China Foreign Trade

With the rapid development of China economy, China's global trade exceeded $1 trillion ($1.15 trillion) in 2004, more than doubling from 2001. The trade surplus however was stable at $30 billion. (>40 billion in 1998, <30 billion in 2003). China's primary trading partners include Japan, U.S., South Korea, Germany, Singapore, Malaysia, Russia, and the Netherlands. According to U.S. statistics, China had a trade surplus with the U.S. of $170 billion in 2004, more than doubling from 1999. Wal-Mart, the United States' largest retailer, is China's 7th largest export partner, just ahead of the United Kingdom. Out of the 5 busiest ports in the world, 3 are in China.

The PRC has experimented with decentralizing its foreign trading system and has sought to integrate itself into the world trading system. In November 1991, the PRC joined the Asia-Pacific Economic Cooperation (APEC) group, which promotes free trade and cooperation in economic, trade, investment, and technology issues. In 2001, China served as APEC chair, and Shanghai hosted the annual APEC leaders meeting.

During his 1999 visit to the United States, Premier Zhu Rongji（朱镕基）signed a bilateral Agricultural Cooperation Agreement, which lifted longstanding Chinese prohibitions on the import of citrus, grain, beef, and poultry. In November 1999, the United States and PRC reached a historic bilateral market-access agreement to pave the way for the PRC's accession to the World Trade Organization (WTO). As part of the far-reaching trade liberalization agreement, the PRC agreed to lower tariffs and abolish market impediments after it joins the world trading body. Chinese and foreign businessmen, for example, will gain the right to import and export on their own - and to sell their products without going through a government middleman. Average tariff rates on key U.S. agricultural exports will drop from 31% to 14% in 2004 and on industrial products from 25% to 9% by 2005. The agreement also opens new opportunities for U.S. providers of services like banking, insurance, and telecommunications. After reaching a bilateral WTO agreement with the EU and other trading partners in summer 2000, the PRC worked on a multilateral WTO accession package. To increase exports, the PRC has pursued policies such as fostering the rapid development of foreign-invested factories, which assemble imported components into consumer goods for export. The PRC joined the WTO on December 11, 2001, after 15 years of negotiations, the longest in GATT history.

Foreign investment stalled in late 1989 in the aftermath of the Tiananmen protests. In response, the government introduced legislation and regulations designed to encourage foreigners to invest in high-priority sectors and regions. A significant example of this is the Encouraged Industry Catalogue which sets out the degree of foreign involvement allowed in various industry sectors.

In 1990, the government eliminated time restrictions on the establishment of joint ventures, provided some assurances against nationalization, and allowed foreign partners to become chairs of joint venture boards. In 1991, the PRC granted more preferential tax treatment for Wholly Foreign Owned Enterprises and contractual ventures and for foreign companies which invest in selected economic zones or in projects encouraged by the state, such as energy, communications and transport. It also authorized some foreign banks to open branches in Shanghai and allowed foreign investors to purchase special "B" shares of stock in selected companies listed on the Shanghai and Shenzhen Securities Exchanges. These "B" shares are sold to foreigners but carry no ownership rights in a company. In 1999, China received nearly $39 billion in foreign direct investment.

Opening to the outside remains central to China's development. Foreign-invested enterprises produce about 45% of China's exports, and China continues to attract large investment inflows. Foreign exchange reserves totaled about $658 billion in March 2005, more than doubling from March 2003 (316 billion). The following series of tables contain the full details about China foreign trade:

Table 1 Foreign Trade and Economic Cooperation

Table 2 Volume of Imports and Exports by Countries and Regions (Customs Statistics)

(USD 10 000)

Table 3 Amount of Foreign Investment by Type (USD 100 million)