A Research On China's Degree Of Dependence On Foreign Trade

Since China has implemented the reform and open policy, the degree of dependency on foreign trade has climbed up successively. After China entered into the World Trade Organization in 2001, the foreign trade environment has improved further, and the degree of dependency on foreign trade climbs up suddenly. The ratio of both export and import to GDP reflects the degree of dependence of one country or region's economy on foreign trade in a certain period. In the last few years, the fast increase of China's degree of dependence on foreign trade has caused much concern. They have different views on this problem. Whether the degree of dependency on foreign trade in our country is high or not? What factors can influence it? Is the calculation reasonable? Which risks will exist with the rapid increase of the degree of dependence on foreign trade? These questions are what this paper tries to answer.With the globalization, the economical growth, the government policy as well as the rapid development of processing trade, the degree of dependency on foreign trade has climbed up suddenly. There are three main periods in the change of China's degree of dependence on foreign trade: the steady increase period (1978—1989), the fluctuant and slow increase period (1990—1999), and the fast increase period (2000—2004). Despite there exists overestimation in some degree considering the effects of market structure, exchange rate etc, the high degree of dependency on foreign trade has been able to bring all sorts of risks and the adverse effect to the domestic economical development.However, when we discuss the degree of dependency on foreign trade, we cannot consider it independently. It cannot get the significance conclusion. We should discuss it with the foreign trade safety of our country. Only do this, we can make the political judgment according to the degree. In another word, whether the degree of dependency foreign trade is high or low should be compared to the foreign trade risk that it causes and the ability that our government can be able to control the risks. This paper analyzes foreign trade safety of our country through our country's degree of dependency on foreign trade from four aspects: the ownership of foreign trade enterprise, the mode structure of foreign trade, the commodity composition of foreign trade and the region structure of foreign trade. From the ownership of foreign trade enterprise, The diversification trend of the ownership of foreign trade enterprise was obvious in recent years, but the main ownership of foreign trade enterprise is foreign-funded enterprise. The competitive power of foreign-funded enterprise cannot represent the competitive power of the state-owned enterprise and the private enterprise. So we must encourage the rapid development of the private enterprise in our country and speed up multiplication of the ownership of foreign trade enterprise. From the mode structure of foreign trade, the high degree of dependency on foreign trade of our country is mainly caused by the processing trade. It cannot represent the true level of our country that how much do we participate the international division of labor. And it does not favor the development of our country foreign trade and the national economy in the long-term view. From the commodity composition of foreign trade, the commodity composition of foreign trade in our country is in the process of optimizing continuously. And the duty is still heavy. From the region structure of foreign trade, the import and export market of our country is too centralized and dissymmetrical. It will bring risks to foreign trade, so we should carry out the strategy of market multiplication further.Lastly the author proposes some suggestions: expanding domestic demand, carrying out the principle of national treatment, speeding up the step of the escalation of processing trade, changing the growth way of foreign trade, establishing the safeguard system of important resources and establishing a better system of foreign trade indexes.