China Foreign Trade Policy Analysis

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CHINA’S FOREIGN TRADE POLICY Introduction Trade has been a very significant factor of the People Republic of China. Since the foundation of republic in 1949, China’s trade institution developed into partially modern system. The drive to modernize the economy began in 1978 with sharp acceleration in commodity flows and greatly improved efficiency in economic transaction. In the coming years economic reforms were adopted by the government to develop a socialist market economy. This type of economy combined with central planning with market mechanisms. The changes resulted in decentralization and expansion of domestic and foreign trade institutions. In 2003, china surpassed the USA as the largest trading nation in the world and plays a vital…show more content…
Exports earned foreign currency which was used to fund domestic development and to purchase foreign technology. Imports of capital goods, industrial supplies and foreign loan & investment were used to improve the infrastructure in energy, transport, telecommunications, etc. Foreign trade organizations were reorganized and control of imports and exports was relaxed or strengthened depending on balance of trade and level of foreign exchange reserve. Because of the expansion of exports in the mid 1980s a large foreign reserve surplus and decentralized management of foreign trade imports surged. Huge, uncontrolled purchases of consumer goods led to trade deficits in 1984 and 1985, resulting in the introduction of an import and export licensing system, stricter controls on foreign exchange expenditures, and the devaluation of the yuan in order to reduce the trade deficit and ensure that machinery, equipment, and semi-finished goods, rather than consumer goods, were imported. In 1985 China had foreign exchange reserves of US$11.9…show more content…
On November 11, 2001, China formally joined the WTO as the 143rd member of the multilateral economic institution that governs over 90 percent of global trade. China promised to offer WTO members greater market access to its agriculture, manufacture and service sectors by lowering tariff barriers, removing nontariff measures and bringing its domestic laws, regulations and other trade-related measures into conformity with WTO rules. WTO membership enabled China to become fully

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