Acknowledging that China has become the major global merchandise trader and the fact that its policies impacted world economy, China needs to rebalance its growth, according to members of World Trade Organisation (WTO) which reviewed China economy recently.
WTO members noted that China needed to rebalance its growth, which had been traditionally nurtured by investment and had heavily relied on directed credit availability.
However, the members observed that China had taken steps to rebalance economic growth through policies to promote consumption. China economy experienced stable growth during 2012-14, with real GDP expanding 7.7% annually, in both 2012 and 2013 and forecast to grow 7.5% for 2014.
The driving force behind growth was strong domestic demand, mainly private consumption, triggered by a policy of fiscal expansion, by rising incomes, and by credit availability. The Chinese Government continues to promote consumption expansion through specific measures, including a structural tax reduction policy. China’s strong domestic demand, including for imports, has continued to contribute to global economic growth. Consumer price inflation, which had reached 5.4% in 2011, slowed down in 2012 and 2013, due to lower commodity prices, wage increase moderation and more contained domestic food and energy prices hikes.
China has become the world’s largest trader (excluding intra-EU trade). During the period under review, both exports and imports of goods expanded rapidly, with exports totalling US$2.21 trillion and imports amounting to US$1.95 trillion in 2013. The share of both merchandise exports and imports on GDP has, however, declined to 24% and 21.3%, respectively, in 2013 (down from 26.7% and 23.7% in 2010).
In 2013, manufactured products remained the dominant component of China’s exports, accounting for 94% of the total. Among manufactured products, office machines and telecommunication equipment and textiles and clothing continued to be China’s main exports. Intra-industry trade is of growing importance to China, as manufactures accounted for 58% of China’s imports in 2013. China’s main manufacturing imports include office machines and telecommunications equipment, and chemicals. Fuels and other mining products accounted for almost 30% of China’s imports in 2013, while imports of agricultural products accounted for some 8% of the total.
China remains a large recipient of foreign direct investment (FDI). FDI inflows reached US$117.6 billion in 2013. The main sectors attracting FDI are manufacturing, real estate, and wholesale and retail trade. The sources of FDI inflows continue to be highly concentrated: Hong Kong, China remains, by far, the main source of FDI to China, accounting for 62.4% of total FDI in 2013. It is followed by Singapore, Japan, the EU, the British Virgin Islands, the Republic of Korea, the United States, and Chinese Taipei. In 2012, outward FDI totaled US$70.1 billion, with the main destination being Hong Kong, China, with two-thirds of the total.