The Role of China’s Imports in the Global Economy

By+HU+JIANGYUN

ENTERING the WTO in 2001 has not only brought China a share in trade dividends but also opened up greater opportunities for the world economy.

Chinas imports of primary commodities have dramatically overtaken those of manufactured goods. China Statistical Yearbook figures show a rise in imports of these products from US $49.27 billion in 2001 to US $ 634.93 billion in 2012 – an approximately 16 percentage point increase from 18.8 percent to 34.9 percent of total imports. In the period from 2001， when China entered the WTO， to 2012， the growth of its imported primary products surpassed that of its imports as a whole. Those of manufactured goods， meanwhile， lagged far behind. In 2012， Chinas imports of primary products were more than 12-fold the 2001 level. Among them， those of fossil fuel increased 16-fold， of animal fat and vegetable oil 15-fold， and of non-edible raw materials 11-fold， so exceeding by far the overall increase rate of imports.

This change is manifest in Chinas high import volume of raw materials， particularly of iron， nickel， manganese， chrome and copper ores， whose growth is significantly higher than that of Chinas total imports. UN and China Customs statistics show that， from 2001 to 2013， imports of these ore products increased more than 20-fold. In 2013， Chinas imports of iron ore reached 819.41 million tons， at a value of US $105.728 billion， those of copper ore stood at 16.61 million tons， a value of US $19.673 billion， those of manganese ore reached 10.07 million tons， a value of US $3.192 billion， and those of chrome ore reached 12.09 million tons， a value of US $2.391 billion. It is notable that in 2012， Chinas imports of nickel ores surged to US $5.247 billion – a 1，200-fold or more increase over that of 2001， this 62.44 million tons of imports represent a more than 8，900-fold growth over that of 2001.

Chinas imports of these primary products have dramatically raised the exports of resource-intensive countries， so promoting the recovery of their economies. Taking iron ores as an example， UN statistics show that from 2001 to 2012， China imported more than 50 million tons from Australia and Brazil， so accounting for 60-plus percent of Chinas total iron ore imports. Adding to this the iron ore imports from India brings the total to more than 70 percent of Chinas imports as awhole. Some leaders of Australias political parties have publicly acknowledged that Chinas rising imports have stimulated these countries exports， so promoting their economic growth and recovery. After the breakout of the international financial crisis， Australias economic growth rose from 1.4 percent in 2009 to more than 2.4 percent in the ensuing years. The same applies to India， whose economic growth has hovered above three percent， peaking at 10.5 percent.

Chinas high imports of mechanical， electrical and high-tech products have also promoted the economic recovery of developed countries at the center of the financial crisis. Although influenced by the crisis， Chinas imports of high-tech products achieved sustained growth， having reached US $558.2 billion in 2013 – an increase of US $216 billion over that of 2008， when the crisis erupted. The same year， imports of mechanical and electrical products surged to US $840.1 billion， an increase of US$300 billion over that of 2008. These achievements are attributable to the positive strategies China has applied to expand domestic demand and stabilize overseas market demand. Chinas intensified infrastructure construction has also resulted in huge imports of manufactured products. This is especially so for those produced through advanced technology， such as electric and electronic appliances， mechanical equipment， instruments and meters， and wheeled conveyance vehicles， which attained a combined value of more than US $100 billion.

Meanwhile， China has also chalked up considerable service trade imports. Those from 2001 to 2012 amounted to US $1.55 trillion， and were of direct global benefit. The countrys trade in services， mainly in the form of cross-border supply， consumption abroad， commercial presence， and presence of natural persons， promoted other countries economic growth and social development. Service trade imports in 2012 of US $281.2 billion made China the third largest service importing country after the U.S. and Germany， according to China Statistical Yearbook. Sustainable economic growth has moreover created a middle class in China. In 2012， Chinas tourism service imports reached US $102 billion， its transport service imports reached US $85.9 billion， and its insurance service imports stood at US $20.6 billion.

Since the international financial crisis， Chinas increased imports， whether primary products， manufactured goods or trade in service， have helped promote its trading partners economic recovery and growth. Commercial orders generated by the countrys imports of both tangible and intangible products have created job opportunities and other benefits in countries worst hit by the crisis. This has eased pressure on their companiescapital chains， so enabling them to overcome hardship and recommence economic activities. All countries hope for a brisk demand on overseas markets that they can satisfy with their native products. This is particularly true of emerging economies adversely affected by the turbulent and recurrent European sovereign debt crisis. Chinas expanded imports have in this respect significantly advanced recovery and stability of the global economy.

Chinas trading power status consolidated and continued to contribute to world economic growth in 2013. But there exist two main problems with regards to its imports. The first is Chinas low status within the new international division of labor which precludes the benefits that might be expected of its share in international trade. In other words， the huge volume of trade in goods and services obscures a low value-added ratio， for example， on high-tech consumer electronic products， such as certain brands of mobile phones.

Although China has a global industrial chain， its imports within it are generally intermediate goods that earn relatively low profits， the focus of the higher end being on design， patents and sales service. But as China has no direct voice in this area it must spend vast sums on patent purchases. In 2012， for example， China paid US $17.7 billion for use of imported patents and license fees.

The second problem is that although Chinas increased imports have brought benefits to its trade partners， the measures such trading partners impose on these goods impede their entry and so cause losses. Whenever China imports advanced technology products it is confronted with either a dramatic price increase or an import ban. This constitutes a blatant inconsistency when taking into account the contributions China has made to other countries economies. Chinas imports have added impetus to global economic recovery and growth， yet the country itself is subjected to constraints and losses. A typical example is that of the surging price of Chinas imported iron ores， which has impinged on the profits of Chinese companies. In 2012， China imported 35.14 million tons of iron ore from Australia and 16.42 million tons from Brazil. But the cost and freight price （CFR） to Tianjin Port increased from US $66 per ton in 2008 to US $180 per ton in 2012. Consequently the price including cost， insurance and freight （CIF） to China in 2013 of imported iron ores from Australia was US $136 per ton and that from Brazil was US $144 per ton. There are several reasons for these price increases. One is Chinas chaotic domestic market and the interference of governments at all levels.

On the whole， the growth of Chinas imports has benefited other countries and maintained a stabilizing effect. China now needs to implement the reform policies agreed at the Third Plenary Session of the 18th CPC Central Committee. This entails regulating government functions and behaviors， giving play to the market mechanism and improving its competitiveness in international division of labor.