To Export or not to Import:The New Idea of China's Foreign Trade Strategy under the "New Normal"
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| Title | To Export or not to Import:The New Idea of China's Foreign Trade Strategy under the "New Normal"
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| Author | Gong Gang,Li Bingnian and Xu Wenge |
| Organization | Yunnan University of Finance and Economics；Tianjin University of Finance and Economics |
| Email | gonggang@vip.163.com；libingnian@163.com；xuwenge_nk@163.com |
| Key Words | New Normal; Transformation of Foreign Trade Strategy; Economic Growth; RMB Internationalization |
| Abstract | Export-led strategy is the basic paradigm of China's foreign trade strategy over the past thirty years. In a demand-determined economy, exports and the trade surplus will undoubtedly promote economic growth. However, when the Chinese economy has entered the "new normal" state, the China will gradually shift from the demand-determined economy to the supply-determined economy. In the supply-determined economy, exports and the trade surplus will curb economic growth, while imports and the trade deficit will ease the shortage of resources and promote economic growth. To this end, we propose that China's foreign trade strategy should be gradually the import-led strategy under the "new normal" state, i.e. the pursuit of trade deficit. However, the long-term deficit is generally not sustainable unless using the renminbi to settle imports. Thus, the transformation of China's foreign trade strategy requires the support of RMB strategy, namely RMB internationalization. Further, we find that imports and direct investments by RMB in the neighboring countries are an important measure to promote the RMB regional internationalization, which the import-led trade strategy in turn will boost the RMB internationalization. |
| Serial Number | WP870 |
| Time | 2015-05-12 |
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