On the eve of U.S. President Donald Trump’s visit to Beijing, the relationship between the world’s two largest economies is still colored by a hefty trade surplus in favor of China.
Over time though, China’s moves to increase its own imports as the economy shifts toward a consumption-driven model and away from investments and exports may eventually put the U.S. trade account on a more even keel. The first-ever China International Import Expo (CIIE), to be held Nov. 5 to 10, 2018, in the National Exhibition and Convention Center in Shanghai, is aimed at helping foreign companies sell more in domestic markets.
China’s Commerce Minister Zhong Shan, writing in response to questions submitted by Bloomberg News, explains how steps being taken now will affect the nation’s trade profile in the future.
How will China address the trade surplus with its partners?
In recent years, China has sped up the implementation of active and effective import policies and introduced a number of policy documents to boost imports. It has effectively adopted a host of substantial measures to expand imports with fiscal and taxation policies, finance, streamlined management and an enhanced level of liberalization.
Such measures will be continued as follows: First, gradually reducing import tariffs. The general tariff level of China has decreased from 15.3 percent before its WTO accession to 9.8 percent at present, much lower than the average tariff of 46.6 percent for developing countries. China has signed 15 free trade agreements, covering 23 countries and regions. More than 90 percent of product varieties enjoy zero tariff, involving over one-fourth of China’s total imports and exports.
Second, improving fiscal, taxation and financial policies to expand imports. We will reduce tariffs on some daily consumer goods and import more consumer goods to optimize the import structure. We will also adjust the Catalog of Technologies and Products Encouraged for Import and encourage banking institutions to offer more support in import credit to expand the import of advanced technologies, equipment and key components.
Third, balancing supply and demand and promoting trade facilitation. We will step up customs clearance integration and improve inspection and quarantine systems to increase the level of trade facilitation.
Fourth, reforming and optimizing the management of imports. We will streamline administration, delegate power, strengthen regulations and innovate administration models to better manage and serve imports.
Fifth, improving the import promotion system. We will come up with new import models and advance parallel import of automobiles.
What’s the cause of the current trade surplus?
China does not deliberately seek a trade surplus. China’s relatively large trade surplus is primarily “surplus transfer”, which comes from undertaking the transfer of international division of labor and far-flung multinational expansion in the context of globalization. It is a result of market competition. Though China makes its name for trade surpluses, it is more than China that benefits from them.
Trade surplus in the process of industrialization is a common pattern for many countries, including the U.S., Germany and Japan, which saw trade surpluses running for a long time in the stage of industrialization. China’s surplus in foreign trade basically fits the pattern. The shift from a constant deficit to a sustained surplus in China’s foreign trade since the 1990s occurred when it adopted a path of new-type of industrialization and lifted its international industrial competitiveness.
What has prompted China to start an import expo next year?
President Xi Jinping announced at the Belt and Road Forum for International Cooperation in May 2017 that China will host the China International Import Expo (CIIE) starting from 2018. The CIIE speaks to China’s sincere wish to open its market to the world and its sense of responsibility as a big country to push for an open world economy.
When will the 2018 China International Import Expo take place?
The first CIIE is scheduled to be held from Nov. 5 to 10, 2018 in the National Exhibition and Convention Center in Shanghai.
The CIIE is the world’s first major expo dedicated to imports. It is a great invention in the history of international trade, and a flagship in global trade promotion. It is an international public good offered by China to promote trade liberalization and economic globalization.
The national trade and investment exhibition will invite not only developed countries, but also developing and the least developed countries. We will work with governments, industrial and business institutions, and international organizations to pool their strengths for the preparation.
China has a huge market with 1.3 billion people. In the coming five years, it is expected to import over $10 trillion of goods and services. The CIIE, with its potential to increase exports for countries around the world and enable the trade and economic cooperation between China and the rest of the world, will offer broad prospects for development.
Do you foresee changes in China’s future role in global trade?
China has been the world’s largest exporter and second largest importer of trade in goods for the past eight consecutive years from 2009 onward. It is also the second supplier of services in the world. China trades with over 230 countries and regions across the world on the basis of equality and mutual benefit. “Made in China” has increased consumer welfare, whereas the “China Market” has driven economic development in relevant countries.
I believe that this trend will continue. To be specific, China will continue to promote trade liberalization and facilitation, support the multilateral trading system, enhance cooperation with its global trading partners, and strive toward creating an open and integrated landscape of market, trade and commerce, in a bid to generate new demand in, inject new impetus into and make new contribution to world economic growth.