China's Trade Surplus and Foreign Exchange Reserves in A Historical Perspective
Abstract
Since the reform and opening up in 1978, China's economy has been more deeply involved in globalization. Because it is better in line with the theory of comparative advantage in trade, China has been in a state of current account surplus for a long time, thus accumulating large-scale foreign exchange reserves. This paper examines China's trade surplus and foreign exchange reserves from a longer-term historical perspective. Firstly, this paper finds and calculates the imports and exports since 1636, the corresponding silver inflows and outflows, as well as the silver stock data in some years. Secondly, the historical trade and silver stocks are compared with the trade and foreign exchange reserves after the founding of the People's Republic of China, especially after the reform and opening up in 1978. Finally, this paper calculates the per capita import and export volume and trade surplus or deficit, and make a long-term comparison. This paper finds that from 1636 to the founding of People's Republic of China, China's trade scale continues to expand, the trade volume decreases slightly in the early days of the founding of People's Republic of China, increases significantly after the reform and opening up, and increases even faster after China's accession to the WTO. In terms of 1990 US dollars, the net inflow of silver brought by trade in the Ming Dynasty is higher than that in the Qing Dynasty, and also higher than that in the early period of the Republic of China and before the reform and opening up, but significantly lower than that after the reform and opening up and after China's entry into WTO. Before the founding of People's Republic of China, the per capita trade volume increases continuously, and decreases from 1949 to 1978. After the reform and opening up, the per capita trade volume further increases. The findings of this paper are helpful to examine the current account and capital account after the reform and opening up from a long-term perspective, and get a more comprehensive and objective understanding.
