2002-present: All-around opening up on many levels. China participated in a multilateral trading framework and fundamentally established foreign trade policies and mechanisms that meet the demands of a market economy; the country complied with international practices and rules; foreign trade realized a leap forward in development; and the country has become a major trade power in the world.

Foreign trade entered a new stage after China's accession to the WTO in December 2001. Since joining the organization, the country has fulfilled its commitments, participated in economic and trade cooperation. It has set up foreign trade policies and mechanisms that meet the demands of a market economy and comply with international practices and rules, established and improved a trade dispute remedy system and safeguarded fair trade, established and improved the promotion and service system of foreign trade and regulated foreign trade orders. Perfection of the policy system facilitates the steady and fast development of foreign trade.

In 2007, the total value of trade in goods surpassed $2 trillion, ranking third in the world. In 2008, despite the influence of the financial crisis from the second half, total imports and exports for the year still realized a 17.8-percent growth to $2.56 trillion. From 2002 to 2008, the average annual growth rate of foreign trade stood at 26.7 percent, of which exports rose 27.9 percent and imports 25.1 percent. Since 2001, China's trade surplus expanded year by year and hit $295.5 billion in 2008. Promoting balanced development of imports and exports has become a new task for China's foreign trade regulators.

As the trade scale expanded, the trade structure further improved. Exports have been much more competitive on the international market. Mechanical, electrical and hi-tech products became the major growth propellent for exports while the proportion of industrial manufactured goods as a part of total exports has reached 95 percent. Exports of many commodities now rank first in the world and China has become the world's processing and manufacturing base. Raw materials, components and parts, as well as advanced technologies and equipment have become major imports. Influenced by the price hike of energy on the international market, the value of imported resources such as oil, iron ore and non-ferrous metals grew quickly, driving up the import value of primary products.

Foreign-invested companies contribute to most exports and imports. The trade proportion of state-owned enterprises declined while other types of enterprises rose rapidly. In 2008, the trade volume of foreign-invested and private companies accounted for 54 percent and 24.3 percent, respectively, of the country's total, while that of state-owned enterprises dropped to 21.7 percent. The European Union has become China's biggest trading partner. Europe, the United States, Japan and Hong Kong still remain China's major trading countries and regions, but their proportion as a part of China's total trade has been decreasing. Emerging markets are increasingly expanding as part of China's foreign trade portfolio.

In 2008, influenced by trade policy readjustment and the financial crisis, the growth of exports and imports in the processing trade both markedly dropped and the position of general trade increased. The share of the processing trade as a part of total exports declined to 47.3 percent, below 50 percent for the first time since 1995.

While China became a major trade power in goods, its service trade has also been forging ahead. After entering the WTO, China further opened its service sector. Like the trade in goods, the service trade also realized growth higher than the world's average during this period and its status in global trade has been rising. In 2005, it ranked fifth in the world and accounted for 4.2 percent of the world's service trade. But overall, the international status of China's service trade does not correspond to the status of its trade in goods. Traditional labor-intensive industries such as transportation and tourism still contribute to the majority of service trade exports while technology- and knowledge-intensive service industries are still in the initial stage of development.

The financial crisis that is sweeping the globe stuck the three major economies of the United States, Japan and Europe into recession, hence the external demand for Chinese products has markedly shrunk, imposing unprecedented difficulties and challenges on China's foreign trade goals. However, under such strained circumstances, some new forces are growing. The destination of exports is changing, with a marked decline of exports to the United States, Japan and Europe, but rising demand from emerging market. In general, the comparative advantages of Chinese products still exist and China's future foreign trade will keep developing.

Milestones of China's Foreign Trade Relations

On August 19, 1952, China and the former Soviet Union signed an inter-governmental trade treaty in Moscow. This was the first inter-governmental trade treaty signed by the People's Republic of China since its founding in 1949. China's foreign trade developed through actively enhancing its economic and trade cooperation with the former Soviet Union and Eastern European countries.

In 1952, the Chinese and Ceylon (now Sri Lanka) governments signed a trade treaty in Beijing. Based on the principles of equality and mutual benefit, China and Ceylon signed a five-year rice-rubber barter agreement. This treaty explored a new way for China to trade with nations having no diplomatic relations with Beijing.

On April 25, 1957, the first China Import and Export Fair, also called the Canton Fair, was inaugurated in Guangzhou. Held twice a year in spring and autumn, it is China's largest trade fair.

In July 1979, the Central Government approved the establishment of the special zone for export in Shenzhen, Zhuhai, Shantou and Xiamen on a trial basis and special policies and flexible measures to be taken therein. From May 15, 1980, the special zone for export was officially named the "Special Economic Zone."

On July 7, 1979, the Chinese and U.S. governments signed the Agreement on Trade Relations Between China and the United States in Beijing and agreed to grant mutual most-favored nation treatment. Bilateral trade began to develop rapidly from then on.

On April 10, 1980, Beijing Air Catering Co. Ltd., China's first joint-venture enterprise, was approved and officially opened on May 1.

On November 12, 1991, the third ministerial meeting of Asia-Pacific Economic Cooperation held in Seoul, South Korea, agreed to accept China, Chinese Taiwan and Hong Kong as members. After that, China began to actively take part in regional economic cooperation.

In May 1994, the Foreign Trade Law of the People's Republic of China was approved. This was the first law dealing with foreign trade issues by the top legislature after the founding of the New China.

On September 8, 1997, the first China International Fair for Investment and Trade (CIFIT) was held in Xiamen, Fujian Province. It was the only and largest global investment event approved by UNCTAD, UNIDO, OECD, IFC and some other world bodies.

On November 10, 2001, the Fourth WTO Ministerial Conference approved China's entry into WTO. On December 11, China became WTO's 143rd member. Entry into the WTO enabled China to benefit from economic globalization and further promote market-oriented reform.

In November 2002, China and the Leaders of ASEAN Member Countries signed the Framework Agreement on Comprehensive Economic Cooperation, laying the ground work for setting up the first free trade zone.

In 2007, China became the world's major trading nation with its imports and exports amounting to more than $2 trillion, the third largest in the world that year.

The author is a research fellow at the Chinese Academy of International Trade and Economic Cooperation