China International Trade Case Study

1597 Words 6 Pages
CHINA AND INTERNATIONAL TRADE In 1978, China opened up its doors to opportunities that brought about development of foreign trade which lead to the promotion of its economic growth. Over the past 30 years, it has seized the opportunity of the world’s long term prosperity and economic globalization by attracting foreign investment, introducing advanced technology and rapid development in foreign trade around the world to increase its trade volume globally. “The total volume of China’s import and export was only 20.6 billion US dollars in 1978, and by 2010 it had increased to 2.974 billion dollars signifying an annual growth of about 16.8%” (“China’s Foreign trade”) . “By the end of 2010, china had become the world largest exporter …show more content…
Amongst their policies are; Import ban on remanufactured products, the Chinese government prohibits importation of remanufactured goods, and they usually classify it as used goods. China maintains restrictions that prevent remanufacturing process inputs from being imported into china’s custom territory (“USTR China”). These import bans restricts the development of foreign industries in china. In addition to the import bans, it also has export restraints, such as export quotas, prices, licensing, duties and other restrictions. These export restraints are put specifically on raw material inputs which are predominantly produced in China. The Chinese government also imposes export duties such as value added tax; these practices cause disruption, and uncertainty in the global market especially in products where China is the leading world producer or exporter. Furthermore, in some instances, “foreign companies who are seeking to enter the Chinese market are pressured into participating in standard setting process which license their technology or intellectual property on unfavorable terms” (“USTR China”). All of these unfavorable conditions make it tough for foreign industries wanting to enter the …show more content…
The Chinese government has been reluctant to open its banking section to foreign companies, threading cautiously, it imposes working capital requirements which makes it difficult for foreign banks to establish and expand their market presence. Due to china’s regulation of its insurance sector, insurance companies from other countries seeking to enter their market face barriers. They are only entitled to a very low share of the market “for example in the health insurance sector, china has foreign cap equity at 50%” (“USTR China”). Also China’s has a restrictive and non transparent internet regulatory regime, which affects a broad range of commercial service activities conducted through the internet. Foreign companies seeking to develop cloud computing, data and storage services experience this barrier. “China has sought to impose value added telecommunications licensing requirements on this sector, including a 50% equity cap on investments by foreign companies” (USTR China Trade Report”).

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