2 - China's Foreign Trade

Abstract

This chapter highlights the key elements of the foreign trade of China. China's political and economic relations with foreign countries are based on the five principles of mutual respect for sovereignty and territorial integrity, mutual nonaggression, noninterference in each other's internal affairs, equality and mutual benefit, and peaceful co-existence. China's foreign trade policies are also governed by the same principles. Specifically, the key emphasis is on independence and self-reliance and equality and mutual benefit. With China's decision to expand the role of foreign trade, changes were made to the structure and management of foreign trade. Since 1978, the country has undertaken a series of reforms designed to improve the efficiency and performance of foreign trade and its structure and management. In 1978, China established a number of domestic corporations under the respective ministries. These corporations determined what equipment to purchase. In 1979, the two provinces of Guangdong and Fujian and the three cities of Beijing, Shanghai, and Tianjin were granted greater autonomy for the conduct of foreign trade. The foreign trade corporations at these provincial and municipal levels are empowered to conduct foreign trade directly and may conclude contracts and agreements valued under $3 million without Foreign Investment Commission approval. In October 1977, Foreign Trade Minister Li Qiang announced China's decision to establish “special economic zones” in certain designated regions in the country to expand China's trade with foreign countries.