Foreign Trade And Foreign Economic Relations

China's entry into the World Trade Organization in 2001 ushered in a period of rapid growth for the country's foreign trade. The sound momentum was maintained in 2005.

Total value of imports and exports reached US$1,422.1 billion, up 23.2 percent over the previous year. Of this total, the value of exports was US$762.0 billion, up 28.4 percent; and the value of imports was US$660.1 billion, up 17.6 percent. China had a trade surplus of US$101.9 billion. Among the total imports and exports of the country, that of foreign-funded enterprises was US$831.7 billion, an increase of 25.4 percent over the previous year. Of this total, the value of exports was US$444.2 billion, up 31.2 percent; and that of import was US$387.5 billion, up 19.4 percent.

Imports and Exports by Major Categories, 2005

Item	Value (US$100m)	Increase over 2003 (%)
Total imports and exports	14221	23.2
Exports	7620	28.4
-- Of which: General trade	3151	29.3
Processing trade	4165	27.0
-- Of which: Mechanical and electrical products	4267	32.0
Imports	6601	17.6
-- Of which: General trade	2797	12.7
Processing trade	2740	23.6
-- Of which: Mechanical and electrical products	3504	16.0
Trade surplus	1019
-- Of which: General trade	354
Processing trade	1425

Imports From and Exports to Major Countries and Regions, 2005

	Exports (US$100m)	Increase over 2004 (%)	Imports (US$100m)	Increase over 2004 (%)
US	1629	30.4	487	9.1
EU	1437	34.1	736	5.0
HK	1245	23.4	122	3.6
Japan	840	14.3	1005	6.5
ASEAN	554	29.1	750	19.1
ROK	351	26.2	768	23.4
Taiwan, China	165	22.2	747	15.3
Russia	132	45.2	159	31.0

The year 2005 witnessed the approval of establishment of 44,001 enterprises with foreign direct investment in China, up 0.8 percent over the previous year; and foreign capital actually utilized was US$60.3 billion, down 0.5 percent. Of the total foreign direct investment actually utilized, the share of investment in manufacturing and real estate sectors accounted for 70.4 percent and 9 percent, respectively, down 0.6 percentage points and 0.8 percentage points over that in the pervious year, and the share of investment in leasing and business service and in transportation, warehousing and post service accounted for 6.2 percent and 3 percent, respectively, up 1.6 percentage points and 0.9 percentage points.

Foreign Direct Investment by Sectors, 2005

Sector	Project (number)	Increase over 2004 (%)	Actually utilized investment ($100 m)	Increase over 2004 (%)
Total	44001	0.8	603.2	-0.5
Farming, forestry, animal husbandry and fishery	1058	-6.4	7.2	-35.5
Mining and quarrying	252	-9.7	3.5	-34.0
Manufacturing	28928	-4.8	424.5	-1.3
Production and supply of electricity, gas and water	390	-14.3	13.9	22.7
Construction	457	11.2	4.9	-36.5
Transportation, warehousing, post and telecom services	734	15.1	18.1	42.4
Information transmission, computer service and software	1493	-8.0	10.1	10.7
Wholesale & retail trade	2602	53.1	10.4	40.4
Hotel & catering services	1207	2.8	5.6	-33.4
Banking	40	-7.0	2.2	-13.0
Real estate development	2120	20.0	54.2	-8.9
Leasing and business services	2981	12.0	37.5	32.6
Scientific research, technical services and geological prospecting	926	47.2	3.4	15.8
Water conservancy, environmental protection and public facilities management	139	-15.2	1.4	-39.3
Services to households and other services	329	31.1	2.6	64.6
Education	51	-13.6	0.2	-53.8
Health, social security and social welfare	22	4.8	0.4	-55.1
Culture, sports and recreation	272	0.0	3.1	-31.8
Public management and social organization			0.04	105.6

In 2005, the overseas direct investment (non-financial investment) by Chinese investors was US$6.9 billion, up 25.8 percent over the previous year.

In 2005, the accomplished business revenue through contracted overseas engineering projects was US$21.8 billion, up 24.6 percent, and the business revenue through overseas labor contracts was US$4.8 billion, up 27.5 percent.

Regional Economic Cooperation In 2005, China energetically developed regional economic cooperation and accelerated creation of free trade areas (FTAs) with some countries and regions. It signed a free trade agreement with Chile and launched FTA negotiation with Pakistan. The country also started FTA talks with Southern Africa, Latin America and South Asia. Negotiation between China and the Gulf Cooperation Council, New Zealand and Australia on trade liberalization was in process. China is now engaged in nine FTA talks, involving 27 countries and regions. Of the proposed FTAs, that between China and the Association of South East Asian Nations leads others in the development level.

In July 2005, the Second Greater Mekong Sub-region (GMS) Economic Cooperation Summit was held in Kunming, which adopted the GMS Strategic Frame of Facilitation on Trade and Investment. The document identifies four priorities for cooperation, namely, the simplification of customs procedures, coordination of inspection and quarantine measures, promotion of trade logistics and facilitation of the mobility of business people.

Supplement II to Closer Economic Partnership Arrangements between the Chinese Mainland and Hong Kong/Macao was signed in October 2005. Under the pact, the mainland agrees to give all products of Hong Kong/Macao origin tariff free treatment beginning January 1, 2006. On trade in services, market access thresholds are further lowered in 10 areas of legal, accounting, audiovisual, construction, distribution, banking, securities, tourism, transport and individually owned stores, to prompt integration of mainland and Hong Kong/Macao economies.

On November 2, 2005, the First Session of the Ministerial Council of the Bangkok Agreement was held in Beijing. At the meeting, representatives from member countries decided to rename the pact to Asia-Pacific Trade Agreement. Beginning July 1, 2006, all member countries will provide tariff reduction on more than 4,000 tariff items.