This paper analyzes a current problem faced by Mainland China, that is how to expand exports. The major contents and conclusions are as follows:
First, we examine the different concepts of exports advocated by Mainland China in the past and at present. Today, exports have assumed a new prominence as they can help manage the unemployment problem, increase the capacity for imports, reduce the trade deficit, and help enable Mainland China to meet foreign debt repayment schedules.
Second, we highlight the patterns of comparative advantage and the particular competitive abilities of products exported by Mainland China. Here, we employ an index of relative export performance, devised by Prof. B. Balassa, as an analytical device. Presently, Mainland China uses a different index that compares the domestic cost of producing exported products to the export value measured in terms of U.S. Dollar. We used both indexes, and obtained similar conclusions. Nevertheless, Mainland China’s index is inadequate to express and reflect the true patterns of her comparative advantage. This is due to the price formation mechanism and pricing policy in use in Mainland China today. The index, however, can still be regarded as a “second best” tool of investigation.
Finally, we look at the possible scope of and the constraints to Mainland China’s exports in the near future under the new economic policies. For example, we explain the reforms in trading institutions, the new methods for expanding exports, and the commodity structure of exports. The growth of Mainland China’s exports will be determined by the amount of surplus available for exports after allowing for domestic consumption, the improvement Mainland China is able to achieve in upgrading the quality of export items, and finally growth will be related to improvement in marketing skill to allow Mainland China to take advantage of the favored trading positions extended to her by many other nations.
