Long Yongtu and the Smiling Curve: Only a Great Importer is a Great Power

Main Link: Taiwan News / CNA. Links within blockquote added during translation.

CNA reporter Kang Shih-jen (Kang Shih-jen, Ann Chen) in Chongqing, May 17.
Former mainland Chinese former chief negotiator of China’s accession to WTO and deputy foreign trade minister Long Yongtu emphasized today that if the mainland wants to change its international long-term status as a trade-surplus state, it will need to broaden its imports, which will also increase its customs revenues, and meet domestic demand.

Long Yongtu spoke on invitation by the 2012 World Trade Center Association (Chongqing) Development Forum and said that the mainland at a point in time where old concepts needed to change, and imports therefore be expanded.

He said that in the past, all the talk had been about how to expand exports, but now, Chongqing Development Forum made the topic of expanding imports a topic with new conceptions; at a time when global trade was depressed, every country had a responsibility to explore ways to expand its own imports, as only through that, global trade could be [re]invigorated.

Long Yongtu stressed that particularly for the mainland’s long-term status as a surplus trader, broadening imports would be beneficial for its image in global trade; by changing the long-term surplus, a positive contribution to global trade could be made.

He believes that to change the mainland’s image, traditional views and conservative, outdated concepts needed to change, and above all, the idea that exports were better than imports.

From the perspective of international theory, Long Yongtu pointed out that importing countries were, from beginning to end, the most benefitting countries: “Whoever controls imports will control the international initiative”.

Long Yongtu said that, based on the example of the mainland and America, that although the mainland was a long-term exporter, its position in international trade wasn’t strong. Why was America “standing out” in international trade? It was because America was the world’s biggest importer. Therefore, if the mainland wanted to move from the position of a big trading nation to a great trading nation, there were only imports, and the need to become the world’s biggest importing country.

Besides, Long Yongtu believes that expanding imports could also promote an increase in mainland industrial upgrading. The mainland exactly needed to switch from dependence on exports to putting domestic demand first, and could, through these means, also meet domestic demand.

He pointed out that to strengthen imports could also strengthen fiscal income. By reducing tariffs, imports could be stimulated and broadened, and the entry of products would benefit a broader custom and excise foundation, and increase tariff revenues.

To expand imports was also the best answer to international trade protectionism. If the mainland expanded imports of European and American products, European and American trade barriers and protectionism would greatly be reduced.

He also emphasized that processing trade [the term “extended workbench” should apply here – JR] wasn’t like normal trade, and that enterprises, great and small, had striven for the old concept of a level of all-inclusive organizational structures*), i. e. to increase their shares of self-made modules. [But in fact,] there was a need to master the global division of labor and procurement, to produce the world’s best products from the world’s best components and modules and thus build the most competitive products. Only this would be beneficial to the mainland’s economic development and make it the world’s marketcenter [purchasing center].

Long Yongtu also praised Chongqing for the creation of a new situation in the information processing industry. This had mainly been for the mainland’s customs rates having been lowered to zero when it entered the WTO. This had stimulated component imports, and the result had been research and development in and production of electronic components. In the end, when calculating the entire smiling curve, the entire assembly line had remained in Chongqing. The “Chongqing Model” had therefore deserved to be studied and to be followed [imitated] by mainland China’s [entire] central and western areas.



*) The 大而全、小而全 slogan is translated, in an online publication of the Central Committee decision of September 1999, as the status of [state-owned, in that context] enterprises that

have an all-inclusive organizational structure, but have failed to establish specialized production and socialized coordination systems and an economy of scale, and lack market competitiveness

– see item IV. there. In short: the share of components bought from suppliers is small, because what would be sub-suppliers’ business elsewhere, is all integrated into a single company’s production under this concept.



» Low-End Exports, Oct 3, 2011
» More Scientific & Fairer Rules, Sept 19, 2011


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