Chinas Trade Patterns and PoliciesVisiting Scholar: Wang Guo An (Andrew)tradelaw@hzcnc.com:86-571-28877313 86-136-00516079: 86-571-28877312http://econet.zjgsu.edu.cn/andrew.wang:www.zjgsu.edu.cn

Three Periods 1949 Liberation-1978-Opening Up1978 Opening Up-Dec. 2001 WTO EntryDec. 2001 WTO Entry-Present

I.1949-1978 Liberation-Opening Up

Trade with the former USSR and other socialist countries

II. 1978- WTO Entry (Dec.11, 2001) Encouraging Exports and Limiting Imports on the basis of theories of A. Hamilton (American) and F. List (German).

Encouraging Exports

Return the paid value-added taxes to exportersExport subsidiesExport credit: suppliers credit, buyers creditExport Credit Guarantee SystemAdministrative institutions and related measures and organs: Chinese Export Commodities Fair http://www.cantonfair.org.cn/en/), CCPIT of the Ministry of Commerce, Commercial Councilor in the Chinese Embassy, Associations.

Free Port: Hong KongSpecial Economic Zones: Shenzhen, Zhuhai, Shantou, Xiamen and Hainan, Shanghai Pudong, Ningbo, Dalian..Free Trade Zone: NingboExport Processing Zone

Limiting ImportsProtective tariffsImport licensesForeign exchange administration/ control

Export control 1export License2military materials,3advanced technology, 4cultural relics5Rare animals.

Foreign Direct Investment Foreign direct investment in China: the biggest recipient of FDI among the developing countries for the last 17 years17. Number of the foreign-invested enterprises: 508,941 Over 400 of 500 biggest transnational corporations invested in China and about 30 of them have established or moved their head-quarters to China30. Contracted FDI: US$1096.608billion Actually utilized FDI: US$562.101billion 86% of FDI is in the east and southeast regions

A. Forms of FDIequity joint ventures (EJV), cooperative joint ventures (CJV), wholly foreign-owned enterprises (WFOE), joint development ventures, other foreign investmentsuch as Build-Operate Transfer (BOT).

B. Sources of FDI

B. Sources of FDIThe 10 Major Investors in China by the end of 20032003

6

2225.751

440.88

413.942

364.87

301.649

235.31

196.88

114.38

88.51

61.47

Country

Actual Utilized FDI(in US0.1billion dollars)

Sheet1

Hong Kong2225.751

America440.88

Japan413.942

Taiwan364.87

Virgin Islands301.649

Singapore235.31

South Korea196.88

UK114.38

Germany88.51

France61.47

Sheet1

Country

Actual Utilized FDI(in US0.1billion dollars)

Sheet2

Sheet3

C. Geographical Distribution of FDI FDI in China has been concentrated on the east and southeastern coast region, whereas FDI in the west and northwestern region has been insignificant

D. Functions of FDI

More than two decades Chinas inward FDI hasa) offered over 23 million job opportunities and greatly relieved China of its unemployment;b)been one of the driving forces in Chinas rapid economic development; c)helped the transfer from other countries to China of advanced science and technical know-how, and introduced advanced managerial skills and expertise to China;

d)contributed significantly to the rapid development of foreign trade of China and to the increase of Chinas revenues; e)contributed to the development of Chinas legal system and socialist market economic system; f) sped up Chinas economic integration into the global economy

Foreign trade surplus value USD101.9 billion in 2005 USD177.47 billion 2006: 2005101920061774.7) Annual economic growth during the last 29 years 9.3%9.3% No. 3 trading power in the worldExport value amounted to USD762 billion in 200520056720

III. Dec. 12, 2001the Presentthe FutureFulfillments of and compliance with Chinas commitments in the WTO agreements Revised FDI LawsForeign Exchange Balance First Priority in Purchases in ChinaExport obligationsThe production and operating plansPotential Effects of Chinas Revised FDI Laws

Chinas trade frictions with major trading partnersA. Foreign trade surplus value: USD101.9 billion1019 in 2005, USD177.47 billion 1774.7) in 2006. Since 1997, The trade between China and the USA has grown at the rate of 12.5% every year and more than one quarter of the Chinese exports are sold to the USA. In the trade surplus with the USA, 60% of made in-China products are made by the US companies in China. 1997,,.

B. Antidumping duties against Chinese products

C. The exchange rate between the Chinese currency RMB yuan and other major currencies, such as US$ and Japanese yen.

Chinas trade frictions with major trading partnersD. Technical barriers to Chinese products: health and sanitary regulation, packaging and labeling regulation technical standards ISO9000-9004/GB/T19000 ISO14000: environment ISO18000:safety QS (Quality Safety): Chinas from August 1, 2003, in strict conformity with the USA, EU and Japan.

Chinas trade frictions with major trading partnersE. Special Safeguard measuresF. IPRs violations and protectionG. SA 8000/Human rights

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