Foreign Trade with China

Since the 1970 's, Deng Xiaoping introduced the wave of liberalization in China. This is one of the main reasons why the rise of China has become one of the world economic powers. In the last 25 years of this century, the Chinese economy has grown 5% annually and has undergone extensive economic growth. This is important for the country as the country's gross domestic product (GDP) has quadrupled and 400 million citizens have been released from the threat of poverty.

China's foreign trade is completely monopolized by the state. In 1979, China relaxed trade restrictions, paved the way for relatively small foreign investment and trade activities. By the early 1990s, the annual total export value was about $ 92 billion and the import value was about $ 104 billion (Encarta 98). Due to the spread of human rights practices and piracy in China, the trade relations between the United States and China was very tense in the early and mid 1990s. Because of these tension relations, the position of "the most privileged country" is in danger. If the amount of trade between them declines, the cancellation of MFN's position may harm the economies of both countries.

In 2004, China's foreign trade grew rapidly. The amount of trade in the country amounts to 1 trillion dollars and foreign investment amounts to 60 billion dollars. There are still favorable factors this year, and China 's foreign trade has maintained the momentum of development. Exports are driving growth in economic growth. In the first quarter of this year, the export volume reached US $ 156.2 billion and the import amount reached US $ 142.76 billion (China, online, 05/2005, 10: 40)

The reform of the foreign trade system made an important contribution to the rapid expansion of Chinese foreign trade. In 1978, the total international trade in China was only $ 20.6 billion, but in 1992 it increased to $ 165.6 billion - this is an eight-fold increase. Exports also increased from $ 9.75 billion in 1978 to $ 84.9 billion in 1992 (Zhang, 1995). The pre-reform foreign exchange system in China features strict management of foreign exchange transactions and strictness of exchange rate of the RMB. In this case, it is impossible to respond flexibly to price price changes between China and the world. Depending on changes in money supply and foreign exchange needs, it is impossible to make prompt adjustments as necessary. This is consistent with the state's advanced control over Chinese foreign trade.