China's Foreign Trade

V. Constructing All-round Economic and Trade Partnerships with Mutually Beneficial Cooperation

China stresses all-round development in its foreign trade. China adheres to developing economic and trade partnerships based on practical cooperation and mutual benefit with all countries, no matter they are big or small, rich or poor.

China enjoys steady growth in its trade with developed countries, and realizes complementary advantages as well as reciprocity and mutual benefit. China' s trade with the European Union has been developing steadily in recent years. The European Union mainly exports manufactured products to China, including advanced mechanical and electronic products, transport vehicles, complete plants, core parts and components, precision components and other high-tech products which are highly competitive in the Chinese market. Foreign trade between China and the United States has a solid development base. China exports a large variety of consumer goods to meet the demands of American consumers, while satisfying its own need for development by constantly expanding imports of electronic, aerospace, biological, medical, agricultural and services trade items from the United States. China and Japan are geographically proximate to each other and this is an advantage in bilateral trade. Sino-Japanese trade promotes continuous cooperation and progress in industry while spurring the development of regional economic comparative advantages and cooperation in East Asia. China' s trade and investment cooperation with developed countries such as Canada, Australia, Switzerland and New Zealand also maintain a good momentum of development.

China's trade with emerging economies and developing countries is experiencing robust growth, with huge development potential. With the comprehensive implementation of the China-ASEAN Free Trade Agreement in 2010, tariffs have been cancelled for 90% of the commodities traded between them, vigorously promoting the rapid growth of bilateral trade between China and ASEAN. The free entry of specialties and competitive products into each other' s market suits the various needs of the two sides. Foreign trade between China and Republic of Korea keeps growing constantly and steadily. Bilateral investment and economic cooperation also present broad prospects. China' s trade with the other BRIC countries has been enjoying rapid growth in recent years, which promotes the development of the member countries' respective advantageous industries and shows the broad development prospects of emerging markets. In recent years China has seen relatively fast growth in its trade with other developing countries, further development of trade with its historical trading partners in the Arab world, broadening areas of economic and trade cooperation with Latin American countries, and bilateral trade with African countries, which gives full play to the complementary advantages of the two sides' resources and economic structures.

China attaches great importance to the institutional set-up of bilateral and regional economic and trade cooperation. Currently over 150 countries and regions have signed agreements on bilateral trade or economic cooperation with China, which has established and maintains high-level economic dialogue mechanisms with the United States, Europe, Japan, Great Britain, Russia and other major economies. China proactively participates in the Asia-Pacific Economic Cooperation, ASEAN (10+3) meetings, which also include Japan and Republic of Korea, the East Asia Summit, Forum on China-Africa Cooperation, Greater Mekong Subregion Economic Cooperation Committee, Central Asia Regional Economic Cooperation Committee, Greater Tumen Initiative, and other regional and subregional economic cooperation mechanisms. China adheres to the principle of "good neighborly friendship and partnership" in establishing and developing various forms of border economic and trade cooperation.

China takes proactive initiatives to participate in and promote regional economic integration. By the end of 2010 China had held 15 rounds of negotiations on free trade or closer economic partnership arrangements with 28 countries and regions on five continents, and signed and implemented 10 free trade agreements or closer economic partnership arrangements. Currently five free trade agreement talks are under way. China advocates the establishment of an East Asia free trade zone. In 2010 the total volume of bilateral trade in goods between China and its trade partners in its ten free trade agreements or closer economic partnership arrangements (ASEAN, Pakistan, Chile, Singapore, New Zealand, Peru, Costa Rica, Hong Kong SAR, Macau SAR and Taiwan) reached US$782.6 billion, accounting for over a quarter of the country' s total import and export volume.

China has actively participated in and promoted the World Trade Organization's Doha Round talks, and strives to safeguard the authority of the multilateral trading system. China stresses that the negotiations should be conducive to the implementation of the principle of fairness and justice of the multilateral trading system, and reflect the goal of the Doha Round as a development round. China takes part in the Doha Round' s talks on agriculture, non-agricultural goods, services, rules and other issues, submitting over 40 negotiating texts on its own and over 100 texts with other members. To promote the Doha Round talks, China repeatedly expressed its wish to make constructive contributions suited to its level of development.

In settling disputes with its trading partners, China gives consideration to the interests of all parties, and seeks common ground while shelving differences. Since China' s entry into the WTO and with the continuous growth of its imports and exports, the number of trade disputes and frictions between China and its trading partners has increased. These cases mainly involved textile products, shoes, tires, car parts and components, steel and chemical products, and mainly covered the issues of IPR, trade balance, fair trade, food safety, environmental protection and other areas of concern. China has always preferred dialogue to confrontation, and cooperation to pressure, and chooses to settle disputes between trading partners through consultation and negotiation. China adheres to giving consideration to and balancing the interests of all parties and settling disputes through dialogue, consultation and negotiation by utilizing bilateral and multilateral channels and following the rules and under the framework of the WTO. In recent years China has adopted various measures to further open up its market, protect IPR, promote trade balance, reform the exchange rate formation mechanism of the RMB and standardize the operational order of imports and exports, among other areas, fully taking into account the concerns of its trading partners. When consultations fail to settle a dispute, China appropriately handles the issue with its trading partners through the WTO dispute settlement mechanism, in order to maintain the stability of the multilateral trading system.

VI. Realizing Sustainable Development of Foreign Trade

At present, unbalanced, inconsistent and unsustainable development factors persist in China's foreign trade. They are manifested in the following ways: Export growth mainly relies on the input and consumption of resources, energy, land, manpower, environment, etc., while the input of science and technology, management, innovation and other factors are insufficient, resulting in an ever more conspicuous contradiction between foreign trade development and the constraint on resource supply and environmental carrying capacity; enterprises are not competitive enough in R&D, design, marketing and services, and products with their own intellectual property rights and with their own brands account for only a small proportion of the exports; the contribution of foreign trade to China's primary, secondary and tertiary industries is unbalanced; central and western China falls behind other regions in the scale and level of foreign trade; and foreign trade needs improvement in terms of the quality of its products and profits. The Chinese government is clearly aware of these problems and has taken active measures to accelerate the change of the development pattern of foreign trade, and achieve sustainable development.

Fostering comprehensive competitive edge of foreign trade development. In recent years, with the rising labor cost and spiraling prices of resources, energy and other production factors, the low-cost advantage of export-oriented industries has been greatly weakened. In the face of these new conditions, the Chinese government has set the strategic goal of turning the mode of foreign trade from extensive to intensive development. During the 11th Five-year Plan period (2006-2010) the Chinese government adjusted import and export taxation policies and implemented the strategies of fostering foreign trade by science and technology, market diversification and putting quality first. It launched pilot projects for transforming and upgrading processing trade, improved financial and insurance services for import and export enterprises, and encouraged enterprises to accelerate technical progress and optimize product structure. With these measures, China enhanced the comprehensive competitiveness of its foreign trade. Most import and export enterprises withstood challenges of the international financial crisis, and China's foreign trade recovered soon after the crisis. During the 12th Five-year Plan period (2011-2015) China will make efforts to maintain its current competitive edge in exports, foster new advantages centering on technology, branding, quality and services at a faster pace, promote industrial transformation and upgrading, extend the value-added chain of processing trade, and the competitiveness and added value of enterprises and products. It will vigorously develop trade in services to promote balanced development between it and trade in goods. It will open the services trade wider to the outside world, promote service outsourcing, and try to expand the export of new services. It will improve and implement state policies in the fields of finance and taxation, banking and insurance, foreign currency management, customs clearance, inspection and quarantine, and logistics and transportation, in a bid to speed up trade and investment facilitation for the stable and healthy development of foreign trade.

Promoting energy conservation and emission reduction in foreign trade development. As early as in 1994, the Chinese government published China's Agenda 21 - White Paper on China's Population, Environment and Development in the 21st Century, setting goals on energy conservation and emission reduction for national economic and social development. In both the 11th and 12th five-year plans, the government made the reduction of energy consumption and CO2 emission intensity two obligatory targets. Since 2004 the Chinese government has lowered and even abolished export tax rebates for some energy-intensive, heavily-polluting and resource-based products, banned or limited the processing trade in some such products, and encouraged import and export enterprises to keep up with the world's advanced environmental standards. As a result, in recent years such products have seen their proportion in exports decreasing, while the export of new-energy, energy-conserving and environmental-friendly products has grown by a big margin. Most import and export enterprises above a designated scale have obtained ISO14000 certification or other environmental standard certifications. China will try to readjust its economic and industrial structure, accelerate the application of advanced energy-conserving and environmental technologies, and promote more balanced development between foreign trade and resource conservation and environmental protection.

Strengthening trade-related intellectual property protection. Strengthening intellectual property protection is necessary for China to comply with its international obligations. It is also an essential move if China seeks to transform its economic growth mode and build an innovative country. The Chinese government has made tremendous efforts in this regard, and made significant progress in legislation, law enforcement, publicity, training and enhancing the social awareness of IPR protection. In 2008 China promulgated the Outline of the National Intellectual Property Strategy, making IPR protection a national strategy. From 2006 to 2011, China published the Action Plan on Intellectual Property Protection for six consecutive years, putting in place over 1,000 concrete measures covering the fields of legislation, law enforcement, education and training, cultural communication and exchanges with the outside world. In 2010 China filed 12,295 applications for international patents in accordance with the Patent Cooperation Treaty, registering a growth rate of 55.6percent over 2009, which was the fastest increase in the world. China also rose from the fifth to the fourth place in terms of patent application in the world. At present, it is a common challenge facing all countries to strengthen foreign trade-related intellectual property protection, and a world trend to strengthen dialogue and cooperation in this area. The Chinese government will, under related international conventions and within its own legislative framework, strengthen exchanges and cooperation with other countries and regions for the healthy development of intellectual property.

Enhancing the quality and safety requirements of export products. Generally speaking, the quality of China's export products is constantly improving, and they are becoming more and more popular among consumers around the world. In 2009 and 2010, 11.032 million batches and 13.054 million batches, respectively, of China's export products were examined by inspection and quarantine authorities, with only 0.15 percent and 0.14 percent being substandard; the export values totaled 429.27 billion U.S. dollars and 552.18 billion U.S. dollars, respectively, with 0.12 percent and 0.13 percent, respectively, found substandard. In 2010 China exported 127,000 batches of food to the United States, with 99.53 percent up to standard, and 138,000 batches to the European Union, with 99.78 percent up to standard. According to a report from the Ministry of Health, Labor and Welfare of Japan on imported food, in 2010 tests on 20 percent of food imported from China found that 99.74 percent was up to standard, higher than that of food imported from the United States and European Union in the same period. However, a small number of Chinese enterprises still ignore product quality and safety to bring down cost, while some foreign importers turn a blind eye to quality and credibility, and try every means to bring down the price or even authorize Chinese producers to use substandard materials. All this harms the image of "made-in-China" products. To tackle these problems, in recent years, the Chinese government has improved laws and regulations on product quality and safety, strengthened supervision at every link, and strictly investigated and punished the few enterprises that had violated laws and regulations and caused quality problems. In March 2011, China launched the Year of Improving the Quality of Foreign Trade Products, through which it aimed to improve the mechanism of approval, certification and supervision of the quality and safety of foreign trade products, thereby enhancing the quality and safety of export products.

Raising import and export enterprises' sense of social responsibility. As China opens wider to the outside world, more and more enterprises have come to realize that along with development and expansion they should shoulder their corresponding social responsibilities. This can not only help promote social harmony and progress, but also enhance enterprises' competitiveness and capacity for sustainable development. Advocating the Scientific Outlook on Development and the idea of a harmonious society, Chinese governments at all levels encourage enterprises to enhance their sense of social responsibility, respect labor rights, safeguard consumers' rights and protect the ecological environment. In the meantime, the Chinese government encourages enterprises to accept relevant social responsibilities in the field of foreign trade and try to get necessary certifications. Since the new Law on Labor Contracts and its implementation regulations took effect in 2008, import and export enterprises have established the system of "five insurances" (old-age insurance, medical insurance, unemployment insurance, work injury insurance and maternity insurance), as well as a housing fund. The Chinese government regards it as an important task in the course of promoting foreign trade transformation and upgrading to enhance enterprises' sense of social responsibility. It is therefore determined to strengthen publicity and training in this regard, establish and improve a management system marked by integrity for import and export enterprises, improve public supervision on enterprises to make sure they fulfill their social responsibilities, carry out international cooperation in fostering and managing enterprises' sense of social responsibility, and call on import and export enterprises to constantly enhance their performance in this regard.

Promoting international cooperation in emerging industries of strategic importance. To develop new strategic industries is of great significance for China to realize foreign trade transformation and upgrading, and sustainable development. After over 30 years of reform and opening up, China has seen its overall strength grow remarkably, its science and technology advancing and its industrial system improving markedly, laying a solid foundation for the development of emerging industries of strategic importance. However, compared to developed countries, these industries in China are still in their infancy. In the wake of the 2008 international financial crisis, all the world's major economies have been developing emerging industries at a faster pace, and China has taken the development of these industries as an important task in the course of its industrial rejuvenation. To promote the priority areas, while giving play to the basic role of the market in allocating resources, the Chinese government has strengthened its policy guidance, regulated market order, improved its investment environment and encouraged enterprises to enhance their technological innovation capabilities. This basic policy of supporting emerging industries of strategic importance conforms to international trade rules. China is willing to strengthen communication with other countries in scientific research, technological development and capacity building, and work with them to create a new situation for international cooperation and development in emerging industries.

Conclusion

At present, the underlying impact of the international financial crisis, the protracted, arduous and complicated nature of the world economic recovery is manifesting itself, and the global economic structure and trade layout face in-depth readjustment. China will make new adjustments to its foreign trade, in an effort to turn foreign trade from scale expansion to quality and profit improvement, and from mainly relying on its low-cost advantage to enhancing its comprehensive competitive edge, thereby turning China from a big trading country to a strong trading power.

China's foreign trade is still hampered by many uncertainties and is bound to meet new difficulties and challenges. During the 12th Five-year Plan period China will open itself wider to the outside world as a driver for further reform, development and innovation, make full use of its advantages, strengthen international cooperation in all respects, and integrate itself into the world economy on a wider scale and at a higher level. China is willing to work with its trading partners to cope with the various challenges facing the world economy and trade, and promote its foreign trade to realize a more balanced, coordinated and sustainable development, and share prosperity and mutually-beneficial results with its trading partners.