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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)
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