Interactive Development of Imports and Exports and the Dynamic Evolution of China’s Comparative Advantages

Through over forty years of development and transformation from “import substitution” to “export orientation,” China has grown into the world’s second largest economy, largest exporter, and largest foreign reserve holder. In this process, the strategy of “export orientation” has played an extremely important role. Meanwhile, the internal and external economic imbalance—in particular that of trade balance—has brought an unprecedented crisis to China’s economic development. The imbalanced growth based on factor price distortions and a series of export-encouraging policies is chewing through the fruits of China’s reform and opening-up at an increasing rate, and increases the costs of further development of the Chinese economy—in social security, environment, and resources, for example. Moreover, it has made impossible substantive improvements in the national welfare and got the Chinese economy stuck in one “rigid structure” or another. Therefore, for sustainable growth of the Chinese economy, we must grasp the key contradiction of foreign trade imbalance and gradually realize the transformation of China’s “new mercantilism” in the interactive development of its imports and exports.