Continuing our look at China with a background overview critical
for importers…
China ranks seventh worldwide in services’ output. High power
and telecom density ensure this sector remain on high-growth
trajectory in the long-term.
China’s global trade exceeded $1.758 trillion at the end of
2006.. It first broke the 1 trillion mark ($1.15 trillion) in
2004, more than doubling from 2001. At the end of 2004, China
became the world’s third largest trading nation behind the
United States and Germany [20]. The trade surplus however was
stable at $30 billion. (>40 billion in 1998, <30 billion in
2003). China’s primary trading partners include Japan, U.S.,
South Korea, Germany, Singapore, Malaysia, Russia, and The
Netherlands. According to U.S. statistics, China had a trade
surplus with the U.S. of $170 billion in 2004, more than
doubling from 1999. Wal-Mart, the United States’ largest
retailer, is China’s 7th largest export partner, just ahead of
the United Kingdom. Out of the 5 busiest ports in the world, 3
are in China.
The PRC has experimented with decentralizing its foreign trading
system and has sought to integrate itself into the world trading
system. In November 1991, the PRC joined the Asia-Pacific
Economic Cooperation (APEC) group, which promotes free trade and
cooperation in economic, trade, investment, and technology
issues. In 2001, China served as APEC chair, and Shanghai hosted
the annual APEC leaders meeting.
During his 1999 visit to the United States, Premier Zhu Rongji
signed a bilateral Agricultural Cooperation Agreement, which
lifted longstanding Chinese prohibitions on the import of
citrus, grain, beef, and poultry. In November 1999, the United
States and PRC reached a historic bilateral market-access
agreement to pave the way for the PRC’s accession to the World
Trade Organization (WTO). As part of the far-reaching trade
liberalization agreement, the PRC agreed to lower tariffs and
abolish market impediments after it joins the world trading
body. Chinese and foreign businessmen, for example, will gain
the right to import and export on their own – and to sell their
products without going through a government middleman. Average
tariff rates on key U.S. agricultural exports dropped from 31%
to 14% in 2004 and on industrial products from 25% to 9% in
2005. The agreement also opens new opportunities for U.S.
providers of services like banking, insurance, and
telecommunications. After reaching a bilateral WTO agreement
with the EU and other trading partners in summer 2000, the PRC
worked on a multilateral WTO accession package. To increase
exports, the PRC has pursued policies such as fostering the
rapid development of foreign-invested factories, which assemble
imported components into consumer goods for export. The PRC
joined the WTO on December 11, 2001, after 15 years of
negotiations, the longest in GATT history.
The U.S. is one of China’s primary suppliers of power-generating
equipment, aircraft and parts, computers and industrial
machinery, raw materials, and chemical and agricultural
products. However, U.S. exporters continue to have concerns
about fair market access due to China’s restrictive trade
policies and U.S. export restrictions. Intellectual property
theft makes many Western companies wary of doing business in
mainland China. Some Western politicians and manufacturers also
say the value of the Yuan is artificially low and gives export
from mainland China an unfair advantage. These and other issues
are behind the recent push for greater protectionism by some in
the US Congress, including a 27.5% consumer tax on imports.
Trade volume between China and Russia reached $29.1 billion in
2005, an increase of 37.1% compared with 2004. A spokesman for
the Chinese Ministry of Commerce, Van Jingsun, said that the
volume of trade between China and Russia could exceed 40 billion
dollars in 2007 .
China’s export of machinery and electronic goods to Russia
grew 70%, which is 24% of China’s total export to Russia in
the first 11 months of 2005. During the same time, China’s
export of high-tech products to Russia increased by 58%, and
that is 7% of China’s total exports to Russia. Also in this
time period border trade between the two countries reached $5.13
billion, growing 35% and accounting for nearly 20% of the total
trade. Most of China’s exports to Russia remain apparel and
footwear.
Russia is China’s eighth largest trade partner and China is
now Russia’s fourth largest trade partner, and China now has
over 750 investment projects in Russia, involving $1.05 billion.
China’s contracted investment in Russia totaled $368 million
during January-September of 2005, twice that in 2004.
Chinese imports from Russia are mainly those of energy sources,
such as crude oil, which is mostly transported by rail, and
electricity exports from neighboring Siberian and Far Eastern
regions. In the near future, exports of both of these
commodities are set to increase, as Russia is building the
Eastern Siberia – Pacific Ocean oil pipeline with a branch to
Chinese border, and Russian power grid monopoly UES is building
some of its hydropower stations with a view of future exports to
China.
