The nation's foreign trade industry has been growing over the past 60 years since the establishment of the People's Republic of China (PRC). It has developed from a planned economy to a socialist market economy and has transitioned from being self-isolated to opening up.
“Made in China” is a concept that has gained worldwide popularity as China's exports have increased. A US writer once said, “Without Made-in-China, you can't survive a single day; you'll have no clothes, no shoes, and your children will have no toys and no gifts at Christmas.”
When the PRC was founded in 1949, the country's annual foreign trade volume was a meagre US$1 billion. Now, 60 years later, the daily average trade volume has reached US$7 billion, a growth of 2,500 times. According to experts' predictions, China will soon replace Germany to become the world's largest exporting country.
60 years of progress for foreign trade-oriented enterprises
The expansion of foreign trade franchises has provided better opportunities for companies engaging in foreign trade. In the era of the planned economy, foreign trade in China was strictly controlled in that it could only be conducted by the state-run foreign trade companies, which were a little more than 100 in number, counting their branches nationwide as well. Today, the number of companies with foreign trade authorizations has risen to nearly 800,000.
“There are two distinctive phases in the development of China's foreign trade companies. During the 30 years before the Reform and Opening-Up Policy, the foreign trade in the country was mainly conducted by several state foreign trade companies. Few enterprises were permitted to engage in foreign trade by themselves. Since 1978, when the Reform and Opening-Up Policy was introduced, the restrictions on foreign trade have loosened. Various industrial trade companies began to emerge, while large state-owned factories were also granted with the same permissions. Later on, foreign-funded enterprises were also allowed to conduct their own foreign trade. In recent years, especially following China's accession to the WTO in 2001, the policy concerning foreign trade has loosened even more, resulting in more companies engaging in foreign trade and the mushrooming of private enterprises who started to look overseas,” said Bai Ming, deputy director of the international market research department at the Chinese Academy of International Trade and Economic Cooperation (CAITEC).
Media reports say that at the end of April this year, the number of foreign trade dealers in China has reached 755,000, including 24,000 state-owned enterprises, 320,000 foreign-funded companies and another 411,000 businesses in other parts of the private sector.
Bai believes that more companies participating in international trade will mean more opportunities for exports. However, he also warns that an excessive number of foreign trade dealers at the same time will generate disorganised and unnecessary competitions, unless they can optimize the industrial structure.
Export sector calls for reshaping
Exports, internal investment and consumption are known as three driving powers of the Chinese economy. Years of development have transformed China into an exported-oriented economy, as exports account for a great percentage of the country's GDP. Zhejiang Province leads the country in exports. Despite the financial crisis that has caused the world's demand to shrink, exports still contributed to as much as 49.9 percent of the province's GDP in 2008.
The financial crisis has largely reduced the entire global market to a sluggish state. Major Chinese trading partners, such as the US and the EU, were both deeply impacted by the downturn, therefore impairing China's exports. Trade protectionist measures of some countries have also added to the pain of Chinese exporters.
“Export-oriented businesses are in compliance with our country's present conditions. What the export-oriented companies should do is to upgrade their production structures in targeting the high-end products, as these products bring bigger profits,” said Bai. “The structural optimization is supposed to be carried out in the entire string of the industry – upgrading the manufacturing facilities, stepping up staff training and introducing more talented people.”
This blog was first published in Chinese on September 28, and translated by Maverick Chen.