Chinese imports benefit domestic, global economy#Oriental Outlook#-Sino-US

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Chinese imports benefit domestic, global economy

The first China International Import Expo was held in Shanghai in November amid the trade tensions between China and the United States, and more than $57.8 billion worth of deals were made at the expo.

The deals covered high-end intelligent equipment, consumer electronics and appliances, automobiles, apparel, accessories and consumer goods, food and agricultural products, medical equipment, and healthcare products and services.

While China’s exports were pivotal for the country’s international trade and economic growth, people have often overlooked the fact that the imports also played an important role in the country’s development and benefited the world.

In the 44th issue of 2018, the Oriental Outlook magazine under the Xinhua News Agency ran a cover story on the role of imports in China’s development and its benefits to the world.

Below is an excerpt of the article.

For a long time, exports have been one of the three major driving forces behind China's economic growth, and most people might not know that imports have also played a vital role in turning China into a top exporting country.

China had shaky industrial infrastructure at the beginning of the reform era, and there was a big gap with industrialized countries in terms of industrial scale, technology and management.

From the strategy of importing a production line in the beginning and then enlarging imports, China gained advanced technologies, equipment and industrial products, which helped it to improve its industrial level.

It was a pragmatic choice as a latecomer to open the door and expand imports at that time.

In 40 years, China’s imports have increased from 18.7 billion yuan to 12.5 trillion yuan a year, with an annual growth rate of 18.1 percent on average. China emerged as a huge market, providing opportunities to other countries and regions.

According to the World Bank, China’s total imports of goods and services accounted for 9.7 percent of global imports in 2016, increasing from 8.4 percent in 2011.

China has realized the importance of opening up for economic development and will stick to it. Through imports, China has gained advanced equipment for innovative development and consumer goods to meet national demand.

China has recently held the first import-themed expo in Shanghai, demonstrating its commitment to opening up, while the world faces the challenge of protectionism and unilateralism in the age of globalization and multilateralism.

Role of imports

From the first home-made refrigerator to the first imported airplane, ship, locomotive and first batch of agricultural machinery, China National Machinery IMP&EXP Corp (CMC) has played an important role in all.

Shi Yonghong, vice president of the China Chamber of Commerce for Import & Export of Machinery & Electronic Products, said China needed to import lots of complete sets of equipment and production lines to improve its industrial level in the beginning, but it needed to focus on important ones due to lack of foreign exchange.

Established in 1949, CMC was the major channel to import foreign advanced equipment and electronic products, which also demonstrated its importance in bringing in foreign advanced equipment and technologies.

China had no container production lines before the opening up. The standardized container has reshaped global transportation.

By the end of 1978, When Mei Haolin, a manager at CMC, knew that a Hong Kong company would build a new container factory, he realized the significance of building such a factory in China.

After several rounds of negotiations, the cooperation finally helped the Guangzhou Shipyard Container Factory to gain the advanced technologies and production lines in 1980.

“Through hard work, CMC and Guangzhou factory finally added the container to China’s export inventories, using the processing fees of three years to acquire advanced equipment and technologies worth of $8 million,” Mei said.

In 1983, the country’s tech authorities expected to import advanced technologies, starting from producing refrigerator, Gu Xuexiang, a former tech consultant for CMC, said.

China talked with Japanese company Toshiba to import the technologies, but Toshiba refused to export the technologies of 1980s to China and only offered the technologies of 1950s, Gu said.

Gu later learnt that Dutch company Philips had automated production lines, and CMC decided to import the advanced European technologies. China’s first automated production line was finally set up in Beijing refrigerator factory.

“The imports of advanced European technologies helped us avoid a detour, making historic contributions to the development of China’s refrigerator industry,” Gu said.

Expanding the imports of advanced technologies and equipment is still a key part of China's imports in recent years. CMC should also adjust its imports to meet with the country’s development.

Zhang Jianping, director of the Research Center for Regional Economic Cooperation at the Institute of International Trade and Economic Cooperation, said importing advanced technologies and important equipment can make up for the shortcomings, helping develop related industries and foster new momentum of economic growth.

At the China International Import Expo in Shanghai, CMC signed an agreement with the Shanghai Waigaoqiao Group Co on jointly building the international intelligent equipment innovation service center.

Wu Yue, vice president of CMC, said that the center will be a high-end platform for international companies to show intelligent equipment such as numerical control machines, industrial robots and intelligent medical devices.

‘World market’

The photo of a boy holding a can of Coca Cola on Great Wall was on the cover of the US magazine Time in 1984, which showed that the drink was rare for the Chinese at that time, but now it is so popular in China.

Some figures have shown China to be an open market. In 1978, China’s import was only 0.8 percent of the global market, ranking 29th place, and in 2017, China took 9.7 percent, ranking the second. The value of total imports was $10.9 billion in 1978 and $1.84 trillion in 2017.

Due to a lack of foreign currencies, China had to focus on importing important equipment and technologies in the beginning, but after joining the World Trade Organization, China accumulated a large amount of foreign currencies and especially in 2006, its foreign exchange reserves exceeded $1 trillion.

Meanwhile, the per capita income has also increased at a high speed from 1,500 yuan per month in 2005 to over 5,000 yuan per month in 2015. The demand for imported products has expanded.

In 2013, overseas purchases through proxy shoppers reached over 70 billion yuan, and in 2014, the market doubled to 150 billion yuan. Customs data showed that in 2017, the value of imported consumer goods reached 1.1 trillion yuan.

Song Yaqian, who runs a shop which sells imported goods in Dalian, Northeast China’s Liaoning province, said that six years ago, a can of milk powder might take a long time to sell, but now she could sell about 100 cans in a month.

Following the increasing demand for imported consumer goods, China has also developed friendly relations with more countries.

The trade volume between China and countries along the Belt and Road routes has grown quickly. In 2017, China imported $666.05 billion goods and services from countries along the routes, a year-on-year increase of 19.8 percent, accounting for 39 percent of China’s total imports.

South Pacific island countries have close trade relationship with China. They target China’s huge market, such as in 2016, Tonga exporting 240,000 tons of pumpkins to China.

Zhang Jianwei, a trader, said that he had imported 190,000 pieces of hand-made soap produced in Syria to sell online and offline since 2016. He also imported 10,000 carpets from Turkey every year.

Contributing to global growth

More than 3,000 companies from 130 countries and regions took part in the first import expo in Shanghai, and over 400,000 traders visited the expo. Deals worth more than $57.8 billion were made, about 2.5 times the GDP of Cambodia in 2017.

President Xi Jinping said at the expo that “China will remain a strong advocate of openness at the global level, and will continue to act as a stable engine of global growth, a big market with enormous opportunities and an active supporter of global governance reform.”

Toshihiro Ueda, chief representative in China for AGC Group, a glass and industrial ceramics maker, said China has changed from “world factory” to “world market,” and in past 40 years, Chinese consumption capability increased a lot.

China has good prospects in the market of high-end vehicles and tablet computers, and AGC as the upstream enterprise realizes China as the most important market, he said.

Great changes have taken place in the development of global trade in the 21st century. In 2001, global imports stood at $7.8 trillion, and the figure reached $22.3 trillion in 2012, increasing 158 percent, but since 2014, the figure started to decline.

Against this backdrop, China still held the import expo, which showed its opposition to protectionism and its support for globalization, said Guan Zhaoyu, deputy researcher at the Chongyang Institute for Financial Studies under Renmin University of China.

In fact, since China joined the WTO in 2001, its imports have increasingly become an important driving force for economic growth in neighboring Asian countries, acting as an important pillar of many industries in these countries.

Data shows that as early as 2003, China’s imports accounted for 32 percent of total exports of Japan, 36 percent of South Korea and 30 percent of ASEAN countries.

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