China Carrys out Import Expansion Strategy

Since joining the WTO， Chinahas made progress on expandingthe amount of goods it imports.The scale ofits imports has risenfrom 6th in 2001 t0 2nd in 2013.

According to data fromthe General Administration ofCustoms， from the beginningtill November of 2014， the totalamount of China's imports andexports was RMB 2.27 billion，declining 0.3%; in which， exportswere RMB l.3 billion， an increaseof 4.9%， and imports were RMB0.97 billion， a decline of 6.5%.

In recent years， China hasimplemented a series of policiesto help expand the scale of itsimports. On September 29， 2014 theState Council confirmed it wouldtake measures to expand imports.According to a statement issued afterthe meeting， positive policies forimporting technology， products andservices would be made to help meetdomestic demand， improve productquality， promote entrepreneurshipand innovation， and upgrade China'seconomic structure.

However， at present there aresome issues with China's imports，such as the areas in which importsare concentrated， a high reliance ondeveloped countries for importinghigh technology products， a lackof pricing power， and a low levelof technology imports. AnalyzingChina's imports could improve andbalance the structure ofits imports.

Asia accounts for the majorityof China's imports. In 2013， 56% ofChina's imports came from Asia， 16%from Europe， and 9.12% from NorthAmerica. Specifically， Japan， SouthKorea， Germany， Russia， the UnitedStates， Austria， and Canada were themain sources of China's imports， andthe trend is increasing. Before 2012，Japan was the number one source ofChina's imports， in 2013 the scale ofimports from South Korea exceededthat from Japan.

From 2001 t0 2013， mid-to-hightechnology products was the leadingcategory for China's imports， followedby low-to-mid technology products;products classified as mid technologywere third. High-tech products rankedfourth， and low-tech products accountedfor less than 3%， making up the lowestpercentage of China's imports.

Regarding the types of enterprisesimporting products into China， foreign-investment enterprises are the largestgroup， followed by private enterprisesand then state-owned enterprises.

Further optimizing thestructure ofimporters

With respect to the continentalareas that China imports from， three-fifths of China's imports come fromAsia， and the percentages ofimportsfrom Oceania and North America areless. Meanwhile， Germany accountsfor the largest share of China's importsfrom Europe， and Brazil is China'slargest source ofimports from Latin-America.

China's dependence ondeveloped countries for importinghigh-tech products

According to data on mid-to-hightechnology products China importedfrom developed countries， in 2011，high-tech products exported by the U.S.to China accounted for 16.64%， andthose from Japan made up 19.07%. Theshares of high-tech products and mid-to-high tech products that Germanyexports to China are increasing; theshare of high-tech products fromGermany increased from 8.18% in2000 t0 12.54% in 2011， while mid-tech products grew from 5.94% in 2000t0 8.54% in 2011.

Generally， developed countries areChina's main source ofimports， andthey mainly import mid-tech products.In the last ten years， Japan， the U.S. andGermany have been the main sourcesfor importing high-tech products toChina.

China's lack ofimport pricingpower

A report from China's Ministryof Commerce shows that there isa phenomenon where the prices ofproducts China imports will rise inthe international market; while theprices of products China sells will fall.Internationally， China's iron ore importsaccount for 65% of the global market，but China has no pricing power， and thesame is true of other bulk commoditiessuch as copper， oil and grain. With sucha clear contradiction between supply anddemand， increasing import dependence，and obstacles with overseas purchasing，the lack of pricing power would makethe buyer suffer a great loss.

Improving the level ofimportedtechnology

Among thirteen countries(China， Brazil， India， Mexico， Russia，South Africa， Indonesia， SouthKorea， Malaysia， Singapore， Thailand，Turkey and Vietnam)， the overalllevel ofimports to China ranked 3rdin 2000， just behind Malaysia andBrazil， while in 2011， China's rankingdropped to 11th， just above Singaporeand India. Therefore， if China wouldlike to improve the overall level ofits imports， it should emphasizeimproving the technology contentand optimizing the structure of itsimported goods.

Suggestions

China's strategy of expandingimports is very important to itseconomic development， which aimsto build closer economic partnershipsand accelerate the transformation ofits economic model. Therefore， Chinashould focus on the following areas.

Elevating pricing power

Due to the features of differentcommodities， which influence the factorsbehind the prices ofimports， Chinashould implement classified managementaccording to the type ofproduct.

First， regarding primarynon-agricultural products， Chinashould develop and reduce the costof international transportationto enhance the pricing power forimported products; second， forprimary agricultural products， Chinashould improve the domestic futuresmarket and boost the scale of futurestrade; third， for high-tech products，China should enhance its technicallevel and increase its ability to supplythese products itself. This requiresincreasing RD expenditures andeducating more high-end researchers.

Optimizing the structure ofimported technology

For developing countries， itis important to take advantage ofinternational partnerships and importhigh-tech products that can improvetheir technical level and narrow thegap with developed countries. Atpresent， it is a crucial for China todevelop its manufacturing industrywith better technology. Hence， Chinashould pay attention to optimizing thestructure of its imported technologyto upgrade the transformation ofits domestic industry， and speedup development of China as atechnologically-advanced industrialpower.

Implementing the strategy ofimport market diversification

China's diversification strategyaims to lower the risks of over-relianceon certain regions， lifting China's voice，improving the level ofimports fromspecific countries and strengthening therelationships between China and othercountries.

(Authors: Dr. Wei Hao， Deanof the Department of InternationalEconomy and Trade at BeijingNormal University; Dr.Li Xiaoqing，also from the Department ofInternational Economy and Trade atBeijing Normal University.)