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Last Published: 11/21/2017

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China’s economic and demographic scale make it a cannot miss market for many companies, but the country faces growing economic headwinds and American companies report increased pessimism about their prospects in the market.

In 2016, China experienced its lowest economic growth rate in more than a quarter century with real GDP growth decelerating to 6.7%. Although economic indicators in late 2016 [and the first half of 2017] suggest a short-term cyclical upturn may be underway, many economists remain concerned about China’s medium-term prospects for economic growth due to the slow pace of economic reforms and a failure to bring corporate debt levels under control. 

China’s 13th Five-Year Plan (2016-2020) calls for ambitious policy reforms in order to “comprehensively build a moderately prosperous society” by doubling 2010 GDP and per capita incomes by 2020. This will require China to maintain an average of 6.5% annual GDP growth over the plan’s five-year period (2016-2020).  Achieving this growth without further exacerbating the build-up in debt will be a major challenge for the Chinese leadership, requiring significant policy adjustments that could impede short-term growth and be opposed by powerful vested interests.

U.S. good exports to China in 2016 were $115.8 billion, down slightly from the previous year. U.S. exports of services to China were an estimated $45.4 billion in 2015 (the latest data available), which is over 400% higher than 2005 levels and approximately 800% higher than the year prior to China’s WTO accession in 2001. The United States had a services trade surplus of approximately $37.4 billion in 2016, which is an increase of 25% from the previous year.

While China’s leadership has, in response to increasing global concerns about Chinese economic policy, repeated long-standing commitments to gradually opening China’s market to foreign participants, little tangible progress has been made in recent years.  Indeed, foreign companies report growing concerns about the business climate in China.  China continues to rely upon industrial policy tools – including subsidies, market access restrictions, pressures to transfer technology, and other support for domestic competitors – to drive the economy, calling into question the ability of foreign firms to operate on a level playing field in the market. 

Furthermore, Communist Party control over SOEs, non-government organizations, and think tanks has increased over the last year.  The United States continues to vigorously engage Chinese counterparts to push for a more balanced and fair bilateral economic relationship.  Nevertheless, significant market potential exists for foreign companies, particularly those operating in industries such as energy efficiency, clean technology, and healthcare, where critical Chinese needs provide an opportunity for mutual benefit.

 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



China Trade Development and Promotion