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China has overtaken the United States to become the world's biggest goods trading nation. What's the next step?
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Editor's Desk
Print Edition> Editor's Desk
UPDATED: May 19, 2014 NO. 21 MAY 22, 2014
Living Up to the Title
China is undeniably a giant in global trade today. Over the past 35 years, foreign trade has played an important role in speeding up its economic growth, creating millions of job opportunities at home and building up the nation's comprehensive strength. Thanks to trade growth, China now holds the largest foreign reserve, and has emerged as the world's second largest economy. And it has also continually ascended into the ranks of the top trading nations in terms of trade volume during the last decade, overtaking Japan in 2004, and surpassing Germany in 2009. As initial WTO statistics indicate, China registered $4.15 trillion in merchandise trade last year, outdoing the United States to stand as a country with the largest volume of commodity trade.

Despite this thrilling performance in the trade sector, Chinese officials and researchers invariably agree that China has yet to develop into a truly "strong" trading country. Good reasons have been given to expound this argument. For one thing, labor-intensive goods still account for a fairly sizeable share of Chinese exports. This means China is still at the lower end of the global manufacturing chain, which destines many "Made-in-China" products to have only low added values and profit margins. An often-cited instance has been that China has to make 8.4 million pairs of shoes to trade for a Boeing passage jet that sells at $21 million. Moreover, China does not boast many core technologies or top-notch brands compared with world trade powerhouses like the United States and Germany. Consequently, Chinese companies have proven much less competitive, especially in the high-end market. Take steel for another example. Although China is now the biggest steel producer in the world, it nonetheless has to import high-end steel from Japan and other industrialized nations.

What should China do to catch up? Experts have proposed several priorities, including emphasizing brand building and core technologies, developing services trade, and optimizing China's trade structure—giving more incentives to support the export of hi-tech and high value-added goods on the one hand, and ensuring key technologies, equipment and strategic raw materials are duly imported on the other. Clearly, all of these cannot be achieved in one go.

China needs to become a stronger trading nation, not in terms of "quantity," or trade volume, but "quality"—more competitive products with high added values. But that is not the only goal for the country. It should undertake more responsibilities in such areas as promoting a healthier global trade environment, on which all nations rely to pursue trade development, and building a more cooperative and harmonious relationship with all its trade partners. In that way, China will become a real trading giant worthy of that title.

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