GROWING PAINS

By+Li+Jian

China became the worlds largest country in goods trade in 2013. However， it has come first place only in a single area， while the United States is still the worlds largest importer and service trader， and in terms of science and technology， education and industrial development as well as human resources， China still lags far behind. It appears that Chinas comprehensive strength will continue to rank second in the world for a long time to come.

However， as a rapidly growing large nation， China has contributed 11.8 percent to global exports and 10.3 percent to imports， and this is set to rise even further. Every action China makes is affecting the world. Since China is now undeniably a major economy in the world， its foreign trade is facing unprecedented challenges.

Space for growth

Since the outbreak of the global financial crisis， the worlds economic growth has slowed down， demand expansion has weakened， supplies of industrial products have become excessive and international competition has intensified.“Made-in-China” can be seen everywhere in the consumer product market， indicating that Chinese goods have gained a formidable market share. In the meantime， with a rapidly growing national wage level and continual appreciation of the yuan， the low cost advantages previously boasted by Chinese companies are weakening. Within the existing industrial development level and export structure， China has been faced with a market size “ceiling，” and it will be increasingly difficult for China to maintain high growth.

In the past three decades， China received transfer of industrial production from more advanced countries and regions， gaining market shares from its trade partners. The international competition China faced was not so fierce. But now， Chinese companies have started to enter some high-end industries and production links， which is considered a threat by developed countries such as the United States， and they are becoming less and less willing to give up their market share. Instead， they have adopted various measures to restrict expansion of Chinese exporters. On the other hand， other de- veloping countries are also learning from China and seizing Chinas market shares with lower production costs.

In the past three decades， most of the products made by foreign-invested companies in China were sold to the international market， and domestic companies made more money from exports than they did from domestic sale. But now， as external demand shrinks， China has become a market that companies from all over the world covet. When entering China， foreign companies aim at this 1.3-billion-strong market， and some export-oriented Chinese companies are similarly transferring their focus to domestic sales. Changes in the supply and demand in domestic and international markets have brought challenges for China in expanding development spaces for foreign trade and promoting economic growth.endprint

Sino-U.S. trade ties

More and more “made-in-China” products are replacing their “made-in-U.S.”counterparts and more and more Chinese companies are entering industries and markets that had previously been U.S.-dominated， which will inevitably touch on the traditional interests of the United States. In the meantime， China and some developing countries are trying to break through the international trade rules championed by the United States and establish a more reasonable and fair international economic order， the need for which the United States is not willing to recognize.

There are some people from both countries who have not yet dispensed with their“Cold War mentality.” While dealing with trade disputes， they are not well versed in communication and mutual respect and cannot seek common ground while maintaining their individual reservations regarding related issues.

As the largest developing and developed countries in the world， respectively， China and the United States have many common interests and extensive fields in which they may cooperate. The two countries are complementary to each other in terms of economic and industrial structure. One side needs the assistance and cooperation of the other in solving structural imbalance， and they also need to engage in mutual understanding， cooperation and support when dealing with a series of global economic and trade issues. The two countries are both responsible for promoting common development.

Over the past three decades since the establishment of diplomatic ties， China-U.S. trade volume has soared 180-fold， bringing real benefits to the economic growth of both countries. Most U.S. multinational corporations have investments or businesses in China. This fact indicates that China and the United States will benefit from cooperation but suffer from confrontation， and sound and sustainable economic and trade relations are in keeping with the fundamental interests of the two countries.

The United States has been the worlds largest economy for more than a century. It will not be easy for China to deal with its relationship with the “No.1.” On one hand， Chinas economic strength is valued by the United States. Particularly after the global financial crisis， the United States hopes China can help the U.S. economy to recover， and that the top two economies can be evenly matched in trade conditions. On the other hand， the No.2 can easily fall prey to being the target of attack， as it is naturally viewed as a strategic rival by the No.1 country. Therefore it will be arduous and complicated for the two countries to avoid disputes and set up stable trade relations that benefit both sides.endprint

Global responsibilities

When Chinas economic scale was small， no other country was overly concerned about Chinas macroeconomic policies. But now China has become the worlds second largest economy and is one of the driving engines for the world economy， the international community will scrutinize its monetary， fiscal and foreign trade policies as well as exchange rate changes. As a large developing country， China must protect its own interests and also consider the global impact of its policies.

In promoting development of multilateral trade mechanism， China used to only participate in and obey the rules. But having risen to the rank of No.2， China is now considered a major rival by other major economies and the interest groups involved in international negotiations. They hope China can make more active commitments to opening up， although China still considers itself a developing country and a new WTO member.

With regard to ensuring the stability of bulk commodity prices in the global market， China is the biggest importer of bulk commodities， but conversely， has little pricing power. China will be the biggest victim if bulk commodity prices destabilize， but it is also considered a major reason behind such instability. The international community hopes China can play a bigger role in ensuring stable bulk commodity prices in the market.

In assisting developing countries to accelerate their development， China is one of the developing countries that has opened up the most to less developed countries. However， the international community， including developing economies， still has expectations that China will grant more favorable policies in trade and investment， as well as offer more aid.

While coping with climate change， China now faces severe pressure in cooperating with major world economies to reach new emission reduction agreements since it is still engaged in the process of industrialization and its carbon emissions are quite considerable.

As China becomes the largest country by goods trade， it will face the contradiction of a growth in trade volume and a “ceiling” of the global market size. Its economic growth is slowing down and it has to change the condition of a national economy that is certainly large， but not yet strong.

More importantly， China should not only consider its own economic and trade growth， but also global economic growth as a whole. China relies on the international market， and in the meantime it is also an important part of the global market. It should not pursue just economic growth on a purely national scale， but also whether or not its trade growth will benefit sound and sustainable development of the world economy and trade.

China must establish stable trade relations based on mutual trust with its trading partners and ensure its major trade policies are consistent with those of its partners.

China should also play a more active role in solving key global issues， establishing a more reasonable and fair new international economic order and promoting joint and sustainable development. Only when the world economy realizes sustainable development can China develop in a sustainable way. nendprint