Research on the Challenges and Countermeasures of China s Foreign Trade Development under the Background of Economic New Normal

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1 Research on the Challenges and Countermeasures of China s Foreign Trade Development under the Background of Economic New Normal Tao Zhai School of Economics and Management, Northeast Agricultural University, Harbin , China *Corresponding author( neauzht@126.com) Abstract Under the background of profound changes in domestic and foreign economy, China's foreign trade development has entered a new normal. The speed of development has entered a period of low and medium speed growth, the degree of dependence on foreign trade has entered the middle and low level, and the structure of foreign trade is relatively stable. Under the new normal situation of foreign trade, new opportunities and challenges are coming. In order to realize the sustainable development of China's foreign trade, should take the initiative to adapt to the new norm, grasp the comprehensive reform of the period of strategic opportunities to further reform the bonus release; the development of new advantages in foreign trade, mining potential; to enhance the international discourse, the multi channels of cooperation and achieve mutual benefit and win-win situation of foreign trade. Key words:new normal foreign trade; slow growth; strategic opportunities; Internet plus foreign trade 1. INTRODUCTION During the 30 years of reform and opening up from 1978 to 2008, China's economy has developed rapidly with an average annual growth rate of 9.9%, creating a unique miracle in the history of world history. But since 2008, a series of new changes have taken place in the economic and social development at home and abroad, and China's economic development is facing a new development situation. In the face of these new changes and new situation, in May 2014, general secretary Xi Jinping pointed out that China's economy will enter the "new normal" from high speed growth to medium and high speed growth". Under the background of the whole economy entering the "new normal", China's foreign trade also presents the characteristics of the "new normal". In 1978, the Third Plenary Session of the 11th Central Committee of the Communist Party of China (CPC) made a major strategy for opening to the outside world. China's foreign trade development has entered a new stage, especially since joining the World Trade Organization (WTO). Since the end of the international financial crisis in late 2008, by foreign and domestic dual factors, China's foreign trade into the low-speed growth stage of development. In 2000, the total import and export volume of China's goods trade was billion yuan, up from 359% to 1,799,215 million yuan in Compared with 2008, China's foreign trade in goods in 2009 fell to billion yuan in 2013 increased to billion yuan. From 2000 to 2008, the volume of trade in goods in China increased by 45% annually, the average annual growth rate from 2009 to 2013 was 18%, and the growth rate slowed down. China's foreign trade entered the "new normal" of low growth rate. (See Figure 1) The degree of dependence on foreign trade refers to the proportion of a country's foreign trade total GDP in the country, it reflects the degree of dependence on a national economy of foreign trade, foreign trade contribution to the economic development of a country. The formula is: dependence on foreign trade = (import and export volume /GDP) x 100%. After the accession to the world trade organization, China's foreign trade dependence has been continuously improved. In 2001, the dependence on foreign trade was 39%, and increased to 65% in After that, the overall dependence on foreign trade showed a downward trend. Between 2009 and 2013, China's dependence on foreign trade was between 40%~50%. Compared with the previous, China's foreign trade dependence entered the "new normal" in the middle and low speed range". (Figure 2) After 30 years of reform and opening up, China's foreign trade commodity structure has undergone great changes, but after entering the twenty-first Century, China's foreign trade commodity structure is relatively stable. Since 2000, the proportion of primary products in the total import and export of goods has stabilized between 10% and 20%, and the proportion of manufactured goods is between 80% and 90%. From the intensive elements export commodities structure, exports of China's labor-intensive products and technology intensive products accounted for the total amount of foreign trade in the proportion of 95%, resource intensive exports accounted for less than 5%. (Table 1) the proportion of trade in services in foreign trade is 10.3%, 10.8% and 11.5% in 2011, 2012 and 2013, respectively. China's trade partners are mainly concentrated in the European Union, the United States, ASEAN, China, Hongkong, Japan, South Korea and other countries and regions. 686

2 Figure 1.The growth rate of China's import and export of goods from 2000 to 2013 Figure 2.The change of China's foreign trade dependence from 2000 to CHALLENGES FACED BY CHINA'S FOREIGN TRADE DEVELOPMENT UNDER THE "NEW NORMAL" ECONOMY 2.1.Rising labor prices Labor intensive commodities occupy an important position in China's foreign trade, and occupy a large proportion in China's export trade. Abundant labor resources are regarded as the important reasons to support the development of China's foreign trade. In recent years, with the change of population structure in China, the unlimited supply of labor market is changing, and the outstanding performance is that the price of labor is rising. The labor price of China has been rising since 2000 since the average wage of employees in urban units is measured (see Figure 3). In 2000, the average wage of employees in urban units was 9333 yuan, and increased to yuan in 2013, with an average annual increase of 34.7%. The rising price of labor force increases the cost of production, increases the price of commodities, and weakens the international competitiveness of commodities. Table 1.Intensive structure of goods trade and export commodities in China from 2007 to 2013 Import and export structure structure of factor intensity of export commodities year primary products Manufacture d goods Resource intensive Labourintensive Technologyintensive % 86% 4.97% 42.67% 52.17% % 83% 4.82% 42.81% 52.37% % 84% 4.71% 42.9% 52.39% % 83% 4.63% 42.94% 52.43% % 81% 4.51% 43.05% 52.44% % 81% 4.40% 43.17% 52.43% % 82% 4.28% 43.21% 52.51% Source: the import and export structure of goods is calculated according to China Statistical Yearbook 687

3 Figure 3.Changes of average wage of employees in urban and rural units from 2000 to Great pressure on resources and environment Over the past thirty years, China's foreign trade is an extensive development model, behind the rapid growth of foreign trade is excessive consumption of resources, environmental pollution intensified. Fu Jingyan (2008), through the import and export and pollution emission data of China's manufacturing industry from 1980 to 1998, shows that China's import and export commodity structure tends to air pollution intensive industries. With the process of industrialization in China, the energy consumption per unit GDP is far greater than the world average, and the dependence on oil foreign trade has already exceeded the international critical level of early warning. For a long time, China's export trade embodied carbon emissions increasing with the development of the export trade, in 2001 China's carbon emissions embodied in exports amount to 7.51 tons in 2012, increased to tons, an increase of nearly 1.5 times. The development of China's foreign trade is facing the bottleneck of resources and energy, and the environmental carrying capacity is approaching the upper limit. 2.3.Foreign trade transformation difficult Since the accession to the WTO, with the deepening of the breadth and depth of China's participation in the global value chain division of labor, the single labor cost advantage of foreign trade has been weakening, resulting in more and more trade frictions. The development mode of foreign trade supported only by price advantage is unsustainable. With the enhancement of resource and environmental constraints of foreign trade development, China's foreign trade has entered a critical period of "transfer mode". China's foreign trade, especially the export products, is still mainly labor-intensive and technology intensive products, and the export of high-tech products in technology intensive products is relatively small. Zhang Fan (2014) by constructing the index system to measure the degree of change in the transformation and upgrading of China's foreign trade, that since 2001, the change trend of upgrading the transformation of foreign trade in our country appears after the first strong weak situation, 2001 to 2003 years to maintain an annual growth of about 10% of the amount, comprehensive evaluation of its value after serious decline the trend, China's foreign trade transformation and upgrading of the task is still arduous. 2.4.RMB entering appreciation channel In twenty-first Century, with the accession to the World Trade Organization of foreign trade and promote the internationalization of the RMB, the RMB appreciation gradually into the channel, especially since the reform of RMB exchange rate system in 2005, it is to accelerate the appreciation of the situation (see Figure 4). At the beginning of 2000, the central parity of the US dollar to the RMB was 1 US dollars to RMB, and the RMB appreciation was yuan at the beginning of 2006, and it increased to yuan at the beginning of RMB appreciation has an important influence on foreign trade. On the one hand, reduce the price of imported goods, improve the import trade conditions, conducive to the development of import trade; on the other hand to improve their products in foreign market prices, weakened the competitiveness of export products, is not conducive to the development of export trade. In the high degree of dependence on foreign trade of our country and long-term trade surplus in the background, the adverse effects of the RMB appreciation on China's export trade is greater than the strong influence of import trade, the impact of China's foreign trade growth, thereby affecting the economic development. Therefore, how to deal with the RMB appreciation in a long period of time will be an important issue for the development of China's foreign trade. 2.5.The international economic situation is complex and changeable Since twenty-first Century, the world economic development imbalance, economic globalization is slowing, especially in 2008 the U.S. subprime mortgage crisis and the European sovereign debt crisis, the world economy continued to slow growth, the international financial crisis presents a long-term and complicated 688

4 characteristics. China's major trading partners, the European Union and the European debt crisis are not completely through the dangerous period, the U. S. "financial cliff" problem is pending, Japan's economy is facing double risks of sustained downturn and debt crisis. Developed countries trade protectionism continues to rise, various forms of trade protection measures frequent, seriously affecting the international trade order. Although the global governance process dominated by the reform of international financial institutions has made some progress, it is generally slow. At the same time, the reconstruction of international economic and trade rules is beset with difficulties. The United States tries to negotiate new rules of trade through the negotiation of "TPP", "TTIP" and "TISA", while China proposes to build a "global free trade area network with high standards" to deal with it. In a word, the international economic situation is increasingly complex and changeable, which poses a severe challenge to the development of China's foreign trade. Figure 4.Exchange rate of RMB to us dollar from 2002 to OPPORTUNITIES FOR CHINA'S FOREIGN TRADE DEVELOPMENT UNDER THE "NEW NORMAL" ECONOMY 3.1.The period of strategic opportunity for comprehensively deepening reform Demographic dividend and global dividend disappeared, and further release of reform bonus has become an inevitable choice for China's foreign trade development under the new normal economy. In 2012, the eighteen big party made the strategic deployment of comprehensively deepening the reform, and opened the prelude of China's comprehensive deepening reform. In 2013 the third Plenary Session of the 18th CPC Central Committee, on several major issues comprehensively deepen reform, through the "decision" of the CPC Central Committee on deepening reform of the overall number of major issues, deepening reform of the overall strategy to further expand. "Decision" pointed out that we should further relax the investment access, accelerate the construction of free trade area, and expand the opening of inland Yanbian. Promote the internal opening to promote mutual introduction and go to better integrate and promote the integration of international and domestic factors orderly flow freely, efficient allocation of resources, market depth, participation and accelerating the development of leading the new competitive advantages of international economic cooperation, to build a new open economic system. China's foreign trade development ushered in an important period of strategic opportunities. 3.2.The Belt and Road construction drive In 2013, General Secretary Xi proposed the strategic concept of "New Silk Road Economic Belt" and "twenty-first Century Maritime Silk Road". The third Plenary Session of the 18th CPC Central Committee, to promote the Silk Road Economic Belt, the construction of the maritime Silk Road, the formation of an all-round opening of the new pattern of important instructions. "Belt and Road Initiative" building at both ends of the Eurasian continent, the developed European economic circle and the most vibrant East Asian economic circle connected, driven by Central Asia and West Asia, South Asia, Southeast Asia, Africa and other areas of radiation, in the world economic situation is complicated, the main economy economic downturn in the background, Silk Road Economic Belt the structure of foreign trade area of China had great change. According to the general framework of The Belt and Road "construction, China will give full play to the comparative advantages of each region, to further clarify and optimize the development orientation of the east coast, northwest, northeast and southwest regions of the eastern and western regions and layout, strengthen interaction and cooperation, the full release of the western regions to open potential, enhance the level of opening up inland economy construction open a new pattern. 3.3.Accelerate the pace of regional economic integration Since 1990s, China has actively carried out and participated in the regional economic cooperation with foreign countries. After entering the twenty-first Century, the level of foreign regional economic cooperation 689

5 has been further improved, and the scope and depth of cooperation has been deepened. Especially, the implementation of free trade zone strategy has become an important part of China's new round of opening to the outside world. The Seventeenth Party Congress the construction of a free trade zone as a national strategy, the eighteen proposed to accelerate the implementation of the strategy of free trade zones, proposed in the third Plenary Session of the 18th CPC Central Committee to accelerate the implementation of the peripheral based strategy of free trade zones, the formation of a high standard for the global FTA network. In addition to the "The Belt and Road" strategy, by the end of September 2015, China construction FTA 19, involving 32 countries and regions. Among them, 14 FTA agreements have been signed, involving 22 countries and regions, 7 free trade agreements are being negotiated, involving 22 countries, there are 4 free trade zones under study. First, the regional economic integration process, which focuses on the strategy of free trade zone, will certainly promote the further development of China's foreign trade. 3.4.Internet plus foreign trade mode With the rapid development of modern information network technology, the Internet and traditional industries are increasingly integrated. The three session of the National People's Congress on 2015, Premier Li Keqiang first proposed the "Internet plus" action plan in the government work report. After the State Council issued "several opinions on accelerating the development of the new competitive advantages of foreign trade" and "guidance" on promoting the rapid development of cross-border e-commerce health aims to foster new competitive advantages of foreign trade by "Internet plus". "Internet plus" is the Internet technology, penetrate into traditional industries, to achieve a comprehensive docking process of manufacturers and consumers, online and offline. "Internet plus foreign trade", referred to as the cross-border electricity supplier. It is the integration of customs, CIQ, payment, tax rebates, circulation and other aspects of traditional foreign trade to the same platform, reduce intermediate costs, to small and medium enterprises to provide opportunities for survival and development, "Internet plus foreign trade has become a new engine to promote the development of China's foreign trade in the new mode and new the concept 4. COUNTERMEASURES TO PROMOTE THE DEVELOPMENT OF CHINA'S FOREIGN TRADE UNDER THE NEW NORMAL ECONOMY 4.1.Seize the opportunity and create a favorable environment for foreign trade Since eighteen, Chinese economy experienced from high-speed to high-speed growth phase shift, structural adjustment pains, pre stimulus digestion period three overlay to actively take the initiative to adapt to the change of new normal, and deepening reform of the strategic opportunity period for the CPC Central Committee and the State Council concerning. Stable economic growth, accelerate the strategic adjustment of economic structure to develop a series of principles and policies, the steady growth of foreign trade in our country, to realize the transformation of foreign trade structure, promote the transformation and upgrading of foreign trade has important significance. China is currently in the industrialization, modernization and urbanization and accelerate the development of information technology stage, a huge potential domestic market, abundant labor resources, the national savings rate is higher, technological innovation ability, change the mode of economic development and economic restructuring is accelerating the pace of economic development trends, good long-term still exists, all aspects of institutional mechanisms continue perfect, social and political stability. All these have created favorable conditions for the development of China's foreign trade, provided broad space and created a favorable environment. 4.2.Cultivate new advantages, tap new potentials and promote sustainable development of foreign trade It has become an important issue to promote the development of China's foreign trade to cultivate the new competitive advantage of foreign trade under the dual pressure of the traditional competitive advantage and the RMB entering the appreciation channel. Innovation driven development. Under the background of activating the initiative and decentralization of the whole people, foreign trade enterprises should increase their R & D investment. From the perspective of product shape, function, business model, key core technology and other aspects of innovation research, the establishment of innovation incentive mechanism. Two is to cultivate independent brand. Establish brand awareness, establish brand goals, through the promotion of product quality and service, establish brand advantages, gradually to the high-end of the product value chain, get rid of the plight of low value-added. At the same time actively tap new potential, one is brought by the new pattern of "Internet plus foreign trade" growth potential; two is to give full play to the role of trade in services. The export of service trade has less consumption of domestic resources, less environmental pollution, and also has important significance for domestic employment and economic restructuring. Three is to actively explore new markets for foreign trade. Especially the "The Belt and Road along the countries and emerging market countries are potential national or regional development of China's foreign trade. 690

6 4.3.Enhance the right to speak, multi-channel cooperation to achieve mutual benefit and win-win situation in foreign trade Enhance the discourse power mainly refers to the use of China's foreign trade country's position on the one hand, to develop and actively participate in the reconstruction of a new round of international trade rules; two is to actively participate in regional economic cooperation, regional trade negotiations to grasp the initiative, play an important role in the process of regional economic integration. Promote trade negotiations in all directions and participate in cooperation in various channels. First, we should actively promote free trade negotiations with an inclusive attitude. Two is to build inclusive cooperation platform to attract as many countries to participate in cooperation, and actively promote regional balanced to Global Balanced stride To further expand areas of cooperation, tap the potential for cooperation, through the implementation of the "The Belt and Road" strategy, the establishment of the Asian infrastructure investment bank and the BRICs Development Bank, in-depth exchanges, cooperation in various fields, and promote China's foreign economic cooperation in the implementation of mutual benefit and win-win, driving the transformation and upgrading of foreign trade. REFERENCES Qi Chunling, Xu Li: the path of realization and transformation of the new normal of China's foreign trade, Economy, 2015 (8): Zhang Fan, Zhu Min, Chen Xuan, Wu Tingting. An Empirical Study on the process of China's foreign trade transformation and upgrading, China business, 2014 (11): XuPeihao. Research on the transformation and upgrading of China's export trade under the new normal, Macroeconomic management, 2015 (8): Wu Yuqi. Analysis of the development of Internet plus foreign trade mode, Time finance, 2015 (8): 274. Tan Jun, External challenges and Countermeasures of China's export sector under the new normal, Economist, 2015 (8): Liu Yuanzheng (2010). China 's money supply endogenous and monetary policy transmission effect, University of International Business and Economics, Colm Kearney and Kevin Daly (1963). Monetary Volatily and Real Output Volatility: An Empirical Model of the Financial Transmission Mechanism in Australia.Review of Financial Analysis 6,77-95 Friedman,M. and Schwartz, A.J. (1963). A monetary history of the United States, Princeton: Princeton University Press. Kirstin Hubrich and Peter Vlaar, (2004). Monetary tansmission in Germany: Lessons for the Euro area.emprical Economics,29,