Chapter 2.7: The Changing Role of China s State-owned Foreign Trade Enterprises

Xuekun Wang, Director, Division of Economic Analysis, Department of Policy Research, Ministry of Foreign Trade and Economic Cooperation

China's economy is currently navigating a course of strategic restructuring. Its entry into the World Trade Organization(WTO) has elevated China onto a new stage in its reform and opening policy. In view of these new circumstances the role of Chinese state foreign trade enterprises (SFTEs) has to be radically transformed in order to meet the demand for further development.

The SFTEs have made tremendous contributions to the vitality of China's foreign- related economy and trade

Since the adoption of the reform and open -door policy, Chinese foreign trade has experienced a remarkable growth in which the SFTEs have played a crucial role. In 1980 China's foreign trade value stood at US$38.14 billion with exports at US$18.12 billion and imports at US$20.04 billion. The export value in that year ranked 26th in the world. At that time virtually all foreign trade activities were conducted by SFTEs. In 2001 China's foreign trade value surged to US$509.77 billion with exports at US$266.15 billion and imports at US$243.61 billion. Its position reached sixth in the world in terms of both trade value and export value. Among these, SFTEs achieved an export value of US$113.23 billion and import value of US$103.55 billion. With regard to the export of general commodities in particular, SFTEs occupied a share above 60 per cent.

In the field of foreign economic cooperation, such as contract engineering projects and labour export, SFTEs still maintains a predominant position. By the end of 2001 China had committed to a total contract value of US$127.86 billion in its foreign economic cooperation projects, of which US$93.07 billion has been completed. In the meantime 6,610 enterprises for overseas direct investment had been approved with an outflow valued at US$8.36 billion.

^[*] This chapter was originally written in Chinese and translated by Liu Baocheng, Professor, University of International Business and Economics.