China' S Foreign Trade And Economic Growth

Under the current of economic globalization, the relationship of each country has become widened and consolidated in economy. It is important for China, which just entered World Trade Organization in December 11,2001, to be able to participate in international trade and to take advantage of this chance to develop its economy.Since implemented the policy of reformation and openness in 1978, China has experienced a rapid growth in economy and foreign trade. During the period, the rate of increase in foreign trade has been in lead over that in Gross Domestic Production. Also, the dependency of foreign trade has been keeping a high level of over 40 percent in recent years. It is obvious that the rate of increase in China's foreign trade is promoting the economic growth.The article will make a comparatively regressive analysis of the period between 1952-1977 and 1978-2000 according to Chinese practical condition to investigate the relation between foreign trade and economic growth.The result shows that China has witnessed a miraculous growth in foreign trade since 1978. At the same time, the contribution which China's foreign trade has made to economic growth after 1978 is more and more notable. It must be pointed out that the contribution which export has made to economic growth mainly bases on the expansion of its value, that is to say, the contribution depends on the increasing proportion of export to GDP since1978. On the other hand, the relation between export industries and non-export industries has become weakened in the same period. As far as import is concerned, there is not so much change in the composition of import, which has mainly been composed of capital goods such as capital-intensive or technology-intensive commodities. These commodities have a strong effect on economic growth either before 1978 or after 1978. Moreover, the effect of import on economic growth is weakened to a certain degree since 1978 in that a proportion of the above-mentioned capital goods flow into the industries of improvement trade. These industries mainly consist of foreign investment enterprises, which focus on producing labor-intensive commodities of low value added. This is the result that our comparative advantage is still at a low level of labor-intensive industries, which has a poor external economies effect and poor push on economic growth. We should, therefore, escalate our comparative advantage in terms of the usage of our present comparative advantage and focus our strategies on developing human capital-intensive industries. These require the implementation of strategies of science and technology to prosper our country and promote the level of technology advance; require the combination of trade policy, industry policy, foreign investment policy and regional development policy to enhance the effect of foreign trade on economic growth .