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WTO stimulates foreign trade
2002-12-17
Business Weekly
China's foreign trade performance has been better than expected since it joined the World Trade Organization (WTO) last December.
It is estimated China's foreign trade will reach US$600 billion this year.
Many multinational firms have relocated their overseas manufacturing bases to China since the country joined the WTO.
As a result, China's processing trade grew rapidly in the year's first 10 months.
The processing trade, valued at US$145.2 billion, made up 55.3 percent of China's total trade in the year's first 10 months, indicate customs statistics.
Other countries have increased quotas on China's labour-intensive products and reduced non-tariff trade barriers against Chinese-made products since China joined the WTO.
Light industry products, textiles and consumer electronics made up more than 50 percent of China's exports during the year's first 10 months.
While State enterprises' exports increased 8 percent in the year's first 10 months, those of private enterprises soared 64.1 percent; and foreign-invested companies, 25.2 percent.
The gap between the export growth rates of State and non-State companies could widen if China grants trading rights to non-State enterprises.
But China's foreign trade is not all rosy.
While export growth in eastern provinces such as Guangdong, Fujian, Zhejiang and Jiangsu has jumped more than 20 percent, exports from eight provinces and autonomous regions in central and western China have fallen.
Due to an overall pessimistic forecast for this year's exports, the Chinese Government only budgeted US$100 billion in tax rebates for exporters.
Judging by the rapid growth in exports in the first three quarters, about US$160-170 billion in tax rebates are needed.
While China's exports increased rapidly, prices fell dramatically.
Statistics from Guangdong Province indicate prices have fallen in 10 of 12 categories of commodities.
Prices of high- and new-technology products dropped 23 percent; machinery and electronics products, 8 percent; and textiles and garments, 10 percent.
Many foreign trade companies will only be able to maintain thin-margin profits if they receive tax rebates, even though they are major exporters.
China ranked 45 among 72 countries and regions that participated earlier this year in the United Nations' evaluation of technical innovation, transmission of new technologies, transmission of traditional technologies and human techniques.
China lagged behind in competition in the world's labour market due mainly to its weak innovation capacity, inferior labour quality and postponed reform of foreign trade companies.
China's imports and exports increased 19.7 percent year-on-year, to US$500.26 billion in the year's first 10 months, indicate customs statistics.
The increase rate was far better than the original prediction last year of 6 percent for 2002.
China now ranks sixth in the world in terms of trade volume.
Export growth is expected to slow down in the fourth quarter as exporters exhaust their tax rebates.
But China's foreign trade is expected to maintain a 15-per-cent growth rate over the year.
Exports are expected to grow 16 percent year-on-year, to US$310 billion, and imports are expected to increase 15 percent, to US$280 billion.
If those expectations hold true, China will post a US$30-billion trade surplus in 2002.
That rapid growth is expected to continue next year.
China's WTO entry has resulted in a new round of growth, and a golden period of industrialization.
[The author is a senior researcher with the National Bureau of Statistics.]
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