China's Ascent in World Trade and Associated Shift in Its Trade Structure

The sustained and rapid expansion of China's trade surplus has been a key development in the world economy. While growing trade surplus of China has been viewed with cynicism borne out of an undervalued yuan and for having being a member of WTO since 2001, many others argue that China's trade surplus reflect changes in China's economic and trade structure and associated shifts in its role within regional and global production chains. In order to address the issue, we analyse: (i) China's growing trade surplus with the rest of the world, USA, Europe, Japan and Rest of Asia, (ii) China's changing trade structure in order to see whether or not China has moved up the value chain?, and finally (iii) what role China's trade policies played in the shift of China's trade structure. We find that, not only China has made significant inroads in the world trade since its admission to WTO, but also a shift in China's trade structure with specialization in high-end technology industries and exports aided by well calibrated FDI policy.