2012

Submitted to Mr. Saqib Jalil Submitted by M. Sohaib Farooqui

[IMPORT EXPORT ACTIVITIES OF CHINA AND US]

Individual Assignment 1

Contents
Import and Export Activities of China ........................................................................................................... 3 Strategies .................................................................................................................................................. 3 China Exports ........................................................................................................................................ 3 China Imports ........................................................................................................................................ 3 Trade Partners .......................................................................................................................................... 3 Balance Of Payments ................................................................................................................................ 3 Import and Export Activities of United States .............................................................................................. 5 Strategies .................................................................................................................................................. 5 Trade Partners .......................................................................................................................................... 5 Balance Of Payments ................................................................................................................................ 6

Import and Export Activities of China

Strategies
As much as by luck as by design, China stumbled onto an export and foreign investment strategy that has proved remarkably successful, helping the economy move quickly to a market-based system. But can the Chinese experience serve as a model for other countries? After three decades of inward-oriented trade and foreign investment policies, in 1979, China switched course and launched an "open-door" policy. With the second largest total trade volume, and its current share of global trade accounting for the largest at 10.6 percent, a new trading power has emerged. China Exports In 2010, China exports totaled $1.194 trillion, down from $1.429 trillion in 2008. Its main exports are electrical goods and other machinery, including data processing equipment, apparel, textiles, iron and steel, optical and medical equipment; China Imports In 2010, China imports totaled $921.5 billion, down from $1.131 trillion in 2008. Its main imports are electrical components and other machinery, oil and mineral fuels, optical and medical equipment, metal ores, plastics and organic chemicals;

Trade Partners
Chinas top 5 trading partners are European Union, USA, Japan, ASEAN and Hong Kong. China's main export partners are US (17.7%), Hong Kong (13.3%), Japan (8.1%), South Korea (5.2%) and Germany (4.1%) China's main import partners are Japan (13.3%), South Korea (9.9%), US (7.2%) and Germany (4.9%).

Balance Of Payments
Chinas high export growth has spurred a high current account surplus for many years. This surplus is now showing a declining trend, but this declining surplus on goods dominates the current account. Chinas trade surplus signifies an equal deficit of its trading partners, especially USA. At the end of 1970s, China introduced its trade reform policy, i.e. Import Substitution Strategy, which resulted in China ranking as 32nd among nations in global trade. In a span of thirty years, China has become the world's largest exporter. Although it is said that in 2012, it is the first time since 1998 that money has left China than entering it. China has recorded a slight deficit in its balance of payment this year. The reason is said to be appreciating Yuan that has caused money to flow out of China.

Import and Export Activities of United States

Strategies
Historically, U.S. companies seeking to expand their revenues focused first on increasing their number and share of U.S customers. For years, this focus served as a winning strategy for many of the most successful U.S. companies. Today, global economic trends make clear that successful companies are those that reach and sell to consumers outside U.S. borders and around the globe. Over 95 percent of the worlds consumers live outside U.S. borders. A new middle class is emerging in once-developing nations, which will increase the consumption of goods and services worldwide. More than one billion new consumers worldwide will enter the middle class during the next 15 years. According to a recent study by the Organisation for Economic Cooperation and Development (OECD), global middle-class consumption is expected to rise from $21 trillion to $35 trillion by 2020, with over 80 percent of the growth in consumption occurring outside of North America and Europe.1 U.S. companies ignore these opportunities at their peril. Recognizing the vast opportunity presented by the global marketplace and the need for U.S. companies to be ready to seize these new opportunities, President Barack Obama announced the National Export Initiative (NEI) in January 2010 and set the goal of doubling U.S. exports by the end of 2014 to support millions of jobs here at home. Over the past decade, exports have become a major part of the U.S. economy. In 2008, U.S. exports of goods and services supported 10.3 million jobs and comprised 12.8 percent of the overall U.S. economy. The global economic recession cut significantly into these values in 2009, when U.S. exports of goods and services supported approximately 8.5 million jobs and comprised 11.2 percent of the overall U.S. economy.

Trade Partners
United States top 5 trading partners are Canada, China, Mexico, Japan and European Union, South Korea and Brazil. United States main export partners are Canada (19.1%), Mexico (13.2%), China (6.9%), Japan (4.4%), United Kingdom (3.7%), Germany (3.2%) and South Korea (2.9%). United States main import partners are China (18%), Canada (14.2%), Mexico (11.7%), Japan (5.8%), Germany (4.4%) and South Korea (2.5%).

Balance Of Payments
United States has prospered economically on its consumer based economy. The US has been borrowing from willing foreigners to maintain its lifestyle, even as they have become uncompetitive in world manufacturing markets. The US is importing $700B more in goods and services than it sells abroad.