Since the reform and opening-up, China has made great strides
toward a market economy in all aspects including its foreign trade.
In dealing with antidumping cases, the European and American
countries pay special attention to whether die government of an
investigated country guarantees the freedom in trading, whether
enterprises have the right to decide export quantum according to
export market demands, whether they can determine the prices and
sales terms of export goads, whether foreign exchange rate
calculation is based on market rates, etc. As the case stands,
China has made great progress in all these aspects.
Ⅰ.Evaluation of China' s Marketization of Foreign
Trade
(Ⅰ) Liberalization of Import and export
1. Lower Customs Tariffs and Standard Deviation of
Tariffs
The customs tariffs may reflect the level of market economy of a
country to some extent. Customs duties, being a kind of indirect
duty, will be shifted to the producers or consumers, and may
indicate the intention of a government on controlling foreign
trade. Higher duties may lead to higher prices of the imported
products, lower the competitiveness of commodities, and prevent the
trade of other countries from expanding; while lower duties mean
that a government decreases its protection of domestic industries,
and recognizes the liberalization of economy.
China has adjusted the customs tariffs for several times. At the
beginning of 1992, duties of 225 items of import commodities were
lowered. The average tariffs (arithmetic average, hereinafter
inclusive) dropped down to 43.2 percent; the next year, the duties
of 3371 items of imports were reduced, leading to the average
tariffs down to 36.4 percent; in 1995, 4997 items were adjusted,
accounting for 76 percent of all import tariffs, with the overall
tariffs down to 23 percent; in 1997, the tariffs were again widely
reduced, with the average tariffs declining by 6 percentage points
to 17 percent. By 2001, the average tariffs of China had been
lowered to 15.3 percent.
Meanwhile, the standard deviation of tariffs was introduced to
illustrate the actual decline of China' s tariffs. It demonstrates
the distribution of tariffs. The smaller it is, the more
representative the average tariffs; the bigger, the more
distributed the tariffs, the more powerful and protective the
policies. The decline of the standard deviation of tariffs from
32.1 percent to 8.73? percent during 1992 - 2001 has indicated
that the protection on duties was greatly loosened.
After the tariff reforms, the arrangement of customs
nomenclature and the average tariffs are more consistent with the
requirements of the WTO.
2. Less Quantity Restrictions on Imports and
Exports
The quantity restrictions on imports and exports imposed by
China normally consist of quota control, license control, and the
measure of operating trade by the State. In the bilateral
agreements concluded by China at its WTO accession, to lessen the
quantity restrictions is a substantial part. China started to lift
the quantity restrictions on imports and exports from 1992,
gradually reduced the range of control via quotas and license for
imports and exports, and, accordingly, expanded the power of
enterprises to import and export.
First, the categories under quota and license control in
exportation greatly lessened and open bidding for distributing
quotas to promote the competition mechanism conducted. Quota is an
important non-tariff barrier; it is a restriction on quantity of
imports or exports. In 1992, 227 items of commodities adopted
positive quota control for exportation and the value of
certificates issued reached some US$41.2 billion, accounting for 48
percent of the aggregate export volume. As the reforms in foreign
trade system intensified, by 1997, the number of items under quota
control dropped to 114 and the value of certificates issued fell to
US$32.7 billion, taking an 18 percent share. In 1998, the
commodities under export control of quota and license were again
cut down to 91 items with the value of certificates issued dropping
to US$27.2 billion, accounting for 15 percent. Then, the
commodities under quota and license control dropped to 73 items in
1999; according to the customs statistics, the volume of these
commodities was US$16.55 billion, taking up 8.5 percent in the
aggregate export volume of US$194.9 billion. In 2000, only 68 items
of commodities were still under the control of quotas and license;
the customs statistics revealed the volume was US$22.2 billion,
accounting for 8.9 percent in the aggregate export volume of
US$190.9 billion nationwide. By 2001, the commodities under control
dropped to 66 items; the customs statistics revealed the volume was
US$20.4 billion, accounting for 7.7 percent of the aggregate export
volume of US$266.1 billion nationwide. By 2002, the commodities
under license control were reduced to 53 items.
Second, the import quantity restrictions gradually loosened.
From 1992, China reduced the number of categories of commodities
under quota mad license control. By 1995, commodities under import
quota and license control were reduced from 53 items to 36, the
headings decreased from 742 to 354. The value of certificates
issued totaled US$21.1 billion, accounting for 24 percent in the
total import volume of that year. In 2001, only 33 items of
commodities were under the control of quota and license. According
to the customs statistics, the volume of these import commodities
was US$19.8 billion, taking up 8 percent in the aggregate import
volume of that year. In 2002, the commodities fell down to 12
items, 170 8 - digit commercial cedes. From January 1, 2002, China
abolished the import quantity restrictions on some commodities,
such as crude oil, steal products, pesticides, asbestos, laminated
plywood, tobaccos, cellulose diacetate tow, sodium cyanide,
polyester chip, acrylon, terylen, and some machinery and electrical
appliances, mad replaced with voluntary import license control.
Finally, the number of products under designated operation
decreased. As per the international practices, China implemented
state trading management measures for import and export of the
products under designated operation. In accordance with its
commitments made for joining the WTO, China altered the former
lifelong system for the verified companies. Enterprises that had
been operated legally and possessed favorable achievements and
powerful force were selected through dynamic adjustment in terms of
performance and operation ability to participate in the importation
of bulk goods. In 2002, China adopted state trading management
measures for the following eight commodities, namely, food, cotton,
vegetable oil, sugar, crude oil, product oil, chemical fertilizers
and tobacco; at the same time, non-state-owned enterprises were
allowed to deal in importation within a certain quantity. In this
way, enterprises that actually engage in these commodities were
increased; steel products, wool, natural rubber, acrylics and
laminated plywood were still under designated operation. These
reforms have strongly promoted the reforms in import and export
systems and arouse the enthusiasm of enterprises.
3. Increased Dependence on Foreign Trade
The dependence on foreign trade indicates the interdependence
between a country's national economy and world economy. It involves
the influence of external economy on domestic economy and the
influence of domestic economy on external economy. The dependence
on foreign trade herein refers to the proportion of the total
import mad export volume in GDP. Although the dependence on foreign
trade mainly demonstrates the economic growth instead of the degree
of marketization, since enterprises in the countries in transition
will be endowed with more rights in import and export with the
raise in dependence on foreign trade and the loosening of foreign
trade control, we hereby analyzed the dependence on foreign trade
and the relevant variables.
From 1978 on, both import and export have experienced rapid
growth and the growth rate of import and export were higher than
that of GDP all along.
From this chart we can see that China' s dependence degree on
foreign trade was climbing up all the years, reaching a peak of 44
percent in 2001, including a degree on export of 23 percent and 21
percent on import.
(Ⅱ) Diversification of Foreign Trade
Operators
Diversification of trading entities is one of the important
symbols for the marketization of foreign trade because it indicates
that a country has relaxed its control on foreign trade. The
reforms in economic system and trade system have granted many
producers with power to engage in import and export and enabled
them to break through the monopoly by a few professional foreign
trade companies. Foreign trade dealers shall not be exclusively
state-owned enterprises any more. Especially after 1992 when it was
determined to reform towards market economy, non-state-owned
entities took more and more shares in the foreign trade.
In 2001, the export volumes of state-owned enterprises, foreign
invested enterprises, collective enterprises and other enterprises
were respectively US$113.234 billion, US$133.236 billion, US$14.223
billion and US$5.462 billion.
The proportion of export volume by state-owned enterprises in
the total export volume sharply decreased during this period while
that by the foreign invested enterprises greatly climbed up. This
trend has fully demonstrated the development of foreign invested
enterprises in China' s foreign trade. In 1994, the volume of
import and export by state-owned enterprises occupied 70.2 percent
of the total import and export volume and the other enterprises
carved up the remaining 29.8 percent. Till 2001, state-owned
enterprises only took 42.6 percent in export. The distribution of
aggregate export volume shows that the market competition mechanism
has been basically established in foreign trade. The functions of
collective and private enterprises as new growth points for foreign
trade became more and more prominent. From January to October 2002,
the export volume by other enterprises including the collective and
private sectors increased by 64.1 percent. They have become
potential growth points for China to expand the export. With the
softening of market access, more foreign invested enterprises and
private enterprises got involved in foreign trade. The market
displayed a pattern with various operational entities jointly
developing.
(China.org.cn November 7, 2003)
