China’s Trade Regime Entering a New Century

China’s foreign trade grew rapidly between the mid-1980s and the mid1990s. Since 1995, however, the pace of trade growth has slowed substantially. While China has continued to attract foreign investment and trade has continued to grow, trade growth has generally lagged GDP growth. Much of the explanation for the trade slowdown lies with straightforward economic factors. A prolonged slowdown in the domestic economy, caused by macroeconomic austerity policies since 1994, has suppressed demand for imports. The effects of the Asian financial crisis on China’s exports became increasingly severe during 1998. Under these circumstances, trade was unlikely to have been as dynamic a force in transforming the domestic economy as it might have been under more robust economic conditions.