The degree of foreign trade dependence is the main indicator to measure the external dependence of a country's economy. This indicator, also known as the trade-to-GDP ratio, refers to the proportion of a country's total import and export in its GDP. It is used to measure the dependence of a country's economy on foreign trade, and its change can reflect the change of foreign trade status in the national economy to a certain extent. During Mao's era, China was closed to the outside world and claimed to be "self-reliant". At that time, China did not have much foreign trade, the country was poor, and its dependence on foreign trade was far below the average level of developing countries.
After opening up to the outside world, China vigorously promoted foreign trade, especially after joining WTO in 2001, China has become the world's factory, and its foreign trade dependence degree has risen sharply: from 51.3% in 2003 to more than 80% in 2006, making China the country with the highest foreign trade dependence degree in the world. In 2008, the U.S. subprime mortgage crisis triggered the world financial crisis, China spent five trillion yuan to rescue the market, and the investment mainly flowed into infrastructure and real estate industries. In 2009, China's foreign trade dependence degree dropped to around 45%, and in 2017, it dropped to 33.5%. In August 2018, the Political Bureau of the CPC Central Committee set up the policy of ensuring stabilities. Since then, stabilizing foreign trade has been a key task, and foreign trade dependence degree has been stable at more than 30%. According to China's Ministry of Commerce, China's imports and exports totaled RMB 32.16 trillion in the first quarter of 2020, with a trade surplus of RMB 3.7 trillion.
China is heavily dependent on external resources. Take the grain self-sufficiency rate as an example, China's grain self-sufficiency rate had fallen below 90% in 2012, which is below the food security standard set by the Food and Agriculture Organization of the United Nations. In 2017, China's grain self-sufficiency rate was even lowered to about 82.3%, and the three major staple foods of wheat, corn, and soybeans were heavily dependent on foreign countries. Chinese President Xi Jinping has emphasized over the years that food security is the foundation of economic security, and he has called for strengthening food security and expanding the grain acreage. Grain self-sufficiency rate is now said to have reached 95% - a vague concept, as the import dependence of the three main staples has not fundamentally changed, especially seeds, which are heavily dependent on imports and have an external dependence of 75%. In the last two years, China has regarded crop seeds as irreplaceable strategic materials.
Chinese government think tanks and experts have been studying how to safeguard China's resource security in the face of changing international supply chains. On December 18, 2020, China hosted the first China Industrial Chain Innovation and Development Summit, where Academician Gan Yong, the presenter of the Chinese Academy of Engineering's 2019 report on the comparative analysis of 26 fields of manufacturing between China and foreign countries, pointed out that China is highly dependent on overseas for important minerals, including strategic minerals such as petroleum, iron, copper, nickel, and cobalt, which have an external dependence of over 70%.
As far as the foreign environment is concerned, Gan Yong said the U.S. has previously issued several executive orders targeting China's key minerals and materials industries. For example, the United States joined the Energy Resource Governance Initiative with 10 countries including Australia, Brazil, the Democratic Republic of the Congo (DRC), and Zambia to form a grand alliance of mineral resources. These 10 countries are the main sources of China's mineral resources import and are also the most important overseas mining investment destination for China. According to Gan Yong, 85% of China's iron ore imports, 36% of copper imports, 20% of gold imports, 58% of nickel imports, and 95% of diamond imports come from these 10 countries. Chinese companies' overseas mining investments are also highly concentrated in these 10 countries, with 94% of China's copper, 84% of its diamond, and 60% of its lithium overseas production coming from these countries.
As long as it is not intentionally misinterpreted, it is clear that this research is not an advocate of a closed economy, but an attempt to find contingency plans for supply chain disruptions caused by changes in international politics.
According to the McKinsey Global Institute's China report issued in May 2021, China ranked 9th globally in terms of its connectivity to the world economy in 2017. In 2018, China's GDP accounted for about 16% of the global total. The report analyzed trade, business, capital, mobility, technology, the size of the information industry, environmental impact and culture, and concluded that the world economy cannot be separated from China. It is a known fact that economic dependence is a two-way street, and China is inseparable from the world.
