China’s Economic Relations

 

 

China’s economic relations crucially depend on bilateral trade with the other nations of the world. The economic relations of China have undergone substantial changes since it has joined the World Trade Organization in the year 2001. As an aftermath of the WTO agreements, the Chinese government has followed the open trade policy.

The free trading system has further expanded the economic relations of China with its trade partners, uninterrupted by all types of trade barriers. This transition of Chinese economy to an open market-oriented economy has been highly beneficial for the all-round growth of China.

China’s Economic Relations with the US

China’s economic relation with US has expanded significantly with China joining the World Trade Organization in the year of 2001. Over the years China has emerged as the most potential market for American exports. US goods export to China amounted to $41.8 billion in 2005. This figure was 20% more than the corresponding figure in the year 2004.

When it comes to US farm exports, China happens to be the fourth biggest export market of US; the other three markets being Canada, Japan, and Mexico. During the period from 2001 to 2005, Chinese exports to US have also increased substantially. In monetary terms, the volume of exports from China to US has increased from worth 102 billion US dollars to 243.5 billion US dollars.

China’s economic relations with US took a different turn in 2005, with America acquiring around 23% of the good exports from China. This bilateral trade involved a trade deficit amounting to US $201.6 billion with China, the highest ever trade deficit seen in bilateral trade. There are different factors that resulted in this trade deficit. Some of the major factors are as follows:

• The US demand for Chinese goods exports was much higher than the amount that was exported from China.
• Restrictions imposed on US prevented the American traders to get into some crucial sectors of the Chinese economy.
• The China-US trade deficit is considered as a part of the US trade deficit with East Asia. As the trade deficit with Asia has continued to remain the same over the last decade, the trade deficit with China only added to this problem.

  To improve the economic relation between China and America, the US government has adopted different policies from time to time. The primary objective of all these policies is to push the Chinese government towards implementing a more liberalized economic structure. This is turn facilitates the process of correcting the imbalances of the Chinese economy. The US government is working with the reformers and political leaders of China to promote bilateral trade between the two countries. The US government is also trying to ensure China’s compliance with the commitments of the World Trade Organization.

  The US direct investments in China constitute an important part of China’s economic relations with US. The Chinese petrochemical sector, manufacturing sector, and hospitality industry are some of the preferred areas of investment by the US investors. More than 100 multinational corporations based in the United States are having their operations in China. US cultivated investment in China has been more than $54 billions.

  All these act as positive catalysts in facilitating China’s economic relations with US.

History of China’s Economic Relations with India: An Overview

The history of bilateral relations between China and India dates back to mid 1980s. The process of dialogue initiated by the governments of the two countries at that point of time was quite helpful in identifying the common trade interests. Efforts were initiated to make the most of their economic strengths so as to further the economic relations between India and China. In the year1984, China and India entered into a Trade Agreement, which provided them with the status of Most Favored Nation or MFN. It was in 1992 that the China and India got involved in a full-fledged bilateral trade relation. The year 1994 marked the beginning of a new era in the China-India economic relations. In this year a Double Taxation Avoidance Agreement was signed between India and China. The governments of both the countries also took the necessary initiative to turn into dialogue partners in the Association of Southeast Asian Nations (ASEAN).

Both India and China hold more or less same positions in the global economic scenario. This in turn has further enhanced the economic relations between the two countries. In 2003, Bangkok Agreement was signed between the two countries. Under this agreement both China and India offered some trade preferences to each other. India provided concessions on 188 products exported from China. On the other hand, China provided preferences on tariff for 217 products exported from India. The economic relations between the two nations is expected to improve aided by the flourishing IT and ITES sector, biotechnology industry, health sector, and financial sector. The bilateral trade between the two countries is expected to reach 20 billion US dollars by the year 2008. The projected figure for 2010 is 30 billion US dollars.

In 2003, China and India entered into an agreement to initiate open border trade via the Silk Route. The two countries have also shown interest to take part in a multilateral trade system as per the WTO commitments.

Around 90 Indian companies have set up braches in China. These companies mostly operate in the pharmaceutical sector, IT and ITES sector, and automotive industry. Some of these companies are Satyam, Wipro, TCS, Ranbaxy, and many more.

China has already been the top trading partner of India in the recent time. The economic relation between the two countries is considered to be one of the most significant bilateral relations in the contemporary global economic scenario and this trend is expected to continue in the years to come.

China’s Economic Relations with Japan

China’s economic relations with Japan go back to the 7th century AD. This was the time when maritime trade was flourishing between the countries. The kingdoms of Silla and Baekje, which were Korean kingdoms, essayed the role of middlemen. After the fall of the Baekje kingdom in 663 AD Japan had to trade directly with the Chinese as the kingdom of Silla was hostile as a result of the Tang imperialism, which was rampant at that point of time.

Even though the Japanese were not exactly adept at carrying on sea trade at long distances they were able to go on trading. Some historians are of the opinion that this was possible as a result of the expertise of the expatriates of the Baekje kingdom, who helped them amend the making of their ships and also improve on their sea faring skills.

After the Second World War the economic ties between the two countries resumed in the 1960s. This was brought about by the withdrawal of the economical experts from the country by the Soviet Russia. This incident compelled China to resume their economic ties with Japan as that was one of the few viable alternatives thye had at that point of time.

 

The diplomatic relations between the two Asian countries were formally initiated on the 29th of September, 1972. As per the statistics of the Ministry of Justice in December, 2006 there were 519,561 Chinese nationals staying in Japan. According to the statistics of the year 2005 there were 114,899 Japanese people staying in China and these figures include Hong Kong as well. During the year 2006 China exported goods worth 118.4 billion dollars to Japan and imported goods worth 92.9 billion dollars from Japan. Till the year 2006 Japan has invested 58.2 billion dollars in China.

In the recent year the political relations between Japan and China have not been exactly peaceful. However, it is not expected to have any bearing on the economic relations between the two Asian powerhouses. During the year 2004 China substituted the United States of America as one of the major trading partner of Japan.

The economic experts are of the opinion that macro-economic scenario in the two countries looks to be good enough for the economic relations between the two countries prosper. One of the major factors in this case is the reduction in the difference between the import and export of the country. The goods and services of China are being deemed as being more marketable and this has certainly played a crucial role in the economic relations between China and Japan.

 

China’s Economic Relations with Singapore

It had been expected that the bilateral trade between the two countries were supposed to amount to 12 billion United States dollars. It would have been a record at that point of time. As per the statistics of the Trade Development Board of Singapore, bilateral trade between the two countries started during the year 1958.

According to available data, the bilateral trade between China and Singapore amounted to 11.28 billion up till the month of November in the year 2000. This was an improvement of 33.09% from the amount reached at the same period in 1999. This amount placed China in the top six trade partners of Singapore. The improvement of 33.09% in the trade between Singapore and China was substantially more than the 23.95% addition in the complete trade volume of Singapore in the same economic period. The total value of the bilateral trades, participated in by Singapore, was 247.7 billion United States dollars.

During January to November, 2000 Singapore exported goods and services worth 4.84 billion United States dollars. This was an improvement by 39.97%. The country imported goods and services worth 6.4 billion United States dollars from China and this was an improvement of 28.33%.

The officers working at the Economic and Commercial Counselor’s Office in the Chinese Embassy in Singapore are of the opinion that bilateral trade in China and Singapore has increased as a result of the significant development of the economies of Singapore and China. Both the countries have also been able to make the most of their respective trade structures.

The experts have also observed that the ten best products that had been imported by Singapore from China were electronic goods that had high financial worth. Singapore also imported raw zinc from China, besides accessories and parts of equipments needed for autoprocessing. Also on the list are printed circuit boards, mini-motors, integrated circuits and disk drives of 3.5 inches. All these accounted for 35% of the total amount of goods imported by Singapore from China.

Of the products that were exported by Singapore to China petroleum and electronic goods occupied the pride of place. However, Singapore also exported other items like printed circuit boards, industrial refrigerating equipments and monointegrated circuits. All these items together were 37% of all the goods that had been exported by Singapore to China. As per the experts, the list of items that had been exported by Singapore to China reflects the fact that Singapore has the upper hand over China as far as oil refinery and electronics industries are concerned.