Question

Explain the major changes of China's export commodity composition since 1979, and the implication of these changes on China and the world.

Explain China's trade imbalance with its trading partners.

Please answer those two questions in details.

Answer 1

1). China's economy were highly poor, ineffective and had policies that strictly kept their economy isolated from the whole global economy.

But after opening up their economy to foreign investment and trade from 1979, china took up a position among the whole worldwide quickly rising economies. The annual GDP of china went to an average of 9.5percentage through the year 2018. As a result of freeing up the trade, china's GDP doubles through every eight years and it saved a millions of their peoples from the situation of poverty. Thus china had became the largest economy among the world and the worldwide merchandise trader and foreign exchange reserves holder.

Due to this, china had became an important commercial partner of US. China became the biggest origin of imports, largest merchandise trade partner, and 3rd largest export market of the united states. China also funds the federal debt and made the interest rates of united states lower.

2). Since china is the largest economy and stands in the top position in global trade, what ever happens in china also reflects to its trade partering countries such as US, Japan ang Hongkong.

• United states : Machinery equipments, sports items, furniture, plastics and toys were the most exported items from China to US.

The large abundance of trade between US and china increased by the major slowdown of China. Thus the demand for US goods became cheaper. But the government made the availability of chinese goods to US in a very cheaper state, this resulted in a high import of goods by US from China. This resulted in a large trade deficiency.

• Japan : China is one of the Japan's largest trading partner. Electrical machineries, clothings and chemicals were the top imports from China to Japan. Machineries, chemicals and transport items were the top export items from Japan to china.

By 2018, imports from china had increased by 4% and exports to china had increased by 6.8%. Due to the first global trade shortage, Japan criticized a higher demand from china.

• Hong kong : Hong kong had only 35 st largest economy around the whole world. Basically all the export items to China from Hong kong are re-exports. There were no taxes on the items appeared on the border and is termed as the most free economy around thr world.

Due to trade war and slow growth in Chinese economy, it put downs a severe pressure in the economy of Hong Kong.

Thanks!..