1.1　Idea of International Trade in Goods

1.1.1　The Concept of International Trade in Goods

International trade refers to the commodity exchange between countries. In a broad sense, it refers to the trade of various types of trading objects, including international trade in goods, international trade in services, and international trade in technology. In narrow sense, it refers to international trade in goods, including the import and export of goods. The course of international trade practice and its textbook only deal with international trade in goods, i.e., international trade in narrow sense. Such kind of trade has the following basic characteristics:

(1) Trade in Goods

The object of the transaction is tangible goods, such as raw materials, products of industry, agriculture, fishery and animal husbandry. In trade, such goods need to be delivered by certain means of transportation from the seller to the buyer.

(2) International

Such kind of trade is international in nature in contrast to domestic trade. There are different definitions of such a nature in international community. Among them, the most authoritative provision is derived from the United Nations Convention on Contracts for the International Sale of Goods (CISG) . Article 1 of the convention provides that: “this Convention applies to contracts of sale of goods between parties whose places of business are in different states”. Accordingly, international trade in goods referred to in the convention refers to the trade between parties with places of business in different countries. Based on such an international rule, the criterion to determine whether a trade in goods is international trade is whether the business places of the buyer and seller are in different countries. This criterion is widely adopted in the world and is also the criterion adopted in China’s foreign trade.

Based on the above interpretations, we can arrive at the following concept: international trade in goods refers to the trade of tangible goods between parties with places of business in different countries. Such kind of trade is called export trade from the seller’s point of view, import trade from the point of view of the buyer. From point of view of countries, it is called foreign trade.

1.1.2　Difference Between International Trade and Domestic Trade

Based on whether the business places of the buyer and the seller are in the same country, we can divide the trade in goods into international trade and domestic trade. The major differences between the two are listed as follows:

① The applicable legal norms are different. Domestic trade is governed by domestic laws and regulations and carried out according to domestic business customs. International trade is governed by the unified international trade legal norms applicable to the parties in different countries and carried out in accordance with the internationally prevailing customs.

② The administration systems are different. International trade is subject to customs administration. Goods entering and leaving the customs territory of a country need to go through customs declaration procedures and pay customs duties and other relevant taxes. Domestic trade is not subject to the administration of the customs. It is governed by the relevant administrative departments of domestic industry and commerce, taxation and so on and pay domestic trade-related taxes.

③ The influencing factors are different. International trade is affected by the trading environment of the international market. The economic policies, supply and demand status, consumption preference, socio-economic development and so on of other countries, especially that of the major trading partners, have direct impact on a country’s import and export of goods. Domestic trade, however, is mainly affected by the domestic trading environment.

④ The transaction risks are different. In the process of international trade, there are many types of risks, such as credit risk, transportation risk, political risk, economic risk, exchange rate risk, operational risk and so on. Some of these risks are not available in domestic trade, such as exchange rate risk. Some also exist in domestic trade, but are usually lower than that in international trade. Taking transportation risk as an example, the transportation risk of international trade includes not only the transportation risk in the exporting country and the importing country, but also the risk in the process of international transportation. On the whole, the risks in international trade are more and greater than those in domestic trade.

In addition, they are also different in terms of transaction language, transaction currency, measurement system and so on.

1.1.3　Importance of International Trade in Goods

(1) It Is an Important Means of Economic Interaction among Countries

International trade in goods may be the earliest form of international economic interaction. As early as the second century BC, Zhang Qian of the Han Dynasty of China was sent to the countries of the western regions twice. In the process, Zhang Qian and his mission traded with such countries as Kangju, Dayuan, Parthian Empire and so on. China’s silk, tea and other products were sold to these countries and such local goods as grapes, pomegranates, jades, etc. were bought. The two world wars in the 20th century once caused serious setbacks to world trade, but after the wars, with the economic recovery of countries, world trade developed rapidly. Nowadays the totaling of international trade is a huge data, indicating that trade among countries is very frequent, and countless international trade occurs every day. Trade in goods, like a link, connects countries of the world.

(2) It Promotes National Economic Development

Trade in goods can promote the development of national economy through a variety of ways. For example, export can directly increase national income and promote the development of related industries in the country. Through import trade, we can obtain technologically advanced products and materials that are in short supply domestically to promote the expansion of production scale and raise labor productivity. In the theoretical research of scholars at home and abroad, the proposition that international trade in goods can effectively promote the economic development of trading countries has been repeatedly verified.

(3) It Helps the Meeting of Consumer Needs and the Improvement of Social Welfare

Through international trade, consumers can obtain richer supply of products and share the production of other countries. It helps the improvement of people’s living standards and consumption quality by meeting the consumer needs of different levels and preferences to a greater extent. Examples are everywhere in our daily life: Chinese consumers can consume household appliances from Europe and the United States, dairy products from Australia, and fruits from Southeast Asia. Meanwhile, as a leading exporter in the world, China exports a large number of products every year, which greatly meets the consumption needs of people in other countries.

1.1.4　China’s Import and Export Trade

Since the implementation of the reform and opening-up policy in 1978, China has been trading with more and more country. Joining the World Trade Organization (WTO) in 2001 makes China’s foreign trade enter a stage of rapid development. From 2009 to 2020, China’s export trade ranked first in the world. China’s total import and export trade ranked first in the world from 2013 to 2015 and 2017-2020. Until now, China’s foreign trade ranking has always been among the best in the world, indicating that China has become an outstanding country in the field of international trade.

In recent years, in order to promote a higher level of opening to the outside world, China attaches much more importance to the development of foreign trade and takes many positive and effective measures. The following are some examples.

(1) One Belt and One Road (B & R)

B & R is the collective name ofthe Silk Road Economic Belt and the 21st Century Maritime Silk Road. Ever since China put forward the initiative of jointly building B & R in 2013, it has received great attention and response from the international community. Developing trade is one of the important items of B & R cooperation, which has already achieved very good results. Official data shows that the proportion of trade volume between China and other B & R countries to total trade volume of China rose from 25% in 2013 to 27.4% in 2018. With the further advancement of B & R cooperation, bilateral trade between China and the countries along the line will further develop.

(2) Free Trade Zones (FTZs) and Free Trade Port

On September 27, 2013 the State Council of PRC approved the establishment of China’s first FTZ — the China (Shanghai) Pilot Free Trade Zone. By August 2019, China had set up 18 FTZs, providing good platforms for Chinese enterprises to carry out import and export trade.

On the basis of FTZs, the CPC Central Committee and the State Council PRC issued the Overall Plan for the Construction of Hainan Free Trade Port on June 1, 2020, officially establishing China’s first free trade port. In terms of trade in goods, Hainan Free Trade Port will implement trade opening measures such as zero tariff and preferential rules of origin to promote the development of foreign trade, especially import trade.