The Structure and Issues of the External Dependence of China's Economy

No.259
April 2006
Senior Fellow Yan Zhu

1. The external dependence of China's economy is continuing to increase, inducing a host of problems such as trade friction and dependence on resources imports that are becoming shackles to economic growth. Trade friction is intensifying in a number of fields, spurring instability in Chinese production and exports. Further, dependence on resources imports is engendering difficulties in procurement, rising prices, higher costs and other problems.
2. Various issues are aggravating China's trade friction and dependence on resources imports, such as: China's growth pattern of dependence on foreign demand, mass production, and mass exporting; the trend toward low value-added exports; mass consumption and mass import of resources.
3. In order to support sustainable economic growth and to overcome the issues of dependence on foreign demand and resources imports, China's domestic economic and industrial structures must be realigned. First, China must turn its growth pattern around, and expand domestic demand. Additionally, the industrial structure must be adjusted through the sophistication of product exports and the conservation of energy and resource consumption. Further, policy coordination in various fields such as financial policy, industrial policy and price adjustments are indispensable. China must also vigorously pursue external approaches aimed at avoiding trade friction and acquiring resources.
4. The Chinese government is already aware of the importance of structural changes in order to counteract trade friction and reduce dependence on resources imports. From a policy perspective, these worries are reflected in the proposals relating to transforming the country's growth pattern into a domestic demand-based pattern, realigning the industrial structure, and others that are included in the 11th Five Year Plan.
5. These issues of external dependence, economic friction, and structural realignment in the Chinese economy have a tremendous influence on Japanese companies in China. In addition to effects on business aspects such as local production, local export, and choices in types of industry for investment in China, new business chances in China include growth of sales in local markets, the transfer of energy-saving and resources-conserving technologies, and other opportunities. Taking advantage of these opportunities, Japanese companies must respond quickly to changes in China's economic and industrial structures and policies.

More Informations

• Japanese
• Full text is not available in English for this report.
  The original Japanese full text is PDF here [593 KB].
  Please let us know the serial number of this report (259) to submit a request for translation.