Many sectors of the international market have experienced significant shifts since the global financial crisis, and China’s foreign trade has also changed during these years, forming some noticeable new patterns.
First, in the context of global trade slowdown and the fragile foundations of economic growth, China is nevertheless expected to become the world’s largest commodity trading country with a further increase in market share. Second, foreign direct investment (FDI) in China exceeded $100 billion US, making China the developing country attracting the most FDI in the world for the 20th consecutive year. Third, FDI made by China maintained a growth rate of over 20% in 2012. During the year, China invested in 445 overseas enterprises in 141 countries and regions. Non-financial direct investment amounted to $77.22 billion US, increasing by 28.6%.
China’s foreign trade strategy attaches importance to the structural adjustment and competitiveness of domestic industry. In 2012, the apparent international competitiveness of Chinese low-tech products continued to improve, particularly for furniture, lighting fixtures, spare parts, and plastic products. Medium- and high-tech products also showed notable international competitiveness, for example automatic data processing equipment and its components, watches and integrated circuits. Meanwhile, China has also become an important service trading partner. The trend of outsourcing services in recent years has contributed to the enhancement of China’s service trade and promoted the development of China’s domestic service sector.
Imports into China, as the second largest world economy, will be a growing force for global economic expansion. China is expected to become the world’s largest importer over the next few years. The nation has already entered the ranks of middle-income countries, and due to its enormous population its domestic market is likely to become ever more attractive. China’s rapid economic growth and social development is reflected in its imports, especially bulk commodities, primary products, and semi-finished products. Through imports, China can effectively adjust its economic structure from one oriented primarily towards export to one driven by domestic consumption. This will promote the upgrade and transformation of domestic industry.
China is still the world’s most important foreign investment destination, measured in dollars. Reports of the United Nations Conference on Trade and Development (UNCTAD), and the business environment reports released by the U.S. Chamber of Commerce and the European Union Chamber of Commerce in China show that China is expected to continue to be the most attractive destination for enterprises all over the world. And as China’s economic strength has steadily increased, China has implemented an expansion strategy that provided strong support for its enterprises that make investment in overseas enterprises. Some of these enterprises have grown into multinational corporations. Before and after the international crisis, FDI made by China demonstrated a rapid growth trend, which in 2012 exceeded the size of FDI utilization in China for both 2006 and 2007. It is foreseeable that before long, FDI made by China will surpass the FDI into China.
Overall, China’s position in international trade and economics continued to be extremely influential in 2012 despite repeated shocks during the financial crisis, and the ensuing slow economic recovery. The changes in China’s import/export balance, as well as its shift to a net FDI investor, will be important trends to watch in the global economic environment.