1. Introduction

China`seconomic relations rely on a bilateral deal with other countries allover the globe, and the Chinese government has since then adopted anopen trade policy as per the WTO agreements. The free trading has asa result extended the economic relations of China with its businessassociates. The conversion of the Chinese market to a freemarket-oriented nation has been hugely helpful for the overalldevelopment of this country. According to research by the IMF,China`s economy is ranked second worldwide regarding the nominal GDPand the biggest economy while taking into consideration thepurchasing power parity. In respect to the exchange rates used toassess the inter-country comparisons, China is positioned secondafter the United States of America with a subtotal GDP approximatedat $10.38 trillion in the year 2014. &quotChina`s economy can bedescribed as massive and robust since it accounts for about 15percent of the world’s overall output&quot (The World Bank). Theeconomy constitutes components of socialism and capitalism and itsinfluential struggle to build a communist structure, and more of itsdevelopment took place after it took on several capitalist practices.According to research by the IMF, China`s GDP grows by about 11percent annually which is a higher rate when compared to otherdeveloped nations. &quotMost of the Chinese companies are possessedby the government and the country hence has substantial control overprivate firms&quot (Ross). This regulatory which many individualsperceive as being limiting has helped China to grow in a way that isviewed by the government as most beneficial. This study aims atdiscussing China and its international economic relationships. In itsanalysis, it will major on the main exports, imports, China`s tradingpartners alongside other aspects.

2. Elements of China’s Economy

Chinahas seen a sound economic development from low-priced exports such asmachinery and gadgets. Substantial government expenditure has beenfueled into nation-owned corporations to stimulate the exports. Theseorganizations have also been able to take over other privately ownedfirms. Examples of such companies in the energy sector are Sinopec,CNOOC as well as Petro China. Nonetheless, these businesses are lessprofitable compared to the private companies. Their overall returnaccounts for about 4.9% of the total assets in comparison to 13percent for the private firms. Additionally, &quotChina has beenable to expand cities to attract employees who work in thesefactories&quot (The World Bank Foreign direct investment). For thisreason, about a quarter of the China`s wealth is in real estate. Thegovernment has also financed the building of the railways as well asother infrastructure to maintain a sustained economic development.This kind of infrastructural development has led to the importationof considerable quantities of products such as aluminum and copper.

3. Chinese exports

Since2013, China has been the globe`s largest exporter. In the year 2015,its total exports amounted to $2.7% of the world`s volume of exports.The nation dispatched a total of 16 percent of its exports to Americain 2014 which led to $460 billion deal arrears in 2015. China hassince then expanded its trade operations with Hong Kong, Japan aswell as South Korea. It has also incorporated in measures to enhancetrade with the African countries by spending in their infrastructurein exchange for oil. Also, China has enlarged trade unions withother Asia Countries as well as with several Latin American nations.These relations explain why the former president of the UnitedStates, Barrack Obama pioneered the Transpacific Partnership tradeagreement. One of its principal objectives was to weigh up China`srising economic authority in the sector. China engages in massiveproduction for foreign companies such as American firms. The inputsare dispatched to China where factory employees generate the finalproducts and ship them back to America. In that case, lots of Chineseexports are manufactured by the US firms. China`s major exportsinclude &quotmachinery such as computers, integrated circuits,broadcasting equipment, as well as health devices. Other exports are,fabric, and textiles&quot (Morrison, 16).

Chinais the world`s biggest producer of steel. It exports much of itssteel to the United States compared to other nations. It also shipsconsiderable amounts of iron to Germany, South Korea, United Kingdomand Mexico. Chinese exports have been increasing rapidly over recentyears, not including the year 2009 when the nation experiencedfinancial crises coupled with the worldwide economic downturn.Textile and apparel are among the other primary products that areproduced and traded in China since the economic reforms wereinstituted in 1978. Currently, China is the largest textilemanufacturing and exporting nation globally. In the year 2013, therevenue from Chinese textile industry amounted to $520 billionfollowed by the European Union and India with an allocation of 24percent and 5 percent respectively. To support its export advantages,China has attempted to advance the global value chain by a shift tothe high-end exports including the power gadgets and electronicproducts for the past decades. The country was ranked number one inregards to the production and exportation of integrated circuits andelectronic devices.

4. China’s Imports

Chinais ranked third globally regarding the importation of goods andservices. In the year 2015, it imported an estimate of $1.6 trillionwhile United States imported an approximate of $3.4 trillion. Thecountry brings in raw products from Latin America and Africaincluding oil as well as other fuels, vehicle parts, coal briquettes,plastics, organic chemicals, and metal ores. China is the world`sbiggest importer of aluminum and copper. By the year 2012, Chineseimports constituted $330.5 billion iron ore, $95.6 copper, $38.6billion soybeans, and lastly plastics represented $46.2 billion. Mostof the Chinese imports are from Japan, South Korea as well as fromother Asian Countries. China imports a large amount of manufacturedand agricultural products such as soybeans from developing nations.Being a member of the East Asian manufacturing sharing, products fromthese countries are shipped to Hong Kong for production.

China’sShare of Global Commodity Expenditure in 2014/2015

Commodity	Share of the World Consumption
Aluminum	53%
Nickel	49%
Copper	48%
Zinc, Tin	45% of each
Steel	43%
Lead	39%
Cotton	29%
Rice	28%
Gold	20%
Corn	21%
Wheat	18%
Oil	13%

(Source:&quotChina`s Giant Appetite,&quot&nbspWSJ,&nbspAugust 26, 2015)

5. Industries in China with massive FDI

ForeignDirect Investment entails instituting operations or obtainingtangible assets such as stakes in other businesses. It can also bereferred to as the acquisition or founding of income–producingassets in a foreign nation that involves the monitoring of theprocesses or the organization. FDI also includes the conveyance offactors that are complementary to capital such as technology, andorganization skills. It occurs in three distinct forms namely,horizontal, whereby the corporation executes the same activitiesoverseas as at home. For instance, Toyota assembles vehicles in bothUK and Japan. Vertical form occurs when distinct phases of activitiesare added overseas. Lastly, conglomerate, this is where theindependent businesses are supplemented abroad. It is the mosttypical form of FDI since it entails trying to conquer two barriersconcurrently.

Chinahas been doing well in organizing its external foreign directinvestment. It has obtained over 19 percent of all of the FDIs toless developed nations over the last five years. In regards to theallocation of GDP and investment, FDI amounted to about 3 percent ofthe overall GDP on average for the last six years. According to theMinistry of Commerce, &quotforeign invested firms account for abouta half of China`s net exports. Numerically, this is about 20 percentof the Chinese industrial production and produces an approximate of20 percent of industrialized gains while hiring about 11 percent ofmanual labor due to their massive productivity.&quot Studiesindicate that China is anticipated to grow three times greater thanthe United States, for this reason, American firms are trying toenter into Chinese markets to boost their profits. Examples of thesecompanies are Apple, Ford Motor, Nike and HJ Heinz. Americancompanies account for over $3.6 billion in foreign direct investmentin China. For instance, Coca-Cola and Starbucks Corporations regardChina as their primary growth market. Other American corporationsthat have invested heavily in China include Wynn Resorts which haveestablished its operations in Hong Kong. It announced its plans toexpand its operations in China by opening several branches to boostits competitive advantage with Chinese companies such as Las VegasSands. &quotGeneral Motors and Volkswagen have also spent millionsto increase investment in China&quot (China FTA Network). FordCompany is trying to compete by expanding manufacturing capabilityand its trade set-up in China. Along with its joint ventureassociate, Chang’a Ford Mazda, have put into place plans to startgenerating the advanced Ford model. Foreign direct investment inChina has risen from 14% to almost $39 billion in the first fivemonths of this year.

6. Major China’s trading partner

Chinais the biggest trading country worldwide and hence plays asignificant function in the global business dealings. China became amember of the World Trade Organization in the year 2001. Itsprincipal trading partners are the United States, South Korea, HongKong, Germany, UK, Netherlands, European Union and ASEAN. It also hasfree trade agreements with other nations such as Pakistan,Switzerland, and Australia. Additionally, China is involved in thetriangular trade that includes intermediate products from developedeconomies including Japan and South Korea. In regards to cheaperlabor of Chinese employees, these raw materials are then assembledinto products then exported in America and Europe. For this reason,China was able to surpass the United States as Japan`s first tradeassociate in the year 2004. Domestically the Chinese governmentshave been putting more efforts to lessen the economy`s reliance onexports and aim at internal consumption. In the year 2013, China`snew management proclaimed their plans to move to a recalibrateeconomy, admitting there is increasing conflict between downwardpressure on economic growth and excess production capability.

7. China`s Economic Relations with the US

China`seconomic relations with America has considerably expanded since thenation joined the World Trade Organization. Currently, China hassurfaced as the most prospective market for the American exports. In2016, America’s exports to China accounted for about $50 billion.China is ranked fourth as a destination for American exports afterCanada, Japan, and Mexico. On the contrary, Chinese exports to theUnited States have also increased significantly. The Americangovernment keeps on introducing various strategies targeted tostrengthening the ties between China and America. For instance,various summits and bilateral meetings have been held in both nationswith the aim of finalizing significant business agreements. The majorgoal of these strategies is to drive the Chinese management towardsachieving a liberalized economic system. In return, it helps infacilitating the actions of correcting the disparity in the Chineseeconomy. The American direct investment in China comprises of anessential part of China`s economic relations with America. China alsohas foreign investment in America in various sectors such as Chinesepetrochemical, manufacturing as well as the hospitality industry.

Chinahas over the recent years invested rapidly in Africa surfacing as theAfrican`s largest trading partner by offering a demand for thecontinent`s energy and minerals. Nonetheless, most of China`s directinvestments in Africa have poor track records of governance such asin Angola and Sudan. As a result, this has led to some negativecomments regarding Chinese investment in Africa. China has alsoinvested in Europe for the past decades offering excellent businessopportunities for the European SMEs. The most targeted Europeannations by China`s multinationals include the France, Portugal, UKand Germany. Much of the Chinese foreign investment in Europeancountries is concentrated in the machinery and electrical gadgetsfollowed by textiles, clothing, as well as the optical products.

8. China’s Effort to Lower Trade Barriers

Everycountry has its trade barriers destined to protect its domesticfirms. China has put in several measures intended to reduce tradebarriers to boost its international business relations. One strategyincludes tariff escalation in this case, China`s main aim is to cutdown taxes applied to the imports of essential raw materials as wellas means of production while higher tariffs are applied to theimportation of industrial products, foodstuffs, and luxury goods. Forinstance, textile raw materials are levied at 5 percent whilefinished textile products are taxed at about 55 percent. China hasalso reduced import tariff rates applied to particular productsimported from FTA nations. Moreover, the Chinese government hasinstituted a new system of compulsory product certification whereby aunified catalog, fee schedule as well as standard mark areincorporated. China`s Compulsory Certification (CCC) symbol is anaccreditation sign for all commodities which are allowed to beimported, sold or utilized in China. The CCC catalogs the mainproducts of electrical wires, circuit, switches, electric gadgets,more power tools as well as household apparatus.

9. China’s Free Trade Agreements

Chinais a member of over 11 Free Trade Agreements, with some undernegotiation and still three others under consideration. Some of theseagreements are relatively small though crucial for the firms whosenations are members of the respective unions. Examples of theseassociations include the European Free Trade Association, China-ASEAN FTA, Asia-Pacific Trade Union, China-Chile FTA, and China-Pakistan FTA alongside others. The government of China considers Freetrade unions as the latest platform to foster the establishment andto fasten the domestic reforms as well as a practical way ofintegrating into the global economy and excellent economiccooperation with other economies. Trade agreements have promotedinnovation and competition in China. Intense competition, forinstance, can be seen in the effort to create the current personalcomputers at the lowest cost possible. Also, trade agreements haveenabled Chinese citizens to access an extensive range of products atcheaper cost compared to the country`s products. This availability oflow-cost products is because some countries have a comparativeadvantage over the production of particular goods than others.Additionally, free trade has generated economic growth in China. Itdoes this by fostering opportunities for Chinese businesses freetrade increases sales, profit margins as well as market share. China`s firms have as a result expanded their operations overseaswhich have boosted their profits over time. Free trade has helped tospread democratic values. By engaging in international trade, Chinesecompanies conform to the stipulations of their contracts and globalstandards and rules. World Trade Organization, for instance, requirestheir members to honor trade agreements. By adhering to the rule oflaw, free trade has lessened the chances of corruption. &quotEngagingin free trade has boosted economic growth in China by increasingopportunities, standards of living as well as the choices&quot(WTO). Also, there has been an increase in job opportunities in Chinaas a result of increased trade between member nations. China`s firmsenjoy economies of scale due to expanded operations in othercountries which have led to lower costs and prices for the consumers.Nonetheless, the trade agreements have several demerits to China`seconomy, for instance, it has resulted in a distortion of commerce inthat trading unions have the potential of changing the world tradewhich decreases the gain impacts of specialization and theutilization of comparative advantage. Trade unions also introduceinefficiencies this happens when the trade is abstracted away fromresourceful manufacturers who are situated externally of the tradingregion.

10. China’s FDI patterns

Economicreforms and trade investment liberalization has led to significanttransformations in China. The major FDI investment countries andtheir components are as shown below.

Table1: Major Destinations of Chinese Non-Financial FDI Outflows

Country	Amount	% of Total	Amount	% Total
	1,500	100	118.6	100.00
Hong Kong	758.5	47.5	86.5	72
British Virgin Islands	111.5	7.2	–	–
Japan	97.5	6.4	4.4	3.5
United States	76.2	5.0	2.8	2.4
Taiwan	74.2	4.8	5.4	4.4
Singapore	72.4	4.7	6.0	5.0
South Korea	61.0	3.9	4.1	3.4

Source:Chinese Ministry of Commerce and Chinese Statistical Yearbook

GrowthTrends and share of Capital components in China and the Net FDI flowsfrom 2011-2016

	Net Inward Investment						Net Outward investment
Year	Total Inflow	Growth in Total Inflows	Share of Equity	Proportion of reinvested earnings	Percentage of other capital	Growth of total outflows		Portion of equity	Part of reinvested earnings	Fraction of other capital
2009-2010	53008	5.9	17	10	15	38		50	3.5	1.5
2011-2012	18900	550	62.2	0	37	20		61	4.5	3.6
2013-2014	10150	127	145.4	82.1	56	19.4		75	5.2	12.2
2015-2016	94360	8	86.7	12.5	20	21.0		95	6.4	13.5

Source:WorldInvestment Report

Theabove data shows that the biggest destinations of the overall ChineseFDI are Hong Kong followed by the United States, Taiwan, Singaporeand lastly South Korea.

11. Conclusion

Insummary, China is a populous country in East Asia which is ranked asthe world`s fastest growing economy. The state has put in measuresthat have enabled it to compete globally. For instance, it hasentered into trade agreements with various nations all over the worldwhich has aided in boosting its competitive advantage. China`seconomy is expected to surpass the United States by the year 2020regarding the GDP and net exports. China`s rapid economic growth andeconomic power have warranted China`s leadership globally. Decreasingtrade obstacles on imports has led to increased competition in China,lessened costs for consumers as well as fostering economicefficiency.

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