Business / Opinion

Opportunities are still aplenty in the nation

By Wang Haifeng (China Daily) Updated: 2014-02-10 10:05

China likely became the world's biggest trader in goods for the first time last year, overtaking the US for all of 2013. While this is no doubt a creditable achievement, it also has far-reaching implications on other economies.

The steady expansion of China's trade, particularly after the global financial crisis of 2008, has been a major factor in shoring up global growth, especially after major economies such as the eurozone and Japan reported double- and triple-dip recessions.

China's robust trade numbers also kept its economy on a strong footing and helped sustain full year economic growth at 7.7 percent. According to customs data, for the full year, exports grew by 7.9 percent to $2.21 trillion, while imports rose 7.3 percent from a year earlier to $1.95 trillion.

By virtue of China being the biggest trading country, its economy is now more integrated than ever with the global economy. China's market-oriented reforms, especially those associated with opening-up, have created investment opportunities for foreign and domestic investors.

Multinational enterprises have been the biggest gainers from China's reform push. Last year, foreign companies accounted for 46.1 percent of China's total trade in goods, while domestic private companies accounted for just 33.3 percent of foreign trade.

Developed nations continued to be China's dominant trading partners, closely followed by the Association of Southeast Asian Nations and other emerging markets. The EU and the US were the two biggest trade partners last year, accounting for 13.4 percent and 12.5 percent of China's foreign trade. ASEAN was the third-biggest trade partner with a 10.7 percent share, while Japan and South Korea accounted for 7.5 percent and 6.6 percent respectively. The BRICS economies - Brazil, India, Russia, and South Africa, in addition to China - collectively accounted for 7.5 percent of China's foreign trade.

China's trade prospects in the long term look bright because of the potential for sustained, steady economic growth. Although its annual growth rate may slow to about 7.5 percent this year, it would pave the way for further reforms.

There are already ample indications that China's next round of reforms will provide more consistent growth drivers, ones that can ensure economic growth of more than 7 percent over the next 10 or 20 years.

While the growth may be lower than earlier, it would still be higher than the rest of the world. China's economy and its per capita income are forecast to double by 2020 and, consequently, lead to a doubling of foreign trade.

It is also important to realize that the continuous expansion of China's foreign trade comes with more opportunities than threats to the rest of the world. China's three decades of globalization and reforms have allowed multinational firms, mostly from advanced economies, to explore various investment opportunities and generate profits. That trend is expected to continue over time.

Emerging and developing economies have benefited from market access and also from various spillover effects associated with cross-border trade, investment and financial cooperation.

China's domestic market and its sizable middle-class population are expected to create new market opportunities for global companies, while the outbound moves by Chinese companies in overseas markets are expected to prop up several foreign economies.

The author is director of the Institute for International Economic Research under the National Development and Reform Commission.



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