FOREGIN TRADE

1
FOREGIN TRADE

• October 17, 2001
• JMSC6027

2
MOFTEC

• Ministry of Foreign Trade and Economic
  Cooperation
• www.moftec.gov.cn
• latest figures show August data

3
State Statistical Bureau

• http//www.stats.gov.cn/
• latest figures include September data

4
China Customs

• http//www.customs.gov.cn/
• latest figures show May data

5
US China Business Council

• www.uschina.org
• U.S. lobby group
• you can download the entire document of US China
  WTO market access agreement from the website.

6
How important is China trade

• Worlds 7th largest exporter, 9th largest
  importer in 2000.
• But its total share of world trade is well below
  10 percent. With WTO membership, it is expected
  to rise to 10 pct in 2005.

7
Foreign Trade in Domestic Economy

• Internally, trade to GDP ratio is about 45 pct in
  2000 and will rise to 65 pct in 2005.
• 90 pct of exports are low-end manufactured goods.
• Chinas imports are likely to rise faster than
  its exports after WTO because of removal of
  tariff barriers.

8
Processing Trade

• Manufacturing of foreign products in China for
  re-export.
• It accounts for half of Chinese exports.
• WTO will further boost processing trade as more
  multi-nationals moved production to China.

9
China trade in global downturn

• Sharp contraction in trade growth.
• Q1-Q3 - exports 195 billion, up 7 pct
  imports 181.4 billion, up 11.2 pct
• trade surplus 13.6 billion, down 5.6 billion
  from a year ago.
• Estimated 2001 surplus 10 billion, down 15
  billion from 2000.

10
Capital Flight

• End of 2000, Chinas forex reserves totalled
  165.5 billion, up 10.9 billion from 1999.
• In 1998, Chinas trade surplus was over 40
  billion, but forex reserves rose only by 5
  billion. Some 35 billion was missing.
• Most common route is through foreign trade.

11
Impact of Capital Flight

• Theft, money laundering.
• Incur unnecessary foreign debt.
• In fact, some foreign loans contain domestic
  capital that has fled abroad -- it raises the
  cost of borrowing.
• Unfair competition.

12
RMB black market

• Demand Travelling, studying abroad, etc.
• Foreign currency as a store of value
• Supply Chinese workers foreign currency
  remittance, foreign tourists, etc.
• Ultimate solution convertibility.