The Situation Of Global Free Trade And China's Countermeasures

Generally speaking, a country's foreign trade policy should be formulated on the basis of the state of the domestic economy and international situation. Consequently, foreign trade policy is not lasting. To maximize the national interests, the government has to readjust and improve the policies while domestic and international situation is changed. Since our reform and opening-up, the advantages of lower cost and late-development have been taken into account by Chinese government. As a result, China's GDP and foreign trade volume have been growing by leaps and bounds. With the development of other emerging nations, however, our advantage of lower cost has been waken and the competition for market and raw material has been becoming intensifying. This situation brings adverse impact on our foreign trade and much more social problems. On the other hand, after the global financial crisis in 2008, many countries' economy has dipped into a serious recession and the global trade volume dropped substantially. Following this, many countries readjusted their policies that resulted in the trade protectionism's gain ground. Therefore, how should Chinese government readjust our trade policies is a question of importance. Under this background, it is very necessary to review and study the economic development histories of other countries to find out the foreign trade policies which can maximize our national interests.There are three parts in this thesis. The first part is arguing the arising of free trade theories and its advantages. This part takes example of Francois Quesnay, Adam Smith and David Ricardo's theories of free trade, analyses the background of these theories and the following interests, concludes that the free trade theory replaced Mercantilism and has been widely accepted and the constant improvement of free trade theories is the result of each country maximizing its national interests. The second part is discussing the experiences of the United Kingdom, the United States of America and Japan becoming the economic powerful countries. Reviewing the history of the world economy, almost every economic power's rise is accompanied by the process of advocate of free trade, and the United Kingdom, the United States of America and Japan are the typical examples that realized their national interests in the process of trade liberalization. After the study of these three countries'histories, the thesis suggests that, when a country's industry develops to a certain level, trade liberalization could promote the domestic production, technology, capital and talents'development, to impel the GDP increases by leaps and bounds, and turns the country into economic powerful nation. This part also discusses UK, USA and Japan's results of trade liberalization, their implementing processes, and sums up their experiences to direct China's foreign trade policy. The third part is discussing the development of China's trade liberalization and suggesting some measures to solve the problems coming with the opening-up. Firstly, thesis analyses the reason why China needs free trade, suggests that China should boost worldwide liberalization positively, especially the regional and bilateral free trade. After this, it argues the situation of China's liberalization, including the development of FTA. Following that, it discusses the problems encountered in the processes of foreign trade and the challenges met in the courses of carrying out liberalization. At last, there are some measures to solve these disadvantages, including that bringing free trade into foreign strategy, taking into account of our industrial policies while formulating FTA strategies, accelerating the domestic reform to strengthen the international competitiveness of industry, agriculture and service industry, and having a positive attitude towards free trade. On the basis of these measures, China could maximize our national interests.There are three innovations in this thesis. First, the free trade theory replaced Mercantilism and has been widely accepted is not only because of the theoretical advantages (the win-win situation), but also because it is consistent with the interests of politicians by providing an academic support for their political opinions, and it is the result of the government maximizing their national interests. Considering the current international and domestic situation of China, thesis suggests that China should be a standard bearer for the global trade liberalization. Second, it suggests to bring free trade into foreign strategy to make sure the relating measures to be carried out successfully. At last, thesis pointed out that it is necessary to take into account of the industry policy while concluding a FTA. The government should give high attention to the industry which specially aided by the industry policy, and endeavor to procure a better export conditions for it or try to reduce the adverse attacks during the course of opening-up. The insufficiencies of the thesis is that the author is limited by the materials and writing skills, and failed to study some of the questions deeply enough.