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

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. What are the characteristics of the change in China's degree of dependence on foreign trade? Why it is so high? Which risks will exist with the rapid increase of the degree of dependence on foreign trade? What strategies should we take to improve it? These questions are what this thesis tries to answer. There are four main periods in the change of China's degree of dependence on foreign trade: the low growth period(1978—1983), the steady increase period(1984 —1989), the fluctuant and slow increase period(1990—1999)and the fast increase period(2000—2004). The degree of dependence on foreign trade has been rising in most countries in the world. This index of most biggest countries in foreign trade changes steadily, while China's one has a trend of continuously rapid increase. Many factors, including domestic and foreign ones, cause the continuous increase of China's degree of dependence on foreign trade. But the most important one is the fast expansion of China's improvement trade, with the active role of FDI. Despite there exists overestimation in some degree considering the effects of improvement trade, exchange rate and lagged service industries, the fast increase of China's degree of dependence on foreign trade has already been a fact and became a trend. Along with China's economy melting into the world economy deeper and deeper, the structural risks following the change of the degree of dependence on foreign trade will have important influence on the sustainable development of China's economy that cannot be neglected. These structural risks include: Employment risk resulted from the concentration of export on few markets and low value-added products; The national security risk brought by the concentration of import on energy products and technology etc. In addition, there are the trade friction risk and the exchange rate risk due to the large and unbalanced trade surplus. And also risk exists on account of predominant improvement trade in China. Lastly the author proposes some suggestions: Expanding foreign trade in the short term continually while expanding domestic demand in the long term; Improving the structure of the degree of dependence on foreign trade; Establishing a better system of foreign trade indexes.