Research On The Applicability Of Strategic Trade Policies In China's Petroleum Industry

Since China joined the World Trade Organization,it continues to reform the international trading system,gradually reduces tariffs on all types of goods,selectively eliminates export subsidies,decreases a large number of non-tariff barriers,and continuously and fully open China's market,in order to better adapt to the regulations of WTO.However,trade liberalization that is advocated by WTO is not equivalent to absolute trade freedom.As a matter of fact,each country's foreign trade policy serves the sole purpose of promoting the development of the domestic economy,ultimately improve their overall level of national welfare.Even the western developed countries that always advocate trade freedom,also establish trade protection policies to protect strategic industries.As a developing country,the oil industry has always been of our one of our most strategic industry.At present,China's oil industry is facing a harsh attack from the international oil giants.On one hand,there are still some gaps between the production scale of China's oil companies and major international oil companies,therefore economy of scale cannot be fully exploited,cost of production remains at a high level.In 2013,the cost of production of our crude oil is $ 222.29 per ton,in comparison,the imported crude oil only costs $ 198 per ton.Due to the lack of researching funding,resulting in a rather slow improvement on the technical level,therefore,the cost disadvantage will continue in the international competitive market.On the other hand,China's oil demand has increased substantially due to the rapid economic development,but China's oil production has been stagnant,China imports large quantities of crude oil from abroad in order to meet the required economic development.China's oil companies accounted for China's oil market share dropped from 58.13%in 2004 to 42.76% in 2013,since foreign manufacturers continue to occupy China's oil market,it caused significant loss of monopoly profits.By 2015,China's largest oil company China National Petroleum Corporation,the main business income in mainland China fell by 19.59%.Oil industries usually have many industry correlations,thus many industries are bound to be adversely affected,which eventually will seriously undermine China's overall welfare.Therefore,it's essential to implement strategic trade policy for China's oil industry,to promote the general welfare of our country.Therefore,to ensure the healthy development of China's petroleum industry,it is necessary for the industry to implement strategic trade policy.Therefore,to explore and study the applicability of Strategic Trade Policy in China's petroleum industry has great practical significance.This paper analyzes the literature,collate and summarize the strategic trade policy theory basis,and explains from the theoretical level of the important ideas,policy advocacy,and industry conditions of strategic trade policy;Then review and analyze major countries' strategic trade policy,their realistic historical background,policy choices,implementation effect after the Second World War;Secondly,based on the reality of China's oil industry development,explain the reasons why oil industry shall implement strategic trade policy.Then from the welfare point of view,use Cournot duopoly model to analyze the implementation of our country's oil industry,current tariffs,subsidies should be adjusted according to the strategic trade policy.Finally,propose relevant suggestions on how to implement the strategic trade policy in the oil industry,and provide relevant solutions for problems that could arise during the implementations.