Does foreign trade drag down economic growth?(2)

Foreign trade plays an irreplaceable role

Huo Jianguo, director general of the International Trade and Economic Cooperation Research Institute of the Ministry of Commerce, believed that net exports contribution reflects the relations among consumption, investment and net export, not referring to the actual contribution of a certain category of economic growth. These three are closely related. Exports directly increase the foreign demand for domestic goods and services, and imports, not replacing domestic production, often provide goods and services that lack in domestic market.

Actually, using net exports to measure its contribution to economic growth will underestimate foreign trade's role. If the value of imports and exports is high, but trade surplus is low, then the added value, such as employment and services, brought by trade activities, could not be reflected by net exports contribution, though foreign trade plays a significant role for economic growth.

Long Guoqiang, director of Foreign Ministry of Economic Affairs under Development Research Centre of State Council, said by participating in foreign trade and international division of labor, countries can develop its own comparative advantages, improve efficiency of resource allocation, expand employment, increase resident income and promote upgrading of industrial structure.

In the case of developed countries, the average contribution rate of U.S. net exports to economic growth is minus 11 percent. Is the foreign trade a burden for U.S. economy? The answer is no.

Just the reverse, the United States has utilized international trade to import a large number of labor-intensive products and resource products from developing countries, which has saved hundreds of billions of U.S. dollars for its consumers every year.

The inflation rate of United States has also been decreased. The rise of the Four Asian Tigers in the later period of twentieth century has also proved the significant role of foreign trade.

China has a large population and far fewer resources with heavy employment pressure and relatively backward science and technology. Developing international industrial specialization is important for China's economic development. China can make full use of abundant labor advantages for export to participate in global competition. Moreover, China can solve resource and technology restrictions by importing advanced technical equipment and resources.

It's estimated that China's annual import volume of petroleum, iron ore and copper accounted for more than 50 percent of annual domestic consumption. It shows that even if foreign trade surplus decreases or trade deficit emerges, foreign trade is still in favor of economic growth.

Data released by Ministry of Commerce reveal that China solved 80 million people's employment positions in foreign trade sector, 60 percent of whom are from rural area. Each one percent increase in export growth can transfer 200,000 labor forces. Export oriented processing trade also promote technical process and industry upgrading.

Make effort to adjust foreign trade structure

Currently, the comparative advantage of China's manufacturing industry concentrates on labor-intensive products and labor-intensive phases of high-tech products.

An article released by foreign media said that according to data of U.S. Commerce Department, total volume of U.S. trade in goods reached 3.863 trillion U.S. dollars in 2012. China has reached 3.867 trillion U.S. dollars, surpassing United States as the world biggest good trade nation.

Shen Danyang, spokesperson of Ministry of Commerce, said China and United States adopt different statistic measurements.

According to World Trade Organization, China's total export volume is 15.6 billion U.S. dollars less than that of the United States. China remains the largest export country and second largest import country in the world.