Trade policy of China

Last updated

China is the world's largest exporter, a position it has maintained continuously since 2010. It is the largest trading partner of over 120 countries, as of at least early 2024. As a member of the Regional Comprehensive Economic Partnership (RCEP), China is part of the world's largest trading bloc.

Contents

China began promoting overseas investment through the Go Out policy, which Jiang Zemin formally announced as a national strategy in 2000. After its 2001 entry into the World Trade Organization, China focused on export-led growth and became a major link in global supply chains. Through this process, China developed large trade surpluses and foreign currency reserves.

History

In 1999, the Chinese government began promoting investment abroad through the Go Out policy [1] and Jiang Zemin formally announced it as a national strategy in March 2000. [2] :56 The policy was implemented top-down from central government leadership. [3] :123 During Jiang's tenure, the policy greatly expanded China's investment and influence in global South countries, especially those in Africa and Asia. [3] :124

After its entry into the World Trade Organization (WTO) in 2001, China began pursuing export-led growth and became a key link in global supply chains. [4] :235–236 China formed the policy-based insurer Sinosure to support the exports and overseas business of domestic companies. [5] :77–78 Chinese businesses were encouraged to trade directly with foreign companies (instead of working through SOEs as previously). with the exception of certain state monopoly sectors deemed critical to national security. [6] :39 China's industrious and cheap labor also proved attractive to foreign investments. [4] :235–236 China's share of the global trade surplus increased rapidly after it joined the WTO. [7] :274 The country accumulated large trade surpluses and foreign currency reserves, which greatly increased government resources. [4] :235–236

In 2016, China joined the Transports Internationaux Routiers Convention (TIR Convention), a multilateral treaty reducing administrative boundaries for international transportations of goods in customs-sealed containers. [8] :149 The majority of TIR members also participate in China's Belt and Road Initiative and membership significantly facilitates China's trade. [8] :149

China is a member of the Regional Comprehensive Economic Partnership (RCEP). [8] :148 RCEP is the first trade agreement to include all three of China, Japan, and South Korea. [9] :176 In January 2022, RCEP became the world's largest trade bloc (in economic terms) and continues to be the world's largest as of at least early 2024. [8] :148

China provides foreign aid to advance both foreign trade objectives and foreign policy objectives. [10] :18 Since the 2018 creation of the China International Development Cooperation Agency to coordinate aid, China has placed a lesser emphasis on aid to advance foreign trade and a greater emphasis on aid to advance foreign policy. [10] :18

In 2020, China signed major free trade agreements with the European Union as well as fifteen different Asia-Pacific countries. [11] :259 As of at least 2023, China is the world's largest exporter, a status it has maintained continuously since 2010. [12] :88

Impact

As of at least early 2024, China is the largest trading partner of over 120 countries. [8] :147 Given the scale of China and its economy, the country's impact on international trade flow is major. [7] :272 As of at least 2024, the global current account surplus is largely composed of China, Europe, and the Middle East. [7] :274

See also

Related Research Articles

A special economic zone (SEZ) is an area in which the business and trade laws are different from the rest of the country. SEZs are located within a country's national borders, and their aims include increasing trade balance, employment, increased investment, job creation and effective administration. To encourage businesses to set up in the zone, financial policies are introduced. These policies typically encompass investing, taxation, trading, quotas, customs and labour regulations. Additionally, companies may be offered tax holidays, where upon establishing themselves in a zone, they are granted a period of lower taxation.

<span class="mw-page-title-main">Ministry of Finance (China)</span> Chinese government agency managing finance

The Ministry of Finance of the People's Republic of China is the constituent department of the State Council of the People's Republic of China which administers macroeconomic policies and the annual budget. It also handles fiscal policy, economic regulations and government expenditure for the state. The ministry also records and publishes annual macroeconomic data on China's economy. This includes information such as previous economic growth rates in China, central government debt and borrowing and many other indicators regarding the economy of mainland China.

<span class="mw-page-title-main">Ministry of Commerce (China)</span> Chinese government ministry

The Ministry of Commerce (MOFCOM) is an executive department of the State Council of the People's Republic of China that is responsible for formulating policy on foreign trade, export and import regulations, foreign direct investments, consumer protection, market competition and negotiating bilateral and multilateral trade agreements. it is the 20th-ranking department of the State Council. The current minister is Wang Wentao.

<span class="mw-page-title-main">China Development Bank</span> Development bank in the Peoples Republic of China (PRC)

China Development Bank (CDB) is a policy bank of China under the State Council. Established in 1994, it has been described as the engine that powers the national government's economic development policies. It has raised funds for numerous large-scale infrastructure projects, including the Three Gorges Dam and the Shanghai Pudong International Airport.

<span class="mw-page-title-main">Zhou Xiaochuan</span> Chinese economist

Zhou Xiaochuan is a Chinese economist. Zhou served as the governor of the People's Bank of China from 2002 to 2018.

Go Out policy or the Going Global Strategy is the People's Republic of China's current strategy to encourage its enterprises to invest overseas. The policy was announced as a national strategy by Jiang Zemin in March 2000.

Chen Yuan is a Chinese economist who is the current chairman of the China Association for International Friendly Contact (CAIFC). He was previously the chairman of the China Development Bank from March 1998 to April 2013. Chen Yuan then served as Vice Chairman of the National Committee of the Chinese People's Political Consultative Conference from 2013 to 2018. He is the eldest son of former Vice Premier Chen Yun.

The Berne Union, also known as The International Union of Credit & Investment Insurers, is an international non-profit association and community for the global export credit and investment insurance industry.

<span class="mw-page-title-main">National Development and Reform Commission</span> Chinese government agency for macroeconomic management

The National Development and Reform Commission (NDRC) is the third-ranked executive department of the State Council of the People's Republic of China, which functions as a macroeconomic management agency. Established as the State Planning Commission, the NDRC has broad administrative and planning control over the economy of mainland China, and has a reputation of being the "mini-state council".

National champions are corporations which are technically private businesses but due to governmental policy are ceded a dominant position in a national economy. In this system, these large organizations are expected not only to seek profit but also to "advance the interests of the nation"; the government sets policies which favor these organizations. The policy is practiced by many governments, in some sectors more than others, but by giving an unfair advantage against market competition, the policy promotes economic nationalism domestically and global pre-eminence abroad contrary to the free market. The policy also deters or prevents venture capitalism.

<span class="mw-page-title-main">State-owned Assets Supervision and Administration Commission of the State Council</span> Chinese government body

The State-owned Assets Supervision and Administration Commission of the State Council (SASAC) is a special commission of the People's Republic of China, directly under the State Council. It was founded in 2003 through the consolidation of various other industry-specific ministries. SASAC is responsible for managing state-owned enterprises (SOEs), including appointing top executives and approving any mergers or sales of stock or assets, as well as drafting laws related to SOEs.

The Agricultural Development Bank of China (ADBC) is a policy bank of China under the State Council. The bank was established in November 1994. Its main responsibilities are to raise funds based on national credit in accordance with national laws, regulations and policies, undertake agricultural policy financial services, act as an agent for the allocation of fiscal support funds for agriculture, and serve agriculture and rural economic development.

The Export–Import Bank of China is a policy bank of China under the State Council. Established in 1994, the bank was chartered to implement the state policies in industry, foreign trade, economy, and foreign aid to other developing countries, and provide policy financial support so as to promote the export of Chinese products and services.

<span class="mw-page-title-main">Li Ruogu</span> Chinese banker (born 1951)

Li Ruogu is a Chinese banker who served as chairman and president of the Export-Import Bank of China from 2005 to 2015.

<span class="mw-page-title-main">Sinosure</span> Chinese state-owned export insurer

China Export & Credit Insurance Corporation, commonly known as Sinosure, is a major Chinese state owned enterprise (SOE) under the administration of Ministry of Finance of the People's Republic of China serving as the provider of export credit insurance, in particular coverage for the export of high-value added goods in China.

Chinese foreign aid may be considered as both governmental (official) and private development aid and humanitarian aid originating from the People's Republic of China (PRC).

A state-owned enterpriseof China is a legal entity that undertakes commercial activities on behalf of an owner government.

Policy bank (政策性银行), or policy lender, refers to non-profit professional financial institutions established by the Chinese government with the goal of implementing the government's economic policies and carrying out financial business in specific fields. This measure separates policy finance from commercial finance and establishes a policy bank to undertake strictly defined policy businesses. Policy banks' sources of funds mainly rely on issuing financial bonds or borrowing from the central bank, and generally do not accept deposits from the public.

<span class="mw-page-title-main">China under Xi Jinping</span> Leadership of the Chinese Communist Party

Xi Jinping succeeded Hu Jintao as General Secretary of the Chinese Communist Party in 2012, and later in 2016 was proclaimed the CCP's 4th leadership core, following Mao Zedong, Deng Xiaoping, and Jiang Zemin.

Sovereign funds of China are mechanisms through which the Chinese state acts as a market participant with the goals of supporting key domestic economic sectors, advancing strategic interests internationally, and diversifying its foreign exchange reserves.

References

  1. 更好地实施“走出去”战略 2006年03月15日
  2. Liu, Zongyuan Zoe (2023). Sovereign Funds: How the Communist Party of China Finances its Global Ambitions. The Belknap Press of Harvard University Press. doi:10.2307/jj.2915805. ISBN   9780674271913. JSTOR   jj.2915805. S2CID   259402050.
  3. 1 2 Garlick, Jeremy (2024). Advantage China: Agent of Change in an Era of Global Disruption. Bloomsbury Academic. ISBN   978-1-350-25231-8.
  4. 1 2 3 Zhao, Suisheng (2023). The Dragon Roars Back: Transformational Leaders and Dynamics of Chinese Foreign Policy. Stanford, California: Stanford University Press. ISBN   978-1-5036-3415-2. OCLC   1332788951.
  5. Chen, Muyang (2024). The Latecomer's Rise: Policy Banks and the Globalization of China's Development Finance. Ithaca and London: Cornell University Press. ISBN   9781501775857. JSTOR   10.7591/jj.6230186.
  6. Jin, Keyu (2023). The New China Playbook: Beyond Socialism and Capitalism. New York: Viking. ISBN   978-1-9848-7828-1.
  7. 1 2 3 Lan, Xiaohuan (2024). How China Works: An Introduction to China's State-led Economic Development. Translated by Topp, Gary. Palgrave Macmillan. doi:10.1007/978-981-97-0080-6. ISBN   978-981-97-0079-0.
  8. 1 2 3 4 5 Curtis, Simon; Klaus, Ian (2024). The Belt and Road City: Geopolitics, Urbanization, and China's Search for a New International Order. New Haven and London: Yale University Press. ISBN   9780300266900.
  9. Ma, Xinru; Kang, David C. (2024). Beyond Power Transitions: The Lessons of East Asian History and the Future of U.S.-China Relations. Columbia Studies in International Order and Politics. New York: Columbia University Press. ISBN   978-0-231-55597-5.
  10. 1 2 Chen, Muyang (2024). The Latecomer's Rise: Policy Banks and the Globalization of China's Development Finance. Ithaca and London: Cornell University Press. ISBN   9781501775857.
  11. Marquis, Christopher; Qiao, Kunyuan (2022-11-15). Mao and Markets: The Communist Roots of Chinese Enterprise. Yale University Press. doi:10.2307/j.ctv3006z6k. ISBN   978-0-300-26883-6. JSTOR   j.ctv3006z6k. S2CID   253067190.
  12. Brown, Kerry (2023). China Incorporated: The Politics of a World Where China is Number One. London: Bloomsbury Academic. ISBN   978-1-350-26724-4.