Q: China's foreign trade system was formed under the
planned economy. Since the implementation of the reform and
opening-up policies, China has carried out several reforms in the
foreign trade system. What is the main content of these
reforms?
A: China attributes its rapid development in foreign trade to
deep restructuring of its foreign trade system. As all know, after
the founding of New China in 1949, China established a foreign
trade system managed by the government and operated by specially
appointed foreign trade companies, featuring a high degree of
centralized and mandatory planning, to adapt to the product economy
and unitary planned economic system of China. Under particular
historical conditions, this kind of foreign trade system was
conducive to avoiding an imbalance in international payments and to
controlling import and export levels and the composition of
commodities, thus protecting its young national economy. But this
system had some shortcomings: exclusive operation and over-strict
management preventing foreign trade companies from achieving
self-management, self-development, self-disciplined and assuming
sole responsibility for their profits or losses.
Since 1978, in the process of economic restructuring, China has
reformed its foreign trade system continuously with the purpose to
establish a new system suitable to the socialist market economy and
international trade standards.
China's foreign trade system has been reformed in four
stages.
The first stage (1979-1987) was a transitional period of
delegating power to lower levels. Main aspects of the reform in
this period included that the majority of the provinces and
enterprises were allowed to retain a certain proportion of foreign
exchange earnings; some foreign trade companies were allowed to
import non-restricted commodities without getting approval from the
state economic and trade department; and the government operated a
foreign trade agency system and reformed its foreign trade plan and
financial system. By the mid-1980s, the former National Foreign
Trade Corporation no longer dominated the foreign trade market.
The second stage (1988-1990) involved fully implementing the
foreign trade contracting system. In 1988, China decided to carry
out the foreign trade contract responsibility system among all
foreign trade companies. Main aspects were that the foreign trade
companies at all levels – provincial, municipal, and autonomous
regions as well as at the State level – contracted with the central
government on their exchange earnings and corresponding subsidies.
The contractual base would remain for three years. Quotas for the
use of foreign exchange were lifted and the foreign exchange
regulation market was opened. At the same time, the foreign trade
planning system was further reformed. Except for 21 kinds of export
commodities, which were still put under the unified management, the
majority of commodities could be imported and exported by companies
themselves in accordance with relevant government rules and
regulations. During this stage enthusiasm of foreign trade
companies for self-management boosted and foreign trade development
was stimulated.
The third stage (1991-1993) was a transitional period for the
foreign trade operational mechanism. During this period, emphasis
was laid on abolishing the export subsidy from State finances;
allowing the integrated operation of foreign trade enterprises
according to international practices; assuming sole responsibility
for their profits or losses; and further widening their rights to
use foreign exchange. These measures were conducive to maintaining
appropriate growth in imports and provided good conditions for
further expanding foreign trade relations.
The fourth stage (1994-present) embraces reforms in foreign
trade structure. In 1994, China carried out a new round of reform
of foreign trade structure focusing on abolishing the dual-track
exchange rate system. During this period, China trial-implemented
the foreign trade operational registration system and the modern
enterprise system among production enterprises in the five special
economic zones of Shenzhen, Zhuhai, Shantou, Xiamen and Hainan. As
a result a group of multi-functional transnational corporations
have been developed, with foreign trade companies as their main
body and trade-manufacturing-technology-commerce firms and
production enterprises as their core. Small foreign trade
enterprises in the five zones were reorganized into shareholding
companies.
At present, China has initially built up a foreign trade system
in accordance with national economic development and the
requirements of opening up. Meanwhile, the country is actively
promoting the reform of the system of refunding taxes on exported
goods, which will create a better condition for deepening foreign
trade system reform.
Attracting foreign investment is an
essential part of China's opening-up policy. The pictured shows the
Tianjin Economic and Development Area.