In 1979, China began to establish special economic zones and open coastal cities for economic cooperation, adopting more flexible and preferential export and import policies. These special zones have played a demonstrable role in the development of foreign trade and even a more open national economy. In 1980, the import and export volume of the four special economic zones—Shenzhen, Zhuhai, Xiamen and Shantou--made up 1.1 percent of the country's total, and by 1991, the proportion rose to 8.3 percent.

EXPANDING THE MARKET: A foreign buyer negotiates with a toy maker at the China Import and Export Fair held in May 2009 (ZHUANG JIN )

Before 1978, China's foreign trade sector had followed a centralized management mechanism, and the government adopted mandatory planning toward foreign trade companies, managing both their incomes and expenditures and being responsible for their profits and losses.

In 1979, the country started a series of reforms over its foreign trade system, establishing a number of industrial and trade companies affiliated with various industrial management departments, simplifying foreign trade plans, adopting a dual exchange rates system to enhance the competitiveness of exports, and implementing import and export license systems.

GOING GLOBAL: Chinese-made Haier air conditioners are sold at a store in New York City (XINHUA)

In the early years after China introduced the reform and opening-up policy, owing to its low productivity, it suffered severe shortages of foreign exchange. As a counter-measure, the country conferred foreign-invested companies the right to operate import and export businesses. From 1979 to 1991, China used a total of $25 billion in foreign investment. The proportion of imports and exports by foreign-invested companies rose from 0.1 percent to 21.3 percent of the country's total. Foreign investment played a significant role in the development of China's foreign trade.

1992-2001: Transformation and development under a market economy. Capital- and technology-intensive products gradually replaced labor- and resource-intensive products and became the most important exports; foreign-invested companies rapidly developed into the main force of China's foreign trade; processing trade became the major form of trade; and trade surplus soared.

China began actively participating in the international industrial chain, international competition and world economic cooperation, as well as fully playing with comparative advantages.

Since then, China's foreign trade has entered a stage of rapid growth. The Asian financial crisis that broke out in 1997 severely beat the economies of neighboring countries and regions such as Japan, South Korea, the Association of Southeast Asian Nations, Hong Kong and Macao. China's foreign trade also experienced the first serious setback after adoption of the reform and opening-up policy. In 1998, China's exports and imports saw negative growth. However, the country's foreign trade soon overcame the crisis and resumed its vigor. In 1999, the trade volume realized an increase of 11.3 percent year on year and in 2000 the growth reached 27.3 percent, of which exports surged 31.5 percent.

The development of the market economy in China provided conditions to further improve the structure of imported and exported commodities. The proportion of exported manufactured goods rose to more than 90 percent. Capital- and technology-intensive products gradually replaced labor- and resource-intensive products and became the most important exports. In 1995, mechanical and electrical products surpassed textiles to become the largest amount of exports, realizing another significant change in the mix of export. Mechanical and electrical products became the most important driving force for China's exports and stimulated the rapid development of the country's foreign trade. During this period, China's industrialization began to accelerate and fixed-asset investment grew, bringing strong demand for capital and goods and accelerating the imports of mechanical and transportation equipment.

During this period, foreign-invested companies became the major force of China's foreign trade, and processing trade became the major form of trade. In 2001, imports and exports of foreign-invested companies accounted for 50.8 percent of the national total. In 1993, the volume of processing trade reached $44.2 billion, surpassing that of general trade for the first time. From 1995 to 2007, the proportion of processing trade exports remained above 50 percent, being the most important of China's commodity exports.

Development of foreign-invested companies and the processing trade prompted China's manufacturing industries to go global. In the meantime, the processing trade also accelerated the growth of China's trade surplus. From 1992 to 2001, the total volume of China's trade in goods increased from $165.5 billion to $509.6 billion, ranking the country sixth in global trade. During this period, the trade surplus increased from $5.4 billion to $22.5 billion. The country's foreign exchange reserves also accumulated fast, surpassing $100 billion in 1996 and hitting $212.6 billion in 2001. In 1999, China unveiled the strategy of going global. In 2000, the country's non-financial direct investment in foreign countries reached $1 billion, after that soaring at an average annual growth of almost 100 percent and driving China's technology and equipment exports. Overseas investment also helped supplement domestic demand for resources.

While trade in goods developed fast, China began to make commitments to opening its service market as part of the negotiations to resume its status under the General Agreement on Tariffs and Trade. From 1992 to 2001, total exports and imports of the service trade expanded from $18.2 billion to $72.6 billion. Since the domestic service sector was less developed and less competitive than those in developed countries, the service trade had seen deficits except for a small surplus in 1994. Deficits expanded each year.