Foreign Trade And Economic Growth

In the 30 years of reform and opening-up, China's economy has maintained the rapid and steady developing state. Meanwhile, the development of China achieved remarkable results in foreign trade. During the period of 1978-2007, the total merchandise exports raised from 16.76 billion yuan to 9.34 trillion yuan, while the total merchandise imports increased to 7.32 trillion yuan from 18.74 billion yuan. This paper makes a concrete analysis of the relationship between foreign trade and the overall economic development, from which we can see that foreign trade plays a more and more important role in economic development, and it has become a powerful driving force for sustainable development of China's economy.Firstly, by descriptive analysis, this paper analyze the developing trends of China's foreign trade volume and GDP in the past 30 years, as well as the development and changes of China's Dependence on Foreign Trade (DFT). The status quo that the DFT of China has reached more than 65% shows that China's DFT is at a very high level.Based on the relationship, qualitative and quantitative analysis methods are combined here to carry out a comprehensive investigation. First, this paper introduces the factors that affect the economy, and theories about trade can promote economic growth, which can be a theoretical foundation for empirical analysis. Second, the analysis of foreign trade and economic growth shows the development status of foreign trade and GDP, as well as the development of three kinds of trade patterns of imports and exports in the past 30 years. Third, empirical studies find that co-integration relationship exists between China's foreign trade and GDP. Meanwhile, the Granger test proves that the foreign trade is the Granger cause of GDP, which means that foreign trade impacts economy. Fourth, developing foreign trade will have a positive effect on the economy. In order to make foreign trade better serve the economy, we should take measures to ensure faster and better development of foreign trade. In view of this, this paper puts forward several proposals on improving foreign trade, by raising independent innovation ability of import and export enterprises, accelerating the optimization of the product mix, improving related legal system of the foreign trade, improving the development of service trade, etc.