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Currently, China's largest trading partner is the US, which bought up 20.8% of China's exports in the first half of 2004. Over the past 9 years, since China instituted its fixed exchange rate regime, its current account surplus with the US exploded, experiencing 582% growth. It might have grown even more if not for the newly established trade barriers that the US instituted against China. The EU comes in as a close second for largest export partner at 18.6% of total exports. In terms of imports, China's purchases come mostly from the EU and Japan. In 2002, European exports into China were greater than that of Japan's, but in 2003, the relationship flipped with Japan coming in as China's largest source of imports. This |
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change is evidently due to exchange rate fluctuations. With the yuan pegged solely to the USD, any appreciation or depreciation that the dollar experiences against other currencies is also reflected on the yuan. Between 2002 and 2003, the US dollar lost about 15% of its value against the euro while remaining fairly stable against the yen. In recent years, the composition of China's import partners has also changed because of their rapid industrialization and increased consumption of oil and metals. For example, imports from Chile (the world's largest producer of copper) rose from a mere $.034 billion in 1990 to $2.25 billion in 2003, increasing over 65 times. |
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