China should transform its foreign trade growth perspectives
Source: People's Daily Online Date: 2006-09-05
Vice Minister of Commerce Wei Jianguo says there is still great potential for China to expand her foreign trade because her trade with developing countries is still very low, however China still needs to speed up her growth of foreign trade.
In an interview with Economic Daily, Wei Jianguo said that by 2010 China's per capita income would reach US$ 2000 predicted that China would become the world's first or second greatest trade power by 2020. However currently, China's trade quality and efficiency are still not good enough, readjustments still needs to be made to growth perspectives.
Wei Jianguo says that there are fewer brand products in China's export which results in lower profit. 55% of export products come from processing and foreign enterprises. China still lacks her own core technology and sales network which can reap abundant profits. China is a big exporter of DVD players, but among the 57 key technologies in DVD, China only controls 9. Only less than 20% of export enterprises have their own trade marks and less than 10% of the enterprises have their own brands. China is strong in production capacity, but weak in exchange capability. Therefore China is a manufacturing center, but the big profit lies in circulation field for which China only occupies a small proportion and lies in the lower end of the international division of labor.
In import, China is a big buyer, but doesn't have the appropriate price setting. Due to this situation, the cost of resources and energy import becomes higher and higher. By November 2005, China had spent an extra US$ 30 billion on 42 types of resources and energy products such as crude oil, steel, plastic and iron ore which are under key supervision by China.
Under such circumstances, China must speed up her means for transforming foreign trade growth. Firstly, core competitiveness should be improved. There must also be independent innovation and international marketing capability. Chinese enterprises must develop their own brand and have their own intellectual property products in order to increase profit. China should develop her own multinational companies. Secondly, China's processing trade should further develop into deep processing and finish machining and change China's position in the international division of labor.
Thirdly, China should develop green trade by restricting export of resources and high energy consuming products in order to protect strategic resources and natural environment while importing resources, energy and technology.
Fourthly, China should strengthen resources import and export coordination mechanism in order to expand the long term trade proportion and complete the future market.
Fifthly, service trade should be developed. China has to adapt to the new trend of the international service trade to contract international service project and improve the domestic service level.
Wei Jianguo says that from this year onwards, trade surplus, frictions and foreign trade relations will be key issues that influence the healthy development of China's international market. China has entered into an area of trade frictions with Europe and America. The main sources of friction are various kinds of international trade protectionism. To deal with the frictions, China should take it as normal but also take it seriously. Chinese enterprises should consolidate their self-discipline, protect workers' and farmers' interests, avoid waging a price war, and when there is a case, they should actively respond to protect their own interests.
Wei Jianguo says China should readjust her relations with major trade partners and international organizations. The basic principle for dealing with such relations is peace, development and cooperation while taking big trade powers as key partners, putting surrounding countries first, taking developing countries as basis and multilateral trade as important platform. "China should be flexible, but also practical".
From now on, trade relations between China and other trade powers including the US, Europe and Japan will continue to be of strategic importance in China's foreign trade, the mainstream of common development will not change and the framework of co-existence of cooperation and competition will not change.
"The relations with developing countries need new adjustment. China and other developing countries will inevitably have a competitive relationship with each other for example in the textile industry. China's development will bring about some pressure for other developing countries. Therefore, we must continue to keep and develop friendly relations with them and promote common development", says Wei Jianguo.
The vice minister says that China will actively expand the integrated effect of policies in foreign aid, resource development, expanding import and debt reduction or cancellation. Trade frictions with developing countries need more attention and trade barriers should be eliminated in order to achieve a win-win situation.
Wei Jianguo says that China needs to have new cooperation with bordering countries. The economic and trade relations should be strengthened and mutual trust be improved.
"In the long run, we should deal properly with relations between economic and political benefit, national and regional benefit, competition and cooperation, bordering countries and other trade partners."
China should also readjust relations with international organizations. With the improvement of China's economic strength, China needs to participate in making the international rules. China should change her passive role of accepting international rules into active participation in order to promote the establishment of a new just and rational international political and economic order.
