Foreign Trade of China
Foreign Trade of China
K.C. Fung University of California, Santa Cruz Hitomi Iizaka University of California, Santa Cruz Sarah Tong University of Hong Kong June 2002
Paper prepared for an international conference on “China’s Economy in the 21st Century”, to be held on June 24-25, 2002, Hong Kong. We would like to thank Alan Siu and Richard Wong for their encouragement.
1. Introduction
On December 11, 2001, China officially joined the World Trade Organization (WTO) and became its 143rd member. China’s presence in the world economy will continue to grow and deepen. The foreign trade sector plays an important and
multifaceted role in China’s economic development. At the same time, China’s expanded role in the world economy is beneficial to all its trading partners. Regions that trade with China benefit from cheaper and more varieties of imported consumer goods, raw materials and intermediate products. China is also a large and growing export market. While the entry of any major trading nation in the global trading system can create a process of adjustment, the outcome is fundamentally a win-win situation. In this paper we would like to provide a survey of the various institutions, laws and characteristics of China’s trade. Among some of the findings, we can highlight the following: • • • In 2001, total trade to gross domestic product (GDP) ratio in China is 44% In 2001, 47% of Chinese trade is processed trade1 In 2001, 51% of Chinese trade is conducted by foreign firms in China2
1
We define processed trade to include both trade due to processing and assembly and trade due to processing with imported materials. Processing and assembly refers to the type of inward processing in which foreign suppliers provide raw materials, parts or components under a contractual arrangement for the subsequent re-exportation of the processed products. Both the imported inputs and the finished outputs remain property of the foreign supplier. Processing with imported
K.C. Fung University of California, Santa Cruz Hitomi Iizaka University of California, Santa Cruz Sarah Tong University of Hong Kong June 2002
Paper prepared for an international conference on “China’s Economy in the 21st Century”, to be held on June 24-25, 2002, Hong Kong. We would like to thank Alan Siu and Richard Wong for their encouragement.
1. Introduction
On December 11, 2001, China officially joined the World Trade Organization (WTO) and became its 143rd member. China’s presence in the world economy will continue to grow and deepen. The foreign trade sector plays an important and
multifaceted role in China’s economic development. At the same time, China’s expanded role in the world economy is beneficial to all its trading partners. Regions that trade with China benefit from cheaper and more varieties of imported consumer goods, raw materials and intermediate products. China is also a large and growing export market. While the entry of any major trading nation in the global trading system can create a process of adjustment, the outcome is fundamentally a win-win situation. In this paper we would like to provide a survey of the various institutions, laws and characteristics of China’s trade. Among some of the findings, we can highlight the following: • • • In 2001, total trade to gross domestic product (GDP) ratio in China is 44% In 2001, 47% of Chinese trade is processed trade1 In 2001, 51% of Chinese trade is conducted by foreign firms in China2
1
We define processed trade to include both trade due to processing and assembly and trade due to processing with imported materials. Processing and assembly refers to the type of inward processing in which foreign suppliers provide raw materials, parts or components under a contractual arrangement for the subsequent re-exportation of the processed products. Both the imported inputs and the finished outputs remain property of the foreign supplier. Processing with imported
References: 25 WTO (2002)