What Is the Balance of Trade?

Trade balance means that a country's total foreign trade imports and exports generally tend to balance in a given year. Looking at the foreign trade policy practices of governments around the world, there are not many such phenomena. Generally speaking, a government in a foreign country should try to maintain a basic balance of imports and exports with a slight balance, which is conducive to the healthy development of the national economy.

Trade balance

Trade balance means that a country's total foreign trade imports and exports generally tend to balance in a given year. Looking at the foreign trade policy practices of governments around the world, there are not many such phenomena. Generally speaking, a government in a foreign country should try to maintain a basic balance of imports and exports with a slight balance, which is conducive to the healthy development of the national economy.

Chinese name

Trade balance

Foreign name

the balance of trade

Brief introduction

In order to clarify the excessive differences in trade statistics between the two countries and the US trade statistics reflected in China

The United States has adopted discriminatory export control policies against China. This is the main obstacle that restricts US exports to China and affects the bilateral trade balance.

Since the establishment of diplomatic relations between China and the United States in 1979, the United States has gradually relaxed its export controls on China and successively classified China into Groups P and V. However, in the course of US policy and implementation, there are still many discriminatory provisions, so that China cannot really enjoy the treatment of Group V countries. After 1983, the former members of the Paris Coordinating Committee, including the United States, began to consider relaxing export controls on China, and in September 1985 formed a resolution to simplify the approval process for exports to China, but at the same time proposed the so-called export to China. "Controlled Goods" cannot change the requirements of users and uses. The Chinese government has responded positively to this. The Chinese government has always taken the commitments of "end-users" and "end-uses" seriously, and has adopted a series of positive measures accordingly, with obvious results. Other Western countries have recognized and accepted the "End User and End Use Instructions" issued by the Chinese government. Only the United States remains skeptical and asks China to make such additional commitments as the so-called "controlled goods" exported by the United States, such as It puts forward requirements for end-user inspection and verification after arrival, and various harsh conditions attached to export licenses, such as 24-hour on-site monitoring and sampling inspection at any time, which are difficult for China to accept. In March 1994, the Paris Coordinating Committee, a product of the Cold War, announced its dissolution. The United States' export control policy could not help but make some adjustments, but its discriminatory export control policy towards China remained basically unchanged.

In the 1980s, U.S. export controls on China were relaxed, and bilateral economic and trade relations have improved and developed to a certain extent. However, since the 1990s, the United States has adopted a series of new sanctions against China, many of which involve export controls. This has caused serious consequences for Sino-US economic and trade relations, and new changes have taken place in Sino-US trade balance relations. The surplus turned into a deficit. It is hard to say that this kind of policy that harms others is not wise.

The U.S. discriminatory export control policy against China and the sanctions against China that have not yet been lifted have greatly restricted U.S. exports to China, and have also had a very negative impact on U.S. investment in high-tech fields in China, becoming Constraints on the development of Sino-US economic and trade cooperation. The negative impact of US export controls on China-US economic and trade cooperation and the losses caused to US manufacturers can be seen in the following examples:

As early as the early 1980s, Chinese companies had conducted technical and commercial negotiations with Westinghouse and General Electric Company on the purchase of 300,000 kilowatts of nuclear power plants in Qinshan and 900,000 kilowatts of Daya Bay. However, the US government's export control failed. The "Sino-US Cooperation Agreement on the Peaceful Use of Nuclear Energy" was signed by the Chinese and American governments in 1985, and the Chinese side ratified the agreement, but the US Congress attached many prerequisites when ratifying the agreement, which has not yet entered into force. At present, China's nuclear power industry is in the development stage, and the construction of nuclear power plants requires the import of a large number of technical equipment. US nuclear power manufacturers have a strong interest in participating in the construction of Chinese nuclear power plants, but lost the opportunity to export to China because the US government controls the export of nuclear technology to China.

In the mid-1980s, China planned to introduce integrated circuit and program-controlled switch technology and equipment. Due to the restrictions of the US government, US exporters lost billions of dollars in export opportunities. China still wants to import electronic components and their production and testing equipment from the United States. Discriminatory export controls by the US government have hampered US companies' exports to China.

China needs to import advanced machine tools and equipment, which has brought good trade opportunities to American manufacturers. Due to the strict export controls of the US government, many US companies' normal trade activities with China are difficult to carry out.

There are countless such examples. The US government's discriminatory export control policy against China has not only caused a large number of Chinese users to lose cooperation opportunities with US exporters, but also has caused US exporters to lose trade opportunities. According to relevant analysis, due to the discriminatory export controls of the United States, the United States loses billions of dollars in trade opportunities to China every year. It is contradictory for the United States to emphasize the issue of China's trade deficit and not relax its export controls.

While the US government continues to adopt discriminatory export control policies against China, the governments of other industrially developed countries have successively eliminated discriminatory policies and provided China with intergovernmental financial support for capital goods imports, thereby promoting exports to China. This will undoubtedly increase the competitiveness of its products in the Chinese market. Because of this, EU countries not only have no trade deficits with China, they also have billions of dollars in trade surpluses each year. This fully shows the impact of different export policies on China on the trade balance between the two sides.

The Chinese government hopes that the U.S. government can take effective measures to relax and even cancel the existing discriminatory export control policies in the light of the long-term interests of developing bilateral trade and economic cooperation, and do more useful work to promote the balanced and healthy development of Sino-US trade. This is the realistic way to solve the Sino-US trade balance problem.