Views On China's Foreign Trade Dependence

On the background of the daily accelerating economical globalization, foreign trade is becoming more and more important in the national economy. Foreign Trade Dependence (FTD) not only reflects the national economy's exoteric degree, but also weighs the national economy's dependence on the international market. Kuznets compared the foreign trade dependence of some countries from the mid-19th century to the 1970s, and than concluded that the high foreign trade dependence associated with the size of its economy into a negative balance. The reason is that small countries have small domestic markets, the small inherent market size can be overcome d only through the development of foreign trade. And big countries have great population, greater domestic market size, rapid economic growth can be promoted through the development of domestic demand. But with China's actual situation, the economic aggregate has been ranked as one of the world's economic powers, its actual instance has some discrepancies with this conclusion: As a great trade country whose economical gross ranks the front line of the world, its home market is capacious, but its foreign trade dependence is high. In 2004, China's FTD is 70%, in 2005, because of RMB's small appreciation, the FTD dropped a little, about 63.9%. Such a high FTD reflects that the relationship is becoming tighter and tighter on the one hand, and meanwhile it has also brought some safety hidden trouble to the economic development, trade frictions often happen, trade profits loss is serious. How to understand China's FTD roundly and impersonally and then make a corresponding foreign trade policy? This will affect the successful progress of the trade economy, the economy safety and even the national safety.In case of this situation, this article includes theoretical and practical application, on the basic analysis of China's high foreign trade dependence, China's economic development situation, China's foreign trade dependence on the actual level and the factor s of China's high foreign trade dependence, and, accordingly makes the corresponding policy recommendations and forecast the future development trend of China's foreign trade dependence.This article includes six parts: Foreword, Theory summarization of FTD, Actuality and trait of China's FTD, Cause and influence of China's high FTD, Stratagem to reduce China's FTD, Foreground analysis of China's FTD. Part One: Foreword. This part simply introduces the study background, intention, meaning and the main configuration of the article.Part Two: Theory summarization of FTD. This part includes two aspects: the conception of FTD and the way to calculate FTD, the factors that influence the FTD. Thereinto, the factors include three aspects: domestic economic scale, phase of national economic development and mode of economic development.Part Three: Actuality and trait of China's FTD. This part expatiates the actuality of China's FTD from four aspects and educes the conclusion that China's current FTD is high. The four parts include: International comparison of FTD, Developing phases of China's FTD, Foreground of China's FTD, Troubles of China's FTD.Part Four: Cause and influence of China's high FTD. Firstly, this part introduces the causes of the high FTD, there are six aspects: Error in data statistic, Difference in the composing of GDP, Processing trade, Real exchange rate, MNC, Deficiency of domestic demand, thereinto, processing trade, exchange rate and domestic demand are the main factors that influence China's FTD. Secondly, this part introduces the influences of high FTD which include two aspects: active influences and passive influences. Active influences include: Accelerating the economy, Impelling the industrial upgrade, Adding the financial income and the foreign exchange reserve.Passive influences include: Frequent trade friction, Receiving international negative transmission, Threatening the economic safety, Fluctuating of the labour market and the export market, Less guarantee of the important energy sources, Instability and frangibility of the finance. We can get the conclusion from the forenamed analysis that the passive influences caused by high FTD have the call.Part Five: Stratagem to reduce China's FTD. This part expatiates seven stratagems in total: Enlarging the domestic demand, Activating domestic market, Advancing the transformation and upgrading of processing trade, strengthening the contributions that the processing trade do to the development of economy, Carrying out the principle of foreign enterprises''civil treatment', and avoiding running into the trap of'dependence on in-draught', Developing the serving trade energetically, Encouraging foreign investment, especially foreign direct investment, Perfecting the RMB exchange rate forming mechanism, making RMB keep its balance on a rational level, Perfecting the mechanism of checking and truly reflecting the economic gross and its changes.Part Six: Foreground analysis of China's FTD. Firstly, this part introduces how to understand the meaning of FTD. Foreign trade is only a kind of economic behavior in the process of reproduction, belonging to the current area. A phenomenon of concealing the whole with a part or even getting a totally false judgement will appear if we judge the degree of economic opening only by the height of FTD. Moreover, FTD is only a coefficient that is used to analyze issues; it doesn't have any political signification. And then, this part simply analyzes the foreground of China's FTD according to the forenamed analysis, and educes the conclusion that the pace of the FTD will be still faster than that of the economic development, the intending foreground of FTD is the integrated effects of the relative speed of economic development and foreign trade, the change of exchange rate and so on.There is no standard answer to the question that what's the moderate FTD, because different countries have different economic level and scale, different trade configuration, their FTDs are different accordingly.In conclusion, the rising of FTD not too high to put us in fear and trembling, nowadays, China is on a developing phase of economic takeoff and export orienting, high FTD is understandable and receivable, but adjusting and controlling the FTD rationally, and developing foreign trade actively will make great contributions to the fasting and healthy economic development.