspects of China’s foreign trade. Special attention is given to China’s participation in the World Trade Organization (WTO), Chinese foreign trade relations with it’s major trade partners. By using historical information and latest statistical dates the author analyzes the main changes in China’s foreign trade commodity and regional structure. Certain problems and perspectives of China’s trade development are also considered. Key words: Foreign Trade, export, import, world economy the World Trade Organization (WTO), foreign investment; economic development. У статті досліджуються найважливіші аспекти розвитку зовнішньої торгівлі Китаю. Особлива увага приділяється еволюції зовнішньоторговельної політики, питанням участі Китаю в Світовій Організації Торгівлі (СОТ), проблемам розвитку торгових зв’язків цієї країни з її провідними партнерами. На основі використання історичних фактів та новітніх даних китайської національної статистики показані основні зміни в товарній і географічній структурі зовнішньої торгівлі Китаю. Ключові слова: зовнішня торгівля, експорт, імпорт, світова економіка, Всесвітня Торгова Організація ( ВТО) іноземні інвестиції; економічний розвиток. В статье исследуются важнейшие аспекты развития внешней торговли Китая. Особое внимание уделяется эволюции внешнеторговой политики, вопросам участия Китая во Всемирной Торговой Организации (ВТО), проблемам развития торговых связей этой страны с ее ведущими партнерами. На основе использования исторических фактов и новейших данных китайской национальной статистики показаны основные изменения в товарной и географической структуре внешней торговли Китая. Ключевые слова: внешняя торговля, экспорт, импорт, мировая экономика, Всемирная Торговая Организация ( ВТО) иностранные инвестиции; экономическое развитие. 2010 Article The major direction of China’s foreign trade development / N.N. Kotlyarov // Економічний вісник Донбасу. — 2010. — № 4(22). — С. 55-62. — Бібліогр.: 9 назв. — англ. 1817-3772 http://dspace.nbuv.gov.ua/handle/123456789/23997 339.5(510) en Економічний вісник Донбасу Інститут економіки промисловості НАН України |
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International and Regional Economics International and Regional Economics |
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International and Regional Economics International and Regional Economics Kotlyarov, N.N. The major direction of China’s foreign trade development Економічний вісник Донбасу |
| description |
The article examines the main aspects of China’s foreign trade. Special attention is given to China’s participation in the World Trade Organization (WTO), Chinese foreign trade relations with it’s major trade partners. By using historical information and latest statistical dates the author analyzes the main changes in China’s foreign trade commodity and regional structure. Certain problems and perspectives of China’s trade development are also considered. Key words: Foreign Trade, export, import, world economy the World Trade Organization (WTO), foreign investment; economic development. |
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Article |
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Kotlyarov, N.N. |
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Kotlyarov, N.N. |
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Kotlyarov, N.N. |
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The major direction of China’s foreign trade development |
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The major direction of China’s foreign trade development |
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The major direction of China’s foreign trade development |
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The major direction of China’s foreign trade development |
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The major direction of China’s foreign trade development |
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major direction of china’s foreign trade development |
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Інститут економіки промисловості НАН України |
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2010 |
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International and Regional Economics |
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http://dspace.nbuv.gov.ua/handle/123456789/23997 |
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The major direction of China’s foreign trade development / N.N. Kotlyarov // Економічний вісник Донбасу. — 2010. — № 4(22). — С. 55-62. — Бібліогр.: 9 назв. — англ. |
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55
Економічний вісник Донбасу № 4 (22), 2010
N. N. Kotlyarov
International and regional economy
Foreign trade plays leading role in external economic
relations of the Peoples Republic of China. It is the major
source of new machinery and technologies that helps to
maintain fast development of economy, satisfy the needs
for raw materials and foods in case of their shortage. At
the same time the foreign trade policy is important part
of external economic policy of the Chinese government
and represents a series of measures, called to promote
growth of competitiveness on foreign markets, to increase
currency receipts from export, to provide protection for
national manufacturers.
Importance of foreign trade for economic
development of the country at various stages was different.
Till the end of 1970es, during the course of self-isolation,
foreign trade was the unique form of Chinese economic
interaction with other countries. China traded in small
volumes with a very limited number of countries. New
stage of economic policy started in December 1978, when
Chinese National People’s Congress (CNPC) adopted a
policy of modernization and reforms. Chinese leadership
normalized bilateral relations with leading Western countries,
including the U.S. China has entered IMF and IBRD. In
2001 China has finalized negotiations about joining the
World Trade Organization (WTO) that actually meant a
new step in development of foreign trade of the Peoples
Republic of China. China now enjoys unconditional MFN
(most favorable nation) regime and the ability to enforce
its rights through the dispute settlement system.
Since the accession to the WTO foreign trade and
foreign direct investment have made important
contributions to Chinese growth. Between 2001 and 2008,
for example, the dollar value of Chinese exports and
imports increased at annual rates of 29,3. As a result of
this performance, China’s share in world imports
increased from 3.3 % in 2001 to 7 % in 2008. This makes
China a major participant in world trade and, having now
surpassed Japan, the dominant trading power in East Asia.
China looms particularly large as an exporter of labor-
intensive manufactured goods and components and as a
major importer of capital goods, primary commodities,
and semi-finished parts.1
Joining the WTO has also caused significant
changes in the role of state in regulation and realization
of the foreign trade operations.
At the initial stage of the policy of external openness
all foreign trade operations were carried out only by
specialized state organizations. Such system, at certain
times, played positive role, as the government monopoly
for the foreign trade operations allowed to accumulate
large amounts of currency in the hands of the state, that
provided more resources to be used for solution of the
important economic problems, including import of modern
machinery and equipment. On the other hand, such
system did not correspond to the world practice and
caused criticism from major trading partners of China
and from global economic organizations. All this demanded
transformation of foreign trade system of the country,
and such transformation was gradual.
Reformation of China’s foreign trade regulations
system can be divided into several basic stages. The first
stage started in the beginning of 1980-s and lasted till 1992.
The majority of provinces and enterprises received the
right to keep part of currency, gained from export ; national
companies were allowed to carry out import operations
on commodity positions, (excluding those that were
subjects to restriction), without special coordination with
the higher organizations; direct manufacturers of goods
got the right of independent export and import operations.
But the state monopoly for trade in the strategic goods
such as mineral oil, black and nonferrous metals, woods,
cotton and a number of others, however, remained. During
this period the currency market has started to function.
At the next stage, which covers the period till 2001,
measures on gradual cancellation of the state budgetary
subsidies for export, decrease in the customs duties in
accordance with the requirements of the World Trade
Organization were taken. The important changes took
place in the system of currency regulation.
In December 2001 China has been officially
accepted into the WTO, so the third stage of reforming
of the foreign trade system began. It is connected with
the fulfillment of obligations taken by China during
negotiation process with the WTO’s Working Group.
Participation in the World Trade Organization is the
central direction of trade and economic policy of the
УДК 339.5(510)
N. N. Kotlyarov,
Dr. of Science (Economics), Prof.,
Moscow, Russia
TНЕ MAJOR DIRECTION OF CHINA’S FOREIGN TRADE DEVELOPMENT
1 Having assumed the ranks of the world’s third largest trader, Chinese trade policies will now be subject to the WTO trade review
mechanism every two years — a treatment resolved for countries with large trade volumes.
56
Економічний вісник Донбасу № 4 (22), 2010
N. N. Kotlyarov
Peoples Republic of China of the last decade. It means a
transition from a policy of use of external factors to a
policy of integration into a world market economy. The
WTO provides the legal basis for global trade that allows
to defend the national economic interests. The given
circumstance had especially great value for China as the
massed escalating of deliveries of the Chinese goods on
the markets of the developed countries faced numerous
unilateral sanctions from their part. Before entering the
WTO access of the Chinese goods to many foreign markets
was limited, antidumping procedures and investigations
against China took place many times. Considerable currency
losses were consequences of such investigations. Being
behind WTO frameworks, China had no possibility to use
the low mechanism of the Organization to protect its rights.
Besides, participation in the WTO gave the most favoured
nation trade regime in trade relations with WTO —
members countries. That assumed decrease in the customs
duties and cancellation of not tariff restrictions from outside
leading trading partners of the Peoples Republic of China
on the major goods of the Chinese export. Despite the big
efforts and the considerable time interval spent for an
accession to WTO (about fifteen years), Chinese
government has been assured that in long-term prospect
the benefits from participation in the global trade regime
will exceed the costs connected with an accession to WTO.
The greatest interest of the most influential trade nations
to include China in the WTO has been connected with
liberalization of Chinese market for foreign goods, services
and capitals. The main task was to create the mechanism of
control over China’s obligations fulfillment. For these
purposes China has achieved the status of developing country
with corresponding advantages, including transition period
(from three to five years on different goods). During this
period stage-by-stage liberalization of foreign trade activities
within Chinese territory should take place.
By the end of 2007 China has already fulfilled all
the obligations on decreasing import duties and quotas.
In order to encourage export activities the majority of
export duties are now abolished. But the system of export
and import licensing for a number of so -called strategic
goods continues to operate. It is clear that despite foreign
trade policy liberalization, the Chinese authorities will
undertake the long-term policy directed on protection of
the most vulnerable branches of national economy.
In the past years China’s foreign trade has rapidly
increased. If the world trade rise during 1980-2007 was
7,5 % per year (average), foreign trade of China with
other countries these years grew on the average 15,8 %.
The highest dynamics of China’s external trade was
observed in 2002-2007 when rates of increase in the
outward trade operations were over 20 % annually,
especially in 2003-2004 when rates of its growth have
reached 36,9 % and 35,8 % accordingly. 2 The greatest
scale the foreign trade operations China have reached in
2008 when total volume of exports and imports exceeded
2,56 bln. dollars. China turned into large foreign trade
power and since 2004 constantly keeps the 3d place in
the world trade turnover. Because of the consequences
of world financial and economic crisis in 2009 the volume
of the foreign trade turnover of the Peoples Republic of
China has reduced by 13,5 %.
The analysis of the data of the table 1 shows that
the volume of foreign trade of China in 1980 -2009 years
increased more, than in 60 times. In 2009 export of the
country has reached 1,2 bln. dollars, and import -1,01
bln. dollars. In 1990-2009 negative dynamics were
observed only twice — in 1998 and in 2009. In both
cases reduction of volumes of foreign trade has been
connected with influence of external crises. On the
contrerary, the country’s role in world trade constantly
increased. According to the WTO data, the share of the
Peoples Republic of China in world trade in 2009 has
reached 9,2 % while in 1980 this indicator was only
Table 1
Total value of China’s imports and exports (bln. dollars)
Year Total
imports& exports
Total exports Total exports Balance Dynamics
( previous year)
1980 37,8 18,3 19,5 -1,2 –
1981 43,1 21,5 21,6 -00,1 14,05
1985 70,4 27,6 42,8 -15,2 42,4
1990 115,4 62,1 53,3 8,8 3,3
1995 281,1 149,2 131,9 17,3 18,7
2000 474,3 249,2 225,1 24,1 31,5
2005 1421,9 762,0 659,9 102,1 23,2
2007 2173,7 1217,8 955,9 261,9 23,5
2008 2563,3 1430,7 1132,6 298,1 17,9
2009 2219,5 1207,4 1012,1 195,3 -13,5
Source: China Statistical Yearbook 2009, p.724; http://www.uschinaorg/public/export/2000_2009/
2 Calculated on: China Statistical Yearbook, 2009, China Statistics Press, Beijing, p. 724.
57
Економічний вісник Донбасу № 4 (22), 2010
N. N. Kotlyarov
1,2 %.3 So we can see the steady trend of strengthening
of China’s positions in world trading system.
Trade balance of China since 1990 is characterized
by proficiency which reached a record value in 2008 of
298,1 bln. dollars. As a result China became the first
country on the sizes of currency reserves which in 2007
reached 1,53 bln. dollars, and in 2008 — 1,94 bln. dollars.
In 2009, despite world crisis, foreign currency reserves
of China have reached the maximum size of 2,24 bln.
dollars. During last years currency reserves of China
annually grew for 200 billion dollars and more . The surplus
of external trade of China reached 7,8 % of GDP (Gross
Domestic Product) in 2007, but was a little reduced by
4,9 % in 2009 due to the global crises. On the other hand
in a number of large countries chronic deficit of trade
balance is observed. For example, in the U.S. the negative
balance of foreign trade in 2008 reached 6,2 % of GDP.
Many foreign analysts name global trading imbalance as
one of the reasons of the present economic crisis. The
economic crisis slightly smoothed these problems as the
USA trade deficit was in the reduced almost twice to the
level of 3,5 % of GD in the last two years.
The reason for the Peoples Republic of China’s efforts
to increase currency reserves is the necessity to defend
the country in case of regional or global financial crisis.
Such approach has been accepted after the Asian financial
crisis of 1997-1998. Significant currency reserves allow
to support stability of national financial system. Large
currency reserves raise ability to resist the international
risks and speculative impacts. Besides, currency reserves
can be used for stabilization in case of deficiency of the
balance of payments or large fluctuations of the exchange
rate. Therefore, the main goal of accumulation of currency
resources is the maintenance of their high liquidity while
questions of profitableness fade into the background.
As the American dollars remains the main
international means of payment for China, dollar assets
make about 70 % of currency reserves of the country.
20% of reserves are in the European currency. There are
also Japanese yens, the Swiss francs, South Korean vons
— 10 % of the Chinese foreign currency reserves totally.
As to the commodity structure of China’s foreign
trade, it is necessary to notice that for the last twenty
years there were serious positive shifts. In the late eighties
the Chinese export consisted mainly of the textile industry,
agriculture production, natural resources such as mineral
oil, metals, coal. Among the goods of this group the clothes
was especially allocated, the volume of its sales constantly
increased and has made one of the largest articles of the
Chinese export. Fast escalating of Chinese export of textile
goods in the world trade has led to China’s turning into the
leading supplier of this products in 1990-s. At the same
time export of machinery products was very low.
Deliveries of these goods to the world market for a long
time were restrained by poor quality, narrow assortment,
bad design and could not compete with other world leading
manufacturers. However, after the improvement of quality
and extention of assortment, production of equipment and
machinery in Chinese export gradually increased.
The Chinese products of light and textile industry
are in demand in the world market because of their low
cost and high quality. However, the further escalating of
3 WTO database http://www.wto.org./english/res/statis/
Table 2
China’s export value by category of commodities
(USD 100 million)
year 1985 1990 1995 2000 2008
Total 273,50 620,91 1487,80 2492,03 143306,93
Primary goods,
Including:
138,28 158,86 214,85 254,60 779,57
Food and live animals 38,03 66,09 99,54 122,82 327,62
Mineral fuels, lubricants,
and related materials
71,32 52,37 53,32 78,55 317,73
Non-edible raw materials 26,53 35,37 43,73 44,62 113,19
Manufactured goods,
including:
135,22 462,05 1272,95 2237,43 13527,36
Light textile,
rubber products, mineral
and metallurgical products
44,93 125,76 322,40 425,46 2623,91
Machinery and transport
equipment
7,72 55,88 314,07 826,00 6733,29
Chemicals and related
products
13,58 37,30 90,94 120,98 793,46
Miscellaneous products 34,86 126,86 545,48 862,78 3359,59
Source: China Statistical Yearbook 2009, p. 726
58
Економічний вісник Донбасу № 4 (22), 2010
N. N. Kotlyarov
sales of this products is affected by restrictions of the
majority of developed countries, including the U.S. and
the EU countries, which apply various sanctions against
Chinese goods to protect domestic manufacturers. At
the same time participation in global trading organization
allows China to use the conventional legal procedures
for protection of national exporters.
Main trend in transition of the PRC’s export
structure is the increase of the share of machinery and
equipment which now takes a leading place in the Chinese
sales in foreign markets. If in 1990 China exported cars
and the equipment for the sum of 5,6 billion dollars that
has made 8,7 % of total exports of the country, in 2008
the volume of cars and equipment sales has exceeded
673,3 billion dollars that has made 47 % of China’s total
exports. The given group is various enough on its content
and includes metal-cutting machine tools, power devices,
the medical equipment and so on. We can see the
increasing growh in the world market of mass production
of electronic industry of China such as office devices,
TVs, video equipment, mobile phones. At the same time
sales of various vehicles, including cars also grows.
The third place in the Peoples Republic of China’s
export take chemical goods. The structure of this group
includes products of organic chemistry, varnishes, paints,
pyrotechnic goods, plastic and others. During the period
from 2000 to 2008 cost of export of chemical production
has increased from 12,1 billion dollars to 79,4 billion dollars.
This group of goods in China’s export for the last years
remains practically on the same level and makes 5-6 %.
Reduction of the share of raw materials in the structure
of Chinese export is connected, first of all, with increase in
demand inside the country because of economy’s rapid
growth. Therefore, since 1991 China began to turn into
net-importer of some raw materials, first of all, crude oil.
The role of mineral raw materials and fuel in Chinese export
was constantly reduced and in 2000-s.
The most important feature of modern development
of Chinese export is its leading role in mass production
of consumer goods. And for rather short period of time
this country managed to get rid off raw dependence of
its export and occupied more advanced position in the
international division of labor.
Along with the changes in export’s commodities
structure of the Peoples Republic of China there were
essential shifts in the Chinese import from foreign
countries in the last decade. First of all, it is a sharp
increase of import demand for minerals that shows
requirements of a growing national economy in raw and,
first of all, the power goods. During 2000-2008 import
of mineral fuel, oils and the accompanying goods has
increased 20,6 billion dollars to 169,2 billion dollars.
The sharp increase in cost of mineral fuel’s import
began to occur in 2000th years, and that was connected
not only with requirements of the Chinese economy, but
also with the increased world market prices for raw
materials. If in 2000 the volume of crude oil’s import was
60 million tons or 27 % of China’s general demand for this
commodity, in 2008 the volume of import has exceeded
88 million tons or 34 % of the country’s general demands.
In accordance with calculations of experts, by 2015
the volume of demand for crude oil in the country will
increase to 351 million tons ( 48 % of total internal demand),
while own extraction will reach only 180 million tons. Thus
it is obvious that oil import of China will increase and further,
annual rates of increase of crude oil during 2000-2015 will
be about 9-11. Now China takes the second place in world
economy (after the U.S.) as the main oil consumption nation.
The reason for these high volumes of consumption are the
size and rates of development of national economy.
Along with oil import, China has turned into the
leading world buyer of other important kinds of the mineral
resources and raw materials, such as iron and manganous
ore, copper ores, alumina, and also wood, cellulose,
producer of organic chemistry, rubber, polymers. In
particular, in 2008 China has bought at world markets:
iron ore ( for the sum of 60,5 billion dollars), copper ore
— (for the sum of 10,4 billion dollars), a sheet steel — for
the sum of 23,4 billion dollars. As a whole in 2000th years
China has turned into the largest importer (second after
the USA) of not only mineral oil, but also other raw goods.
Its share in world import of mineral raw materials (except
for power resources) now makes 12 %. In the conditions
of world economic recession high dynamics of economic
development of China ( 8,5% in 2009) is one of the main
factors of existing demand for many kinds of raw goods
and materials at the world markets.
Despite the fast increase in China’s purchases of the
raw goods, machinery products take the leading part in
commodity structure of import. In 2008 China bought
cars and the equipment for a total of 441,7 billion dollars
that has made 39 % of the country’s import. Machinery
and technical products are the basic articles of China’s
import for many years. Volumes of purchases of these
goods constantly grow, reaching in separate years almost
half of all Chinese import value. For example, in 2006
import of all kinds of machinery, equipment and cars
reached 49 % of China’s foreign purchases. The given
commodity group is very various on the structure and
reflects requirements of the Chinese industrial development.
Geographic distribution of China’s foreign trade is
also very important. During the first years of the of policy
of “an external openness” China took the first steps to
carry out diversification of foreign trade geographical
structure. By now China has bilateral trade relations with
majority of countries of the world. Chinese government
develops cooperation not only in bilateral, but also a
multilateral forms. Besides the WTO, China is a member
of an intergovernmental forum «Asian-Pacific economic
cooperation», aspiring to use its possibilities for own
59
Економічний вісник Донбасу № 4 (22), 2010
year 1985 1990 1995 2000 2008
Total 422,52 533,45 1320,84 2250,94 11325,62
Primary goods,
Including:
52,89 98,53 244,17 467,39 3623,95
Mineral fuels, lubricants
and related materials
1,72 12,72 51,27 206,37 1692,42
Non-edible raw materials 32,36 41,07 101,59 200,03 1666,95
Food and live animals
used mainly for food
15,53 33,35 61,32 47,58 140,51
Manufactured goods,
Including:
369,63 434,92 1076,67 1783,55 7701,67
Machinery and transport
equipment
162,39 168,45 526,42 919,31 4417,65
Chemical and related
products
44,69 66,48 172,99 302,13 1191,88
Light textile industrial
products, rubber
products, mineral and
metallurgical products
118,98 89,06 287,72 418,07 1071,65
Miscellaneous products 19,02 21,03 82,61 127,51 976,41
N. N. Kotlyarov
interests. Though prospects of concrete realization of
plans on creation in Аsian-Pacific region zones of free
trade remain unclear, China actively advances the idea of
economic and financial integration with АSEAN
countries. Such integration will stimulate annual growth
of China trade with these countries by 20-25 %.
At the end of this decade regional distribution of foreign
trade of the Peoples Republic of China looks as follows:
share of Asian countries reached 53 % of China’s foreign
trade, share of European countries — 20 %, Northern
America — 14,5 %, Latin America-5,6 %, Africa — 4,1 %.
Among the concrete countries Japan, the U.S. and
Hong Kong traditionally occupy leading places as major
Chinese trade partners. In 2008 the Chinese-American trade
has reached 333,7 bln. dollars, while China and Japan trade
has made 266,7 bln. dollars. Share of the U.S. was about
13 % of China’s foreign trade whole volume, share of
Japan — 10,5 %, and share of Hong Kong-8,0 %.
The leading role of the U.S. as the trading partner of
China is defined by a number of circumstances. Besides
powerful economic, scientific and technical potential, the
USA is the world’s largest commodity market for many
kinds of goods from other countries. That makes American
market especially attractive to China. Fast development of
bilateral commercial relations in 2000-s was facilitated by
the enrollement of China into the WTO, and removal of
many tariff and non- tariff restrictions from American side.
As a result the volume of bilateral trade from 2000 to 2008
has increased more,than four times and reached 333,7
bln. dollars. Now China is the third export market for
American producers (after Canada and Mexico). In 2009
volume of Chinese import from the U.S. reached 77,4 bln.
dollars. At the same time the U.S. are the main commodity
market for Chinese products, the sizes of these sales
more,than twice exceed export of China to Japan and more,
than four times exceed Chinese export to Germany. China
is the main supplier of textile products to the U.S. because
of high quality and low prices of these Chinese products.
The second largest trading partner of China is Japan. In
2009 trade between the two countries reached 228,9 bln.
dollars, having reduced in comparison with previous year by
14,2 % because of the world economic crisis. However,
despite crisis, relations with Japan occupy one of the key
places in China’s external economic and trade relations. Level
of Japanese economic development, its international position,
geographical position have great influence on the size and
character of two countries economic cooperation.
To the middle of 2000th years China took the top place
among trading partners of Japan, having superseded the
U.S. from a place of it main foreign trade partner. From its
part Japan is the second trade partner of the Peoples Republic
of China. Despite remaining political contradictions, degree
of economic integration of two countries constantly grows,
thanks to what China has possibility to receive the hi-tech
Japanese goods In Chinese import from Japan cars and the
equipment have the main positions. Both countries now make
efforts to create in East Asia zone of free trade with
participation of China, Japan, republic Korea and other
countries of region to promote t here to regional
specialization and cooperation that will lead to the further
strengthening of regional trade and economic cooperation.
At present time China also continues to develop trade
relations with the EU countries, which are important source
of reception of many modern industial products and at the
same time very important commodity market for Chinese
goods. A maximum level trade between China and EU
countries has reached in 2008, having made 425,6 billion
dollars, but in 2009 reduced to 387,3 billion dollars (because
Table 3
China Import (USD 100 million)
Source: China Statistical Yearbook 2009, p.727
60
Економічний вісник Донбасу № 4 (22), 2010
country 2000 2005 2006 2008 2009
United States 75,1 211,5 263,1 302,6 293,3
Japan 83,2 184,5 207,3 266,7 228,9
Hong Kong (China) 53,9 136,7 166,1 203,6 174,5
Korea Rep. 34,5 111,9 134,2 186,1 156,2
Taiwan, China 30,5 91,2 107,8 129,2 106,2
Germany 19,7 63,2 78,2 114,9 105,7
Russia 8,0 29,1 33,4 56,9 38,8
Malaysia 8,1 30,7 37,1 53,5 52,0
India 3,0 18,7 24,9 51,8 43,4
United Kingdom 9,9 24,5 30,7 45,6 39,6
France 7,7 20,6 25,3 38,9 32,1
Italy 6,9 18,6 24,6 38,3 33,4
N. N. Kotlyarov
of world economic crisis). More than third of consumer
demand of these countries it is satisfied by deliveries from
China. Now China is important supplier on the markets of
these countries of variety of the goods, such as mobile
communication facility, video- and TV-equipment, office
furniture, clothes. During last decade the share of China in
external trade of these countries (EU-27) has increased almost
twice and has reached 14,1 % by 2008. For comparison
we can notice that the share of the U.S. in trade of EU was
about 17,3 %.Last decade trade between China and the
European Union has stable tendency of growth. Despite
difficult market condition in 2008-2009, China could hold
its positions at European markets only with small losses.
Decline in their trade in 2009 was only 9 %.In comparison
American- European trade fell by 17 %, Russia-European
trade fell by 35 %. Such decline in trade between the EU
countries and Russia was caused by falling prices of energy
products, while China is the important supplier of the
industrial consumer goods. Demand on these goods remains
at high level even in the conditions of an economic crisis.
The main problem of trade relations between China
and the EU countries is considerable deficit of the EU trade
balance as the Chinese export to this countries almost three
times exceeds volume of its import. So for last years China
is under great pressure from European countries insisting
along with the U.S. on liberalization of Chinese currency
(yuan) exchange rate. In their opinion, the yuan exchange
rate is overestimated and as a result the Chinese goods get
additional competitive advantages. During several last years
Chinese yuan was consistently revaluated (till 6.84 to the
beginning of 2010). Despite pressure from outside the EU
countries and the USA, China hardly will go on the further
increase of a course of the national currency.
As a whole for last two decades China had a certain
group of the European trading partners which consists of
Germany, Great Britain, Italy, France and Holland. These
countries accumulate two third of all trade volume of EU
with China. Germany now is the leading trade partner of
China from this group of countries. Bilateral trade between
Germany and China in 2009 reached 105,7 billion dollars or
27,3 % of total amount of trade of China with the EU countries.
Despite dynamical (as a whole) development of trade
relations between China and EU countries, its basic trading
partners in a regional context are the states of East Asia.
Besides Japan, China actively develops commercial relations
with Republic Korea, Hong Kong and Taiwan. In 2009
trade between China and Republic Korea has made 156,2
billion dollars, with Hong Kong — 174,5 billion dollars,
with Taiwan-106 billion dollars. As a result trade of the
Peoples Republic of China only with these three trading
partners exceeds China’s trade with all EU countries.
In the past fifteen years the People’s Republic of China,
Taiwan, and Hong Kong have become one integrated
economic region. Often referred to as «Greater China» or «
Сhina Circle», this region is driving the dramatic growth of
investment, production, and trade in East Asia. The
emergence of this economic region represents in certain
respects the triumph of economic over politics. Three very
different political entities have today become an economic
trading and production region. The basis for emergence of
the China Circle was the success of Hong Kong and Taiwan
in developing labor-intensive manufactured exports in the
1980s, particularly to the US market. This success had both
a demonstration effect (as China sought to emulate their
success) and a restructuring effect ( as export surpluses,
increasing cost, and a currency realignments created strong
incentives to move production to lower-wage locations).
These trends reached a high point following the currency
realignments of the late-1980s. The Japanese yen appreciated
sharply, and the Taiwan dollar followed the yen. In response
to rapidly increasing wage rates and labor shortages, as
well as increasing costs for land and environmental
protection, business in Hong Kong and Taiwan ( as well as
in Japan) sought to restructure existing export production
networks. The opening of China to foreign investment at
this time created a dramatic opportunity to transfer labor-
Table 4
China’s main trade partner (USD bln.)
Source: China’s Customs Statistics; China Statistical Yearbook 2009
61
Економічний вісник Донбасу № 4 (22), 2010
4 China Statistical Yearbook 2009, p. 968.
N. N. Kotlyarov
intensive export production to People’s Republic. Wages
were much lower, and land and operating costs were lower
as well. The opportunity to use low-cost labor in the PRC
was very advantageous for businesses in Taiwan and Hong
Kong, because for them transaction costs in the PRC were
low, aided by common language and customs, made doing
business on the mainland easy and cheap. Moreover, low
transaction costs made it possible to initially move only the
low-skilled labor-intensive stages of production onto the
mainland, while retaining other activities in Hong Kong or
Taiwan. Production chains were quickly created that
crossed political boundaries and allowed Hong Kong and
Taiwan to specialize in high value services and technology-
intensive production, while much of the ordinary
manufacturing moved to the PRC. The combination created
explosive growth on the Chinese littoral as production was
moved onshore, permitting Hong Kong and Taiwan to
sustain rapid growth and significantly higher income levels.
The restructuring of existing export production networks
into larger, low-cost networks is the basis for the current
division of labor.
The sharp reduction in transaction costs among the
China Circle participants reflects worldwide trend toward
increased intra-industry trade, accompanied by increased
intrafirm trade and associated with increased investment.
As international transactions costs fall, it becomes profitable
to locate different stages of the production process,
characterized by different factor input needs, in different
locations, according to where factor proportions and costs
are most appropriate. The trend, which has been
particularly prominent in the electronics industry, started
with U.S. electronic firms in the seventies of last century.
They were the first to significantly disperse their production
facilities oversees. Southeast Asia, Taiwan, and Hong Kong
were major beneficiaries. The movement of certain labor-
intensive stages of production chains to the China mainland
is a specific case of this ongoing trend.
At present time over 70% of foreign direct investment
in China come from Hong Kong and Taiwan. Trade data
also show the significance of economic relation in this
region. Total trade of the PRC with Hong Kong and Taiwan
grew from 84,4billion doll. in 2000 to 280,7 billion doll. in
2009. Investment from Hong Kong to mainland China
reached 41,0 bln. dollars, or more than 44% of total foreign
direct investment in China in 2009. Hong Kong plays the
central role only as source of investment but as re-export
base of PRC’s export products. Taiwan’s trade is an
integrated part of this trade and investment relations. Hong
Kong funnels equipment, components, and materials into
China from Japan, Taiwan, and the United States and brings
out consumer goods that it sells in developed-country
markets. In other words, Hong Kong is China’s gateway
to the world in commodity trade.
As manufacturing production has moved to the China
mainland, the southern coastal provinces have been
industrializing rapidly, while Hong Kong is de-industrializing.
The manufacturing labor force is declining in Hong Kong.
The Hong Kong industrial labor force declined from 0,93
million in 1985 to 0,202 million in 2007.4 Meanwhile, in
two southern provinces of Guangdong and Fujian, the
industrial labor force increased from 10 million at the end
of 1995 to 15 million to at the and of 2008. Hong Kong
experienced substantial success in upgrading to higher-
skilled activities. The increased exchange of intermediate
goods within the China Circle has not changed the fact
that a large proportion of the markets for the region’s final
products lies in the OECD (Organization for Economic
cooperation and Development) countries, particularly the
United States; the region as a whole is externally oriented
despite its integrated production network. The region
continues to display a degree of market dependence on
North America. One symptom of this has been persistent
U.S. trade deficit with the China Circle —formerly attributed
primary to Hong Kong and Taiwan, but now largely
attributed to the PRC. For a series of specific commodities
(such as footwear, toys), a declining U.S. market share
for Hong Kong or Taiwan has been matched by an
increasing market share for the PRC.
Now the basic line of China’s foreign trade policy
is expansion of its geographical orientation. Despite most
developed countries, East Asia compatriots and neighbors
are the main trade partner, China tries expend trade
relations with Latin America, Africa, CIS, Southern Asia..
Expansion of China’s commercial relations speaks about
increasing requirements for import of raw materials and
energy, and also tasks for searching new commodity
markets for export-oriented production.
Last years was achieved an increase in commercial
relations between China and Russia. Prior to the beginning
of world economic crisis Russia was the 8th main trade
partners of the PRC. China remains Russia’s second largest
trading partner only after the European Union. The share
of Russia in China’s trade was about 2-2,5 %. It is less
than indicators for the U.S. Japan, Hong Kong and some
other countries.. At the same time the role of Russia is
much higher in trade of some commodity products. In
particular, the Russian share in the Chinese import of oil
and mineral oil in 2006-2008 was 7-8 %. Russia’s deliveries
of round wood are over 60 % of the general Chinese import
of this commodity group. At the same time a share of
machinery and equipment in Russia’s export to China
remains very low ( 1,8-2%). For the last decade the share
of machinery and equipment in Russia’s export to China
decreased more, than twice.( except deliveries of military
equipment). Because of it, Russia is running a substantial
trade deficit that first appeared in 2007.
Two additional trends characterize Russian-Chinese
trade relations. First, Russia is running a substantial trade
62
Економічний вісник Донбасу № 4 (22), 2010
N. N. Kotlyarov
deficit that first appeared in 2007. Second, the global
economic crisis has further aggravated old problems in
bilateral trade. As a result, it is now clear that the goal set
by the leaders of both countries to increase the trade
volume to 80 billion dollars be the end of 2010 will not be
met. It is possible, that Russia will drop from being China’s
eighth-largest trading partner to the to the 15th or 16th largest,
falling behind such countries as India, Malaysia, Singapore,
the Netherlands, and possibly Britain, Brazil, and France.
That would further decrease the mutual importance of
Russia and China as trading partners.
Now Russia gives priority to improving investment
environment, and creates favorable conditions for fresh
investment cooperation with China. Russia has oil and natural
gas resources in Siberia and its Far Eastern region. Since
1990s Sino-Russian cooperation in the energy sector has
been growing steadily. The two sides have completed
feasibility studies of several projects, the construction of
the gas field and the pipeline construction are at the stage of
realization and gas may be supplied to China and possibly
Korea and other third countries. As stressed Russian deputy
Prime Minister Alexander Zhukov, although faced with the
global financial crisis, the two nations should especially
expand energy cooperation. In 2009 two nations signed an
oil-for-loan deal, under which China offered Russia 35 billion
dollars of long-term loan and Russia would supply 300 million
tones of oil through pipelines to China from 20011 to 2030.5
The two sides had also agreed on the construction of a
pipeline from Russia’s Skovorodino in its far-eastern Amur
region to China’s northeastern city of Dacin.
There are prospects of economic cooperation
between two countries in some technological spheres,
including atomic engineering . They exist because Russia
preserves some essential advantages in these areas. Two
countries should work hard to restructure trade to
upgrade economic and technological cooperation.
As a whole, among foreign observes it is widely
believed, that development of China’s external trade for
the last two decades has been very successful, generating
unprecedented growth of export and import. About a
quarter of a century ago, China accounted for a relatively
small share of global trade. By now China has become
one of the most powerful trade nations of the world.
References
1. Barry Eichengreen, Charles Wyplosz. China,
Asia, and the New World Economy / Eichengreen Barry //
Oxford University Press, 2008. 2. Living with China:
U.S.-China Relation in Twenty-first Century. Edited by
Ezra F. Vogel. — N.Y. : Norton& Company, Inc., 2005.
3. The China Circle: economic and technology in the
PRC, Taiwan, and Hong Kong. Edited by Barry Naughton.
Brooking Institution Press, 2000. 4. China Business:
Challenges in the 21st century. Edited by Oliver H.M. Yao.
The Chinese University Press, Hong Kong 2000. 5. The
China Business review, 2007-2009. 6. Beijing Review,
2009. 7. China Statistical Yearbook 2009. Beijing, 2009.
8. http:// mofcom.govcn/article/. 9. http://
www.siteresourses.worldbank.org/data/.
Kotlyarov N. N. The major direction of China’s
foreign trade development
The article examines the main aspects of China’s
foreign trade. Special attention is given to China’s
participation in the World Trade Organization (WTO),
Chinese foreign trade relations with it’s major trade
partners. By using historical information and latest
statistical dates the author analyzes the main changes in
China’s foreign trade commodity and regional structure.
Certain problems and perspectives of China’s trade
development are also considered.
Key words: Foreign Trade, export, import, world
economy the World Trade Organization (WTO), foreign
investment; economic development.
Котляров М. М. Основні напрями розвитку
зовнішньої торгівлі Китаю
У статті досліджуються найважливіші аспекти
розвитку зовнішньої торгівлі Китаю. Особлива увага
приділяється еволюції зовнішньоторговельної політики,
питанням участі Китаю в Світовій Організації Торгівлі
(СОТ), проблемам розвитку торгових зв’язків цієї країни
з її провідними партнерами. На основі використання
історичних фактів та новітніх даних китайської націо-
нальної статистики показані основні зміни в товарній і
географічній структурі зовнішньої торгівлі Китаю.
Ключові слова: зовнішня торгівля, експорт, імпорт,
світова економіка, Всесвітня Торгова Організація ( ВТО)
іноземні інвестиції; економічний розвиток.
Котляров Н. Н. Основные направления раз-
вития внешней торговли Китае.
В статье исследуются важнейшие аспекты развития
внешней торговли Китая. Особое внимание уделяется эво-
люции внешнеторговой политики, вопросам участия Ки-
тая во Всемирной Торговой Организации (ВТО), пробле-
мам развития торговых связей этой страны с ее ведущи-
ми партнерами. На основе использования исторических
фактов и новейших данных китайской национальной ста-
тистики показаны основные изменения в товарной и гео-
графической структуре внешней торговли Китая.
Ключевые слова: внешняя торговля, экспорт,
импорт, мировая экономика, Всемирная Торговая
Организация ( ВТО) иностранные инвестиции; эконо-
мическое развитие.
Received by the editors: 09.10.2010
and final form in 01.12.2010
5 Neftegas, 26.11.2009
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