I China's Foreign economy

Due to the concerted efforts, in 2002, China performed well in foreign trade and double-direction investment. The opening-up policy was steadily carried out. Those vital and sensitive fields, in which people had been afraid of a heavy shock from WTO entry, yet met an overall beneficial situation. This not only makes new contributions to our economic development, but also instilled new energy into the global economy.

1.Export growth better than expected

In 2001 the global trade volume decreased 4.5%; in the first half of 2002 it decreased 4%. Against such a macro background, in 2002, China's export was surprisingly better than expected. Exports totaled US$325.6 billion, up 22.3% than the previous year. This attributes to the series changes in domestic and international situations. Meanwhile this is indispensable from WTO entry. China's entry to the WTO not only increases foreign countries' confidence in its economy and greatly uplifts its attraction to foreign investment, but also highlights its advantages as the safest investment place, a vast market full of potentials, and a low-cost manufacturing base. Meanwhile it triggers off the global industrial transfer and strongly stimulates export expansion.

In addition, China's entry also promotes the optimization of global trade environment and provides multilateral protection for our foreign trade development and multilateral channels for trade disputes solution and checking trade protectionism. Part of the textile quota were cancelled, involving exports of US$4 billion and accounting for 1/3 of textile exports with restrictions. What's more, WTO entry promotes China's foreign trade system reform and the decentralization of the import and export right. In 2002 China's private enterprises achieved exports of US$32.8 billion, up 66.5%, and become the main force in expanding the exports.

2.Stable imports

In 2002, China's imports hit US$295.2 billion, up 21.2%. The imports kept stable. (1).Growth rate of import was below 1.1%. (2). Foreign trade surplus topped US$3.04 billion, up 34.6%, and its driving force on economy was enhancing. (3). Main force of import growth came from processing trade, which increased by 30.1%. Other trade imports only grew 13.8%. (4). Import structure was in optimization. Proportion of advanced technical equipment and rare materials in import was on the rise.

3.New features of foreign investment

In 2002, the number of new registered foreign invested enterprises reached 34,171 with the contract value of US$8.277 billion and actual use value of US$5.274 billion, up 30.7%, 19.6% and 12.5% respectively.

The whole country seized the opportunity brought by China's entry to WTO, and the level of introducing foreign investment increased greatly.

A series of new features showed as below:

(1) With the enhancement of China's attraction in introducing foreign investment, China was listed among the top choices of international direct investment.

(2). Foreign strategic and long-term investment strengthened obviously. Those large-scale multinational companies were swarming to China. Among the top 500, over 400 invested in China, and 218 investment companies and nearly 400 research and development centers of foreign investment were established. The ratio rose in joint ventures adopting domestic advanced technology and even the world level technology. Their investment programs developed at a larger scale, and the additional investment became more and more popular. Some regional headquarters of those giants were moved to China.

(3). Foreign investment is extending to IT industry while the investment in the traditional textile industry was still in the bloom. Numerous accessory enterprises and the domestic medium-to-small enterprises work together and were formed several complete industrial groups. This helps to lower the cost and raise production efficiency.

(4). The policy on foreign businessmen's participation in state enterprises' reforms is also perfecting. We are ready to speed up state enterprises' reforms through attracting foreign investment.

(5). Foreign businessmen expanded their purchase of Chinese enterprises in China, and a dynamic momentum was formed.

(6). More fields are attracting foreign investment with various channels and optimized structure. The focus of foreign investment has been shifted from manufacturing industry to electronics, communications, infrastructure construction, commerce, foreign trade, finance and insurance and so on. Especially with the wider opening of service trade, service industry has become a hot point of foreign investment.

II. China's national economy keeps a steady growth

Due to the incessant implementation of the policies of expanding domestic demands, plus a good beginning brought by China's entry to WTO, in 2002, the national economy kept a robust momentum. According to the preliminary statistics, in 2002 GDP surpassed RMB10.2 trillion, up 8% over the previous year, and the development rate is up 0.7%. In the breakdown, the value of the first industry reached RMB1. 4883 trillion, up 2.9%, of the second industry RMB5.2982 trillion, UP 9.9%, of the tertiary industry RMB3.4533 trillion, up 7.3%. In 2002, the economy also displayed in the following features:

(1) Enhancement of economic development stability.

(2) Enhancement of economic growth autonomy.

(3) Policy of expanding domestic demands was carried out, and a two-wheel (investment and consumption) driving layout was in formation.

(4) Further improvement of economic growth quality and efficiency.

(5) Stable price and employment

(6) People's income increased steadily.

On the other hand, there still exists some deep contradictions and problems, which are worthy of attention, such as deflation danger, employment pressure and income difference. We should not be over optimistic about the present macro economy. Instead, we should enhance our sense of danger and make early preparations.

III. China's WTO entry promoted global economic development

China's entry instilled energy into global economy from two aspects. On one hand, China's further opening market and improving investment environment offered a great deal of business opportunities for world businessmen. On the other hand, China's rapid economic growth, increasing income level, and expanding market brought more trade opportunities and explore new investment and development space. As a result, China made a greater contribution to world economy, trade and direct investment. When the three economy pillars, US, EU and Japan, are in recession, China's economic development became a new engine in promoting world economy.

Due to China's position in world labor division and its special trade and investment structure, China's foreign trade and foreign fund absorption will be a double win. China's industries are labor-intensive, complementary to the developed countries. For example, China can only compete with Japan in less than 20% of the industries. The customs statistics show that, joint ventures have occupied over half of China's import and export, and in recent years, 70% of the new trade volume from them. China's trade profits have been widely shared by the companies of different countries. Influenced by the global economic depression, many developed countries' enterprises have met difficulties and they survive through migrating to China and enlarging investment and production. The industries, which have lost competitiveness in developed countries, have moved to China in large numbers. This not only benefits China's economy, but also helps these countries' economic restructure.

Facts have proved that, in 2002 China's import fast growth created export opportunities to the world, especially its neighbor countries. Most Asian countries have improved their exports. This is not the favor of American economic recovery, but is driven by China's market demands. According to customs statistics, in 2002, the exports of Japan, South Korea and ASEAN rose 25%, 22.2% and 34.4% respectively, and the trade surplus were respectively US$5.03 billion, US$76.3 billion and US$13.07 billion. For many years, China has always been the main source country of ASEAN's trade surplus. The decline of the foreign investment in ASEAN is mainly the direct result of the decline in the world direct investment. Last year China's absorption of foreign direct investment kept a stable pace. It is mainly the result of the attraction of China's huge market and investment environment. Seen from the overall, the decline of foreign investment in Southeast Asia has not direct causal relations with China. In addition, the more foreign investment in China, the more China imports from its neighbor countries and the stronger its economic radiance, which on the other hand propels those countries' development.

(Xinhua News Agency June 7, 2003)