Strategy of converting Jiangsu Province a foreign-trade large province into a fo

Jiangsu Province, after executing economic internationalization strategy and establishing the strate-gic goal of foreign-trade strong province,meaning to pursue a dominating position in the foreign traderelations, has become one of the foreign-trade large provinces of China and provided considerableinternational competitive power in some important fields.

Abstract

Jiangsu Province, after executing economic inter-nationalization strategy and establishing the strategicgoal of foreign-trade strong province ,meaning to pur-sue a dominating position in the foreign trade relations,has become one of the foreign-trade large provincesof China and provided considerable international com-petitive power in some important fields. The period ofthe first twenty years of this century will be the impor-tant strategic favorable opportunity period for Chinesedevelopment. The external motive force of our coun-try for the economic development will not weakengreatly. The economic society of Jiangsu Province willwalk into the industrialization type-transformingperiod, urbanization acceleration period, internation-alization advancement period, market consummationperiod and information penetration period. In order topromote Jiangsu Province converting from a foreign-trade large pi:ovince into a foreign-trade strongprovince, Jiangsu should command the foreign-tradeaffairs through the scientific evolution concept, man-age the relation between the opening to the outsideworld and the domestic development, comply with theeconomy globalization, propel the internationalizationof production, industry, capital and talents, improvethe hierarchy of opening to the outside world, andquicken the internationalization progress. Also, Jiangsuprovince should maintain the steady continuous for-eign-trade growth, change the foreign-trade growthmode, modify the imports and exports merchandisecomposition and establish the marketing system to theinternational market. Furthermore, under the conditionof moderate growth of general quantity of foreign trade,Jiangsu Province should advance and modify the im-ports and exports merchandise composition, improvethe technology and value-added content of the exportproduction, create the independent trademarks of theexport production, foster the leading companies hav-ing the independent development ability, develop theservice industry, promote the processing trade type-transforming, optimize the foreign-trade spatialdistribution, and deal actively with the internationaltrade frictions while exploiting the internationalmarkets. In the meanwhile, Jiangsu Province shouldmodify the drawback policy, control the export of theresource products, improve the materials circulationmanagement of corporations in the export manufac-turing district, modify the policy of processing trade,encourage the localization, increase the value-addedrate of processing trade, develop the processing trade

overseas, raise the important resource stockpileproperly, perfect the cost policy of the exportmerchandise, and bring the guild into play to maintainthe export order.

Recently, after executing economic international-ization strategy and establishing the strategic goal offoreign-trade strong province under the guidance ofscientific evolution concept, the foreign-trade importsand exports of Jiangsu Province have ranked No. 2 inthe whole country. In the former three quarters of theyear of 2005, the imports and exports quantum is $165.12 billion, and the growth rate is 36.1%, whichranks 1 in the coastal area of China. The quantum is16.12% in the whole of China, among which, the ex-ports quantum is 16.19%. In the year of 2004, the for-eign-trade dependence degree is 91.2% (the exportsdependence degree is 46.17%), which is 21.1% higherthan the average of the country. Jiangsu Province hasbecome one of the foreign-trade large provinces of China and provided considerable international com-petitive power in some important fields. The estimatedimports and exports quantum in the year of 2005 willbe $ 220 billion and the growth rate will exceed 17%,among which, the exports will reach $120 billion andthe growth rate will be about 40%.

1.Primay features and questions in theforeign-trade development of JiangsuProvince

Firstly, the electromechanical products and the highand new-technology products are the major exportproducts. In the former nine months, the values of theexported electromechanical products and high andnew-technology products are USS 59.49 billion andUSS 36.99 billion respectively, which reach 67.24%and 41.81% of the exports of the whole province.Secondly, the textile and costume garment are the mostinternationally competitive exported products. In theformer nine months, the exported value of this kind isUSS 14.11 billion and the growth rate reaches 29.7%.Thirdly, the foreign capital companies are the leadingparts of the operating main body. In the last nine months,the exports value of the foreign capital companies isUSS 66.53 billion and thegrowth rate is 50%, whichoccupies 75.2% of the wholeexports of Jiangsu Province.Fourthly, the processingtrade plays an important roleof the trade methods. FromJanuary to September, the ex-ports value of the processing trade reaches USS 58.26billion and the growth rate is 48.2%, 65.9% of thewhole exports of Jiangsu Province.

Despite the fact that the foreign-trade ensembleoperates well, there appear some new situations andnew questions due to the restrictions of some operat-ing circumstances and policy elements. The first is therestrictions of resources and energy sources. The high-quality managers, engineers and mechanic areundersupplied. The second is that that trade frictionsincrease and the export risks appear. In the last ninemonths, there are 30 overseas antidumping and pecu-

liar safeguards cases concerned with the exporting pro-ductions of Jiangsu Province and the amount of moneyconcerned reaches USS 0.36 billion. The third is therelatively low quality grade of the exportingproductions. In spite of the fast increase of the electro-mechanical products, the processing trade with loweradded value still plays an important role and the rateof net earnings in hard currency is still on the low side.For example, the value-added rate of processing tradeof Suzhou Municipality in 2004 is only 14%. Thefourth is that the importing amplification falls backcontinuously. The equipments and goods imported bythe foreign capital companies fall quickly. Form Janu-ary to September, the value of equipments importedby the foreign capital companies is US$5.69 billion,and the falling rate is 8.4%.

2.New circumstances up against JiangsuPrevince's foreign trade

Now the global economy is in the rising stage.Although the global economy is influenced by the ris-ing petroleum price and the natural hazards, tendencyof the economy recovery has not been changed. Theglobal economy of next year will rise continuously.According to the forecast of some authoritativeinstitutions, the global economy growth rate in 2005 will be 4.3%, and in the year of 2006, steady at 4.3%.The growth of global economy will bring the growthof the global trade amounts, and the external motiveforce of our country for the economic developmentwill not weaken greatly.

The period of the first twenty years of this centurywill be the important strategic favorable opportunityperiod for Chinese development, especially the elev-enth-five-year period. In this period, the economy willdevelop rapidly. The type-transforming of the societystructure will quicken, the reform and opening to theoutside world and the modernization construction willdevelop in the directionof high level, wide fieldand large depth. The com-position of the exportinggoods will be optimizedfurther. A great deal ofhigh value-added mer-chandises such asautomobiles, electric generators will be exported. Theexporting of merchandises having the independent in-tellectual rights will increase. The economic societyof Jiangsu Province will walk into the industrializa-tion type-transforming period, urbanization accelera-tion period, internationalization advancement period,market consummation period and information penetra-tion period.

In the" Suggestions about drafts for the nationaleconomy and social development in the eleventh-five-year period" passed in the fifth Chinese People's Con-gress of the sixteenth session, it is expounded in con-siderable space to improve the extent of opening tothe outside world from these aspects such as "quick-ening the conversion of the foreign-trade growthmodes"," executing the opening strategy for mutualbenefits", etc.; and is advanced the proposal of" de-veloping actively the foreign trade, optimizing the com-

modity compositions of imports and exports, improv-ing the foreign-trade quality and level".

According to these current policies, Jiangsu Prov-ince should mend the products' pace ofinternationalization, transform the foreign-trade growthmethod, optimize the foreign-trade construction, im-prove the foreign-trade quality and benefit, enlarge theexports of high and new-technology products, increasethe exporting products and services having the inde-pendent intellectual rights and independent trademarks,expand the exports of high value-added productions,improve the industrial levels of processing trade, andenhance the matching ability of Jiangsu Province. Thusthe foreign trade would accelerate the development of Jiangsu Province's economy and industry, and thesewould convert Jiangsu Province from a foreign-tradelarge province into a foreign-trade strong province.

3. Strategy of converting Jiangsu Province aforeign-trade Iarge province into a foreign-trade strong province

In the eleventh-five-year plan period, in order topromote Jiangsu Province converting from a foreign-trade large province into a foreign-trade strongprovince, Jiangsu should command the foreign-tradeaffairs through the scientific evolution concept, man-age the relation between the opening to the outsideworld and the domestic development, comply with theeconomy globalization, propel the internationalizationof production, industry, capital and talents, improvethe hierarchy of opening to the out side world, andquicken the internationalization progress. Generally,the following strategies should be adopted: the steadycontinuous foreign-trade growth should be maintainedto encourage the economy growth; the foreign-tradegrowth mode should be changed to upgrade the indus- trial division level; the imports and exports merchan-dise composition should be modified to promote the coordination of the foreign-trade district; and the mar-keting system to the international market should beestablished to optimize the market construction and expand the new markets.

4. Developing emphasis on converting JiangsuProvince a foreign-trade Iarge province into aforeign-trade strong province

(1) Under the condition of moderate growth ofgeneral quantity of foreign trade, Jiangsu Provinceshould advance and modify the imports and exportsmerchandise composition, improve the technology andvalue-added content of the export production, createthe independent trademarks of the export production.The exports of high and new-technology industries,electromechanical products and complete sets of equip-ment should be encouraged to realize the foreign-tradegrowth due to the quality of exports. The electrome-chanical products exports such as vessels, automobilecomponents, machine tools and hardware productsshould be emphasized. The exports of IT hardwiresand advanced home appliances should still bemaintained, meanwhile, the growth fields of export-

ing high and new-technology industries should betransferred to the aspects of software products, bio-logic products and medicament products.

(2) To foster the leading companies having the in-dependent development ability. Thus the products hav-ing the independent trademarks and intellectual rightsshould be created to form the new growth dynamicforce transforming from the low field into advancedfield. The operating main body of varying electrome-chanical products and high and new-technology indus-tries should be fostered. The nongovernmental com-panies with high added value rate and key intellectualrights should be propped up. Thereby, we can masterthe initiative right of the market.

(3) To develop the service trade. By grasping thetendency of the transformation and outer-contract of in-ternational service industry, Jiangsu Province shouldpromote and develop its service industry. On the basisof the existed international trade development advantage,Jiangsu Province should introduce the high value-addedproducing and circulating service industry including thehigh-efficient materials circulation(logistics), finance,correlative technology consultancy, etc.

(4) To promote the type-transforming of the pro-cessing trade. Depending on the export processing tradezone, the industry chain of processing trade extendingto upper and lower reaches should be encouraged, andthe matching work of the processing trade should alsobe well done.

(5) To optimize the foreign-trade spatial distribu-tion in Jiangsu Province. Thus we should establish thecomplete sets of mechanical equipments export basein Nanjing, the electric industry export base in Nanjing,Suzhou and Wuxi, the heavy machinery export basein Xuzhou. In the meanwhile, we should also take fulladvantage of the exports of Changzhou's nongovern-mental companies and quicken the development ofZhenjiang and Yangzho's basic industry and heavychemical industry along the Yangtse River, and buildNantong into a new manufacturing industry base independent of Shanghai. We should also put emphasison building the export base of IT and high and new-technology industry along the Hu-Ning(Shanghai-Nanjing) line, developthe export base ofmanufacturing industry,chemical industry andmetallurgy industryalong Yangtse River.Thereby we can pro-mote the foreign-tradedevelopment of differ-ent districts.

(6) To deal activelywith the international trade frictions while exploitingthe international markets. Jiangsu Province should de-velop the markets of ASEAN and South America; co-operate further with the friendly states such as Baden-Wiirttemberg State of Germany, New York State ofUSA, Punjabi State of Pakistan, etc. We should alsoguide the companies to go abroad by the use of oppor-tunities like exhibitions, pay attention to the produc-tions that may cause the trade retaliation, friction andclash, improve the ability to resolve the trade conflict,

and get ready for the trade friction.

5. Some suggestions about the concerned policy

(1) To modify the drawback policy and control theexport of the resource products. It is suggested to re-duce drawback rate of some productions with com-petitiveness including textiles, costume garments andelectromechanical products, improve the value-addedrate threshold for exporting the raw products, reducethe quota of the exporting resource products, and in-crease the export tax for some products.

(2) To improve the materials circulation(logistics)management of corporations in the export processingtrade zone. It is advised to allow the raw componentsneeded by the processing trade companies in the ex-port processing trade zone to be exported directly.While for the exports of components needed for theafter service, it is suggested to be allowed to export ifproved and provided order sheets by the companies.

(3) To modify the policy of processing trade, en-courage the localization, increase the value-added rateof processing trade, develop the processing tradeoverseas. It is advised to perfect the admittance mecha-nism for the processing trade, restrict or even elimi-nate the low-value-added, high-consuming and envi-ronment-polluting processing trades. Meanwhile, weshould encourage the processing trade overseas.

(4) To establish the conception of balanceable tradeand raise the important resource stockpile properly. Itis advised not to pursue painstakingly the rapid ex-porting growth, not to pursue painstakingly the foreigntrade surplus, but to form the policy of balanceabletrade. It is also suggested to raise the important resourcestockpile properly, for risks exist in a certain extent ifall of the foreign exchange reserves of the mainland ofP.R.C over $ 700 billion are reserved in currency. Sowe can transfer a part of the foreign exchange reservesinto the physical goods re-serves and choose to im-port some important re-sources and energysources to increase the im-portant resource stockpile.At the same time we canimprove the imports of theadvanced equipmentsoverseas, this is of greatadvantage to the nationaleconomy safety and will also reduce the active tradebalance and as a consequence to moderate the tradefriction with some countries concerned.

(5) To carry out the standard of social accountabil-ity and perfect the cost policy of the exportmerchandise. Recently, a new kind of internationalstandard in the international trade field, the social ac-countability standard (SA8000) recommended by theSocial Accountability Institution (SAD, has appearedto ensure the merchandise provided by the provider tomeet the requirement of the social accountability. Atpresent, our products such as costume garments, toys,shoes, furniture, gymnastics apparatus hardware fordaily use, etc, have been examined by SA8000. So it issuggested to propagandize the SA8000 through all

kinds of media, establish the uniform examining andcertifying organization, form the systems of the labor-ers' wages, insurances and welfares through legislation,and increase the minimum wage standard to protectthe laborers' rights and benefits.

(6) To bring the guild into play to maintain the ex-port order. It is suggested to bring the guild into playunder the leading of government, put the foreign-tradeoperating into order, strengthen the industry self-discipline, prevent the competitive sale, prohibit thecut-throat competition and" price war" to maintainthe prestige and benefits of our country's exportingproductions.

Caoyang (1967. 12～), male, born in Funing,Jiangsu, Ph. D. candidate of Nanjing University ofScience & Technology, majoring in managementengineering. Now he is the vice-director of the foreigncapital utilization & economic trade division of theDevelopment and Reform Commission of JiangsuProvince, having published more than 30 articles inpapers and magazines.

Yao Hongbing(1976.5～), male, bom in Taixing,Jiangsu, Ph. D., now a lecturer of School of Mechani-cal Engineering in Jiangsu University.