Last Updated 07 Sep 2020

China’s Position in Global Trade

Category Essay Examples
Essay type Research
Words 636 (2 pages)
Views 318

While China is positioned for exporting, the role of foreign trade overall is still strong. Their trade surplus rose from $249. 5bn USD in 2009 to $254. 2bn USD in 2010 (in balance-of-payments terms). Exports came in at just under $1. 6trn USD in 2010 putting the imports in the range of $1. 3trn USD. In 2011 foreign trade surged up 22. 5% to $3. 64trn USD, an impressive gain that brought it to 36% of their GNP (New York: The Economist Intelligence Unit).

These are all positive indicators of a continual strengthening of their position in global trade; however, this must be balanced against the level of external debt that was taken on in order to make it happen. “China's outstanding external debt in 2011 totaled nearly $695 billion, the highest since 1985” (Administration of Foreign Exchange). The external debt taken on rose $146bn, up 27% from 2010 – such rapid increases in foreign borrowing have historically indicated a weakening economy. In China’s situation, a reduced fiscal position will likely not be the case.

With their short-term debt to foreign exchange reserves at 15.75% they are well below the level of concern (near 100%) (New York: The Economist Intelligence Unit). “China's other external debt indicators, such as the 9. 52 percent liability ratio, the 33. 31 percent foreign debt ratio and 1. 72 percent debt-service ratio, all fell into the "safety" range, according to international standards” (SAFE). These positive indicators reflect the sentiment of investors, but as with any country, the decision to invest may come down to the government’s view of the business and its priorities. In 1949 Mao Zedong outlined the new Chinese government, for business this meant all enterprises were now state-owned.

Don't use plagiarized sources. Get Your Custom Essay on

China’s Position in Global Trade

just from $13,9 / page

get custom paper

It wasn’t until the 1980’s that the government would allow the privatization of any of the small and mid-sized companies. “Between 1995 and 2001 the number of state-owned and state-controlled enterprises fell by nearly two-thirds, from 1. 2m to 468,000, and the proportion of urban workers employed in the state sector fell by nearly half, from 59% to 32%” (Leaders). There are now four different categories that run the gambit from private to public: (Leaders). With the large companies, there are few that qualify as fully privatized – usually, no more than 30% of the shares are held outside of the government.

Joint Ventures makeup only a small portion of the enterprises and have historically led to attempts by the China-based partner to extricate the foreign presence. The companies that are truly private are generally the direct result of the privatization from government control and the business having been left in the hands of the managers. “The state has thus forgone ownership in an effort to achieve better results. It does, however, continue to exert influence, notably through party representatives” (Leaders). The remainder of companies is those that have been created by municipally backed funds.

This should result in the state is more of a funder and less of an operating partner, though there is little data that is released on the investment of the public funds. “China’s government has not only held on to economic control but found subtle ways to extend it. At the very least, they constitute an important series of large-scale economic experiments with implications for China’s economy…China has come far since the trials in Shunde and Zhucheng, but the state has always controlled the itinerary”(Leaders). For the foreseeable future, any investment in China will need government cooperation.

Works Cited:

  1. AAG Center for Global Education. Population and Natural Resources case study: What are the challenges of meeting the resource needs of a very large population? 1 February 2011.
  2. Document. 8 April 2012. Administration of Foreign Exchange. China. 23 March 2012. Document. 10 April 2012. <http://www. china. org. cn/business/2012-03/23/content_24965934. htm>.
  3. Bloomberg News. Bloomberg. 17 January 2011. HTML. 26 February 2012. <http://www. bloomberg. com/news/2011-01-18/foreign-direct-investment-in-china-in-2010-rises-to-record-105-7-billion. html>.

Remember. This is just a sample.
You can get your custom paper from our expert writers

get custom paper

Cite this page

China’s Position in Global Trade. (2018, Sep 12). Retrieved from https://phdessay.com/chinas-position-in-global-trade/

Not Finding What You Need?

Search for essay samples now

We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Your Deadline is Too Short?  Let Professional Writer Help You

Get Help From Writers