1.

0 Introduction

Trade is a very important economic activity now, there is no countries in the world that was
not involved in the trade both inter-regional trade, among regions and countries. The purpose
of a trade is increasing the welfare of the country, as indicated by the increase in GDP (Gross
Domestic Products), increased industrialization, transportation progress, and development
efforts towards globalization. International trade is divided into two which are export and
import. Export is known as the domestic trade to another country while import is trade from
the outside into domestic.

Import is defined as the process of transport of goods or commodities from one country to
another country legally, generally in the trade process. The import process is an action to
entering goods or commodities from other countries into the country. Imports of goods
require the intervention of the customs in the country of the sender or recipient. Basically,
there have two types of import. The first is industrial and consumer goods and second is
intermediate goods and services. There are some reasons which make a country decide to
import products and services from other countries. To supply the domestic makket demand at
a cheaper price is one of the reasons. Besides that, import goods and services will make the
domestic market to improve the quality of products and services so that they can compete to
the import products and services. In addition, country also will import products which are not
available in the local market if the products have a high demand in that country. In addition,
there are three board type of importers which are importers who are looking for any product
around the world to import and sell, importers who are looking for foreign sourching to get
their products at the cheaper price and importers who are looking for foreign sourching as
part of their global supply chain.

Export is known as the ship of the goods and services from local country to foreign country.
Expoter is the person who sell the goods and services to foreign country while importer is the
person who buy the goods and services from other country. Doing business through internet
such as Amazon and eBay also know as the export trade. This type of business have largery
by passed the involvement of customs in many countries because of the low individual values.
As we know, export is important to a country because it can increase the profit of that country.

In the international trade, there have some advantages which are ownership advantages,
location advantages and internationalization advantages. Ownership advantages are defined
as the firm's specific assets, international experience, and the ability to develop either low-

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cost or differentiated products within the contacts of its value chain. On the other hand,
locational advantages of a particular market are known as a combination of market
potential and investment risk. Internationalization advantages are the benefits of retaining
a core competence within the company and threading it though the value chain rather than
obtain to license, outsource, or sell it. In relation to the Eclectic paradigm, companies that
have low levels of ownership advantages will not encourage enter into foreign markets. In
addition, Small-and-Medium Enterprises (SME) with less than 250 employees will be
difficult in selling goods and services to foreign markets than selling in the domestic market.
This is because of the lack of knowledge for trade regulations, cultural differences, different
languages and foreign-exchange situations as well as the strain of resources and staff interact.

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2.0 Objectives

Nowadays, most of the companies are trying to expand their business to other country in
order to increase their market share, gain more profit, and transform their business to another
extreme level. Moreover, they also use global sourcing strategy to get low cost raw materials
and labor. Hence, by selling own core products to foreign market and buying cheaper raw
materials and finished products from foreign market, import and export play as a very
important strategy that often be used by company. Therefore, it is important to understand
more about the international trade of the country.

In this study, we examine the economic relation between Malaysia and China in terms of
trade which is the export and import of goods and services. The research involves two stages
which are informational and statistical data gathering through secondary research and data
analysis. As China is an important trading partner of Malaysia, by doing this research we can
know more about the background of this both countries, major products and services trade by
China and Malaysia and the rate of the trade of both countries and understand how the
important of export and import of goods and services to the country. Besides that, we also
compare the export and import rate of Malaysia and China between 10 years which from year
2003-2012. By comparing these two countries, we can see the trend of their export and
import rate and find out the reason why the international trade increase or decrease as well as
the strengthens and weakness of the countries.

Furthermore, import and export are directly effects on one country’s economic. Thus,
government highly encourages domestic companies to export their products and services to
foreign countries instead of import products and services from other countries. Therefore, by
doing this assignment, we are able to understand why and how local government intervenes
on export and import activities. In addition, we are also explored to know how the import and
export activities effect on one’s country currency whether appreciated or depreciated.

Moreover, by critically analyze the Malaysia and China import and export rate, we are able to
determine what is the majority of Malaysia’s products or services import or export from or to
foreign market, what is the majority of China’s products or services import or export from or
to foreign market

In short, this assignment can be really helpful for us to be more understood regarding the
Malaysia and China import and export rate as well as the import export activities.

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3.0 Data of Malaysia

3.1 Background of Malaysia

Malaysia located at South East Asia. It is a middle -income country. It rich with
various types of natural resources which are tin, petroleum, timber, copper, iron
ore, natural gas, and more. The population achieve 29,628,392 people. Malaysia
grows rapidly. Transform into an emerging multi sector economy.

Malaysia has launched the New Economic Model (NEM) in year 2010. It aims of
this NEM is to achieve becomes a high income country by 2020. It also needs to
ensure the growth of economy of our country is sus tainable and inclusive. It
brings our country’s economy further and into higher value -added activities in
both industries. Malaysia should have a knowledgeable base, better skills, and
more competition, and so on to achieve the goal.

Other than that, it also can attract more investments in biotechnology, high
technology industries, and more. There is a project name Economic
Transformation Program (ETP). It is a project that about policy measures the
future plan to speed up the country’s economic growth. I t takes few steps to
loosen some services sub-sectors. The government continue further up the
domestic demand and decrease to over depend on exports. Export commodities
like semiconductors and electronic equipment, palm oil, petroleum and liquefied
natural gas, wood and wood products, palm oil, rubber, textiles, chemicals, solar
panels. However, these show a significance of our economy. For import
commodities are electronics, machinery, petroleum products, plastics, vehicles,
iron and steel products, chemicals. Oil and gas bring a lot of profit to our
country. Even tough, the increase of cost of domestic gasoline and diesel fuel,
and the combination strain government finances. It has force to cut down
government subsidies. Bank Negara Malaysia maintains a we ll foreign exchange
reserves, and developed a regulatory rules on limit the Malaysia’s exposure to
riskier financial instruments and the global financial crisis.

One of the partners is World Bank. Their relationship is base on knowledge -

sharing. Malaysia didn’t borrow loan from World Bank since 1999. Malaysia

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reimburse to the World Bank for the advisory provided. They agree to extend the
Framework Agreement for advisory through 2014 in year 2012. Besides that,
since 2009, when the first Framework Agreemen t has signed, they work together
on few projects in the areas of human development and competitiveness since
2009.

3.2 Malaysia’s Merchandise Trade Patterns

Malaysia exports increase from $117.85 billion in 2003 to $229.83 billion in 2008. Besides
that, Malaysia also imports the merchandise from $96.15 billion to $178.25 billion between
years 2003 to 2008. For the trade balance from years 2004 to 2008 also increase from $21.7
billion to $51.58 billion shows surplus situation. Unfortunately, the export in years 2009 falls
-19.55% which are $184.89 billion. The import also falls -19.27% which are $143.89 billion.
Both export and import falls between years 2008 and 2009 because of the affected by the
financial crisis. Other than that, the trade balance also affected from $51.58 billion to $41
billion which are drop -20.51%. It shows deficit situation in that year. After that, the exports
of years 2010 to 2012 are continuous raise up from $231.38 billion to $295.85 billion. While,
for the imports also rose from $189.03 billion to $224.76 billion between years 2010 and
2012. Trade balance of Malaysia also shows surplus situation from $42.35 billion to $71.09
billion between years 2010 to 2012. It increases 67.86%.

Malaysia's trade performance for the year remained strong even though the
recovery of economic in United States of America (USA) is. Worries of arising
from the debt crisis in the Euro zone, pockets of unrest in West Asia following
the Arab spring, supply chain disruptions due to the tsun ami in Japan and floods
in Thailand. These factors impacted global trade for many economies in varying
degrees last year. This was comparable to developed countries in the region
whereby Singapore and Republic of Korea (ROK) recorded similar achievements.

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Table: Malaysia’s Merchandise World Trade: 2003- 2012 ($ billions)

Years Export Import Trade balance

2003 117.85 96.15 21.7

2004 143.93 118.51 25.42

2005 162.05 130.55 31.5

2006 182.52 147.06 35.46

2007 205.49 167.03 38.46

2008 229.83 178.25 51.58

2009 184.89 143.89 41

2010 231.38 189.03 42.35

2011 263.63 217.86 45.77

2012 295.85 224.76 71.09

Malaysia's Merchandise World Trade

Chart Title
350

300

250
$ billion

200

150 Export
Import
100

50

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Years

6
 Malaysia's Trade Balance
80
70
60
$ billions

50
40
30 Trade balance
20
10
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Years

3.3 Major Export and Import Products of Malaysia

The table below show that the major export products of Malaysia in year 2012 by ascending
are electrical & electronic products, others products, , iron & steel LNG, refined petroleum
products, chemicals & chemical products, crude petroleum, machinery, appliances & parts,
optical & scientific equipment, manufactures of metal, and rubber products. The major export
partners in years 2012 are Singapore (13.6%), China 12.6%), Japan (11.8%), USA (8.7%),
and Thailand (5.4%)

The table show that the major import products of Malaysia in year 2012 by ascending are
electrical & electronic products, others products, machinery, appliances & parts, chemicals &
chemical products, refined petroleum products, transport equipment, manufactures of metal,
crude petroleum, iron & steel products, optical & scientific equipment, and processed food.
The major import partners in years 2012 are China (15.1%), Singapore (13.3%), Japan
(10.3%), USA (8.1%), and Thailand (6.0%),

Each country will have top 3 major products trading with our country, Malaysia. For
example, US trades are electrical & electronic products, optical & scientific equipment, and
rubber products. Thailand trades are electrical & electronic products, crude petroleum, and
chemicals & chemical products. Besides that, Singapore trades are electrical & electronic
products, refined petroleum products, and machinery, appliances & parts. Moreover, Japan
trades are LNG, electrical & electronic products, and iron & steel products, for china trades
are electrical & electronic products, palm oil, and chemicals & chemical products.

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3.4 Export and Import Rate of Each Products

Top 10 major export in year 2012

Description RM Percent of
billion Total (%)

Electrical & electronic products 231.23 32.9

Others products 140.89 20.1
Palm oil 56.09 8
LNG 55.53 7.9
Refined petroleum products 51.43 7.3
Chemicals & chemical products 46.37 6.6
Crude petroleum 32.25 4.6
Machinery, appliances & parts 25.2 3.6
Optical & scientific equipment 22.92 3.3
Manufactures of metal 20.14 2.9

Rubber products 20.14 2.9

Total exports: RM702.19 billion

Top 10 Malaysia Exported Goods and Services in

Optical &
scientific
Year 2012
Manufactures
equipment of metal Rubber products
3% 3% 3%
Machinery,
appliances &
parts
3% Electrical &
Crude petroleum electronic
5% products
33%
Chemicals &
chemical
products LNG
7% Refined Others products
petroleum 8%
20%
products
7%
Palm oil
8%

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Top 10 major import in year 2012

Description RM Percent of
billion Total (%)

Electrical & electronic products 176.00 28.8

Others products 121.04 19.9
Machinery, appliances & parts 52.85 8.7
Chemicals & chemical products 52.03 8.6
Refined petroleum products 49.79 8.2
Transport equipment 39.20 6.5
Manufactures of metal 32.06 5.3
Crude petroleum 27.7 4.6
Iron & steel products 25.23 4.2
Optical & scientific equipment 18.25 3.0

Processed food 14.22 2.3

Total exports: RM607.36 billion

Top 10 Malaysia Imported Goods and Services in Year 2012

Iron & steel Optical & scientific
equipment Processed food
products
3% 2%
4%
Crude petroleum
5%
Manufactures of
metal
5%
Transport Electrical &
equipment electronic
6% products
29%
Refined petroleum
products
8% Others products
20%
Chemicals &
chemical products
9% Machinery,
appliances & parts
9%

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4.0 Data of China

4.1 Background of China

China is a sovereign state which located in East Asia. It is officially the People’s Republic of
China (PRC). The PRC is a single-party state governed by the Communist Party, with its seat
of government in the capital city of Beijing. Power in the People’s Republic is divided
between the National People’s Congress (NPC), the President, and State Council. The NPC is
the single legislative body, whose members are selected by the Communist Party. The State
Council, headed by the Premier, is the administrative branch. The People’s Liberation Army
also wields considerable political power. The current Furthermore, President of China and
General Secretary of the Communist Party is Hu Jintao while the Premier is Wen Jiabao.

Besides that, China is the world’s second-largest country by land area and the third or fourth-
largest by total area, depending on the definition of total area. From the world’s tallest
mountain to the coast, and the Taklamakan desert to the jungles of Guilin, China includes
diverse landforms. It is covering approximately 9.5 to 9.8 million square kilometers; the
discrepancy is due to border disputes with India. China borders 14 countries which included
Afghanistan, Bhutan, Burma, India, Kazakhstan, North Korea, Kyrgvzstan, Laos, Mongolia,
Nepal, Pakistan, Russia, Tajikistan, and Vietnam.

Moreover, China is the world’s most populous country, with a population of over 1.35 billion
and largest energy consumer in the world. Due to the population of China increasing every
year, the government of China has long been concerned about population growth and
introduced the “One-Child Policy” in 1979. Under this policy, families are limited to have
only one child. Couples who get pregnant for a second time may face forced abortions or
sterilization.

Over the past 25 years, China had become the world’s faster-growing major economy in the
word, with annual growth of more than 10 per cent. The rapidly increasing energy demand
has made China extremely influential in the global market. Industry and agriculture are the
largest sectors, producing more than 60 per cent of China’s GDP and employing over 70 per
cent of the work force. China exports $1.2 billion U.S in consumer electronics, office
machinery and apparel as well as some agricultural produce each year. The per capita GDP of
China is $2,00 and the official poverty rate is 10 per cent.

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According to the International Monetary Fund, China’s real gross domestic product (GDP)
grew at an estimated 9.2 percent in 2011 and 7.8 percent in the first half of 2012, after
registering an average growth rate of 10 percent between 2000 and 2011. Economic growth
continues to slow in 2012 as the global financial crises unfolds, industrial production and
exports decrease, and the government attempts to curb economic inflation and excessive
investment in some markets. China mitigated the 2008 global financial crisis with a massive
$586 billion (4 trillion yuan) stimulus package spread over two years. The recent global
downturn in 2012 has spurred China’s government to begin incremental monetary easing
measures and consider a second smaller fiscal stimulus package. However, China become the
world’s second-largest economy in year 2013 by both nominal total GDP and purchasing
power parity (PPP) as well as become the world’s largest exporter and importer of goods.

4.2 China’s Merchandise Trade Patterns

The trade and investment liberalization and economic have helped transform China into a
major trading power. Chinese merchandise exports rose from $485 billion in 2003 to
$2605.20 billion in 2012, while merchandise imports over this period grew from $448.92
billion to $2258.50. 36 China’s exports and imports in 2012 grew by 13.48% and 13.02%
respectively over the previous year, due in part to the lingering effects of the global economic
slowdown. China’s merchandise trade surplus grew sharply from 2004 to 2008, rising from
$49.27 billion to $348.87 billion. China’s trade surplus fell on 2009, dropping to $220.1 due
to the world economic issues in year 2008. However, in 2012, China’s trade surplus rose to
$346.70 billion. In 2009, China overtook Germany to become both the world’s largest
merchandise exporter and the second-largest merchandise importer after the United States. In
2012, China overtook the United States as the world’s largest trading economy. According to
World Bank projects state that this figure could increase to 20% by the year 2030. Overall,
the trade surplus of merchandise in China, large-scale foreign investment, and large
purchases of foreign currencies to maintain its exchange rate with the dollar and other
currencies have enabled China to become by far the world’s largest holder of foreign
exchange.

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Table: China’s Merchandise World Trade: 2003- 2012 ( $ billion)

Years Exports Imports Trade Balance

2003 485.00 448.92 36.08
2004 655.81 606.54 49.27
2005 836.89 712.10 124.79
2006 1061.68 852.77 208.91
2007 1342.21 1034.73 307.48
2008 1581.71 1232.84 348.87
2009 1333.30 1113.20 220.1
2010 1815.60 1583.36 232.24
2011 2296.10 1998.30 297.80
2012 2605.20 2258.50 346.70

China's Merchandise World Trade

3000

2500

2000
$ billion

1500
Exports
1000 Imports

500

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Years

12
 China's Trade Balance
400

350

300

250
$ Billion

200

150 Trade Balance

100

50

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Years

4.3 Major Export and Import Products of China

China is the largest exporter and second largest importer of goods in the world. Its major
trading partners are from various countries which are European Union, United Stated,
ASEAN, Japan, Hong Kong, South Korea, Taiwan and etc. As part of China’s continuing
effort to become competitive in the global marketplace, China joined the World Trade
Organization (WTO) in the year 2001. After China joined the WTO, it has benefited coastal
cities especially in the southeast.

According to Economic Watch and Trading Economic of the China Business, the major
export products of China in year 2012 included electrical machinery, machinery, knit apparel,
furniture and building, optical and medical equipment like optical, photographic,
cinematographic, measuring checking, precision, medical or surgical instruments and
apparatus, parts and accessories thereof, woven apparel, iron and steel products, plastic,
vehicles, footwear and etc. China’s main export partners are US (17.7%), Hong Kong
(13.3%). Japan (8.1%). South Korea (5.2%) and Germany (4.1%).

On the other hand, the major import products of China in year 2012 by ascending are
electrical machinery, mineral fuel, oil, machinery, ores, slag, and ash, optical and medical
equipment like optical, photographic, cinematographic, measuring checking, precision,
medical or surgical instruments and apparatus, parts and accessories thereof, vehicles, plastic,

13
special classification, organic chemicals and etc. The main import partners of China in this
year are Japan (13.3%), South Korea (9.9 %), US (7.2 %) and Germany (4.9%).

As we know that, China’s abundance of low-cost labor has made it internationally

competitive in many low-cost, labor-intensive manufactures. As a result, manufactured
products constitute a significant share of China’s trade. A substantial amount of China’s
imports is comprised of parts and components that are assembled into finished products, such
as consumer electronic products and computers, and then exported. Often, the value-added to
such products in China by Chinese workers is relatively small compared to the total value of
the product when it is shipped abroad.

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4.4 Export and Import Rate of Each Products

Top 10 major export in year 2012 ($ billions)

Description $ billions Percent of

Total (%)

Electrical Machinery 487.5 36

Machinery 376.0 27
Knit apparel 87.1 6
Furniture and Bedding 77.9 6
Optical and Medical equipment 72.8 5
Woven apparel 61.2 5
Iron and steel products 56.2 4
Plastic 55.2 4
Vehicles 55.2 4

Footwear 46.8 3
Total exports: $2605.20 billions

Top 10 China Exported Goods and Services in

Year 2012
Plastic Vehicles Footwear
Iron and steel 4% 4% 3%
products
4%
Woven apparel
5%
Optical and
medical equipment
5% Electrical
Machinery
Furniture and 36%
Bedding
6%
Knit apparel
6% Machinery
27%

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Top 10 imports in year 2012 ($ billions)

Description $ billions Percent of

Total (%)
Electrical Machinery 381.6 36
Mineral fuel, oil etc. 311.6 27
Machinery 181.9 6
Ores, slag, and ash 133.6 6
Optical and Medical equipment 106.4 5
Vehicles, not railway (mainly auto and parts) 70.6 5
Plastic 69.5 4
Special Classification 68.7 4
Organic chemicals 60.9 4
Copper and articles thereof 54.6 3
Total exports: $ 2258.50 billion

Top 10 China Imported Goods and Services in

Year 2012 Copper and
articles thereof
Special Organic 4%
Classification chemicals
5% 4%
Plastic
5%
Electrical
Machinery
Vehicles 26%
5%
Optical and
medical
equipment
7%
Ores, slag, Mineral fuel, oil
and ash etc.
9% 22%
Machinery
13%

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5.0 Analysis and Discussion

5.1 Comparison exports of goods and services between Malaysia and China

Table: Exports of goods and services (current US $ Billions)

Years Malaysia China

2003 117.85 485.00
2004 143.93 655.83
2005 162.05 836.89
2006 182.52 1061.68
2007 205.49 1342.21
2008 229.83 1581.71
2009 184.89 1333.30
2010 231.38 1815.60
2011 263.63 2296.10
2012 295.85 2605.20

Exports of goods and services( current US $ Billions )

Exports of goods and services

( current US $ Billions )
3000

2500

2000
$ billions

1500
Malaysia

1000 China

500

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Years

17
The table and line graph above are showing the exports of goods and services in Malaysia
and China from year 2003 until year 2012. From the graph, we clearly see that export rate in
Malaysia is inconsistently. From year 2003 until year 2008, export rate in Malaysia is
increasing and it had drop in year 2009 and increase back in year 2010. In year 2003, export
rate in Malaysia is $117.85 billion and increased to $143.93 billion in year 2004. In year
2005, it continuously rises into $162.05 billion in year 2005. In year 2006, the export rate has
become to $182.52 billion and increased to $205.49 billion in year 2007. In year 2008, it had
increased to $229.83 billion. However, it had decreased to $184.89 billion in year 2009. It is
the lowest export rate from year 2003 until year 2012. It had increased rapidly to $231.38
billion in year 2010. The export rate had continuously increased in year 2011, which is
$263.63 billion. In year 2012, it had increased to $ 295.85 billion.

The export rates in China from year 2003 until 2012 also show inconsistently. It is same with
the export rate in Malaysia. From the graph, it shows that the export rate in China was
continuously increased from year 2003 until year 2008 and it fall in year 2009 and increased
back in year 2010. In year 2003, the export rate in China is $485.00 billion and increased to
$ 655.83 billion in year 2004.In year 2005, it had increased to $836.89 billion. In year 2006,
it continuously increases to $1061.68 billion and $1342.21 billion in year 2007. The export
rate had increased to $1581.71 billion in year 2008. However, it had declined to $1333.30
billion in year 2009. It also a lowest export rate in China in these ten years. Export rate had
increase again to $ 1815.60 billion in year 2010 and $2296.10 billion in year 2011. The
export rate of China had continuously rises in year 2012, which are $ 2605.20 billion and it is
the highest rate in these few years.

In overall, we can see that the export rate in China is highest than Malaysia from year 2003
until 2012. This is because China is a largest exporter in the world. Export growth is a major
component which supporting China’s rapid economic expansion. There have some reason
which cause the highest export rate In China. First, China’s exported products increased in its
competitiveness and expanded their shares in the international market. In addition, China’s
utilization of foreign investment increased over the years and this had made the foreign
investment realize the growth of export production. Government of China had paid effort in
increased the export products to U.S, EU, Hong Kong, Japan, ASEAN and South
Korea. Furthermore, rise of partnership and private enterprise which contribute to the
exporting number.

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In addition, we also can clearly see that both of the export rate of Malaysia and China also
decline rapidly in year 2009. This is because the global financial crisis happens in year 2008.
In 2008, the Wall Street investment bank Lehman Brothers field for bankruptcy, this is the
largest bankruptcy in US history. This is the main reason which causes the global financial
crisis. As a result, wholesale funding almost disappeared, external creditors turned hostile and
disorderly de-leveraging ensued across the financial system. Besides that, it also causes the
credit flows suddenly dried-up, economic activity and merchandise trade took a nosedive in
year 2008 and it continued falling in early year 2009. In addition, the crisis also produced the
a wide-ranging impact in the world which include the economic slowdown, deceleration of
growth, contraction in world trade, reduced access to trade finance, reduced public
confidence in financial situation and cause the negative effect on trade balances and balance
of payments. This crisis is the main reason which make export rate of Malaysia and China
fall rapidly.

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5.2 Comparison imports of goods and services between Malaysia and China

Table: Imports of goods and services (current US $ Billions )

Years Malaysia China

2003 96.15 448.92
2004 118.51 606.54
2005 130.55 712.10
2006 147.06 852.77
2007 167.03 1034.73
2008 178.25 1232.84
2009 143.89 1113.20
2010 189.03 1583.36
2011 217.86 1998.30
2012 224.76 2258.50

Imports of goods and services ( current US $ Billions )

Imports of goods and services

( current US $ Billions )
2500

2000

1500
$ billions

Malaysia
1000
China

500

0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Years

20
The table and graph above show that the imports goods and services in Malaysia and China
for year 2003 until 2012. From the graph, we can clearly see that the annual import rate in
Malaysia from 2003 until 2012 is inconsistently. In year 2003, the import rate of Malaysia is
$96.15 billion and had continuously increased to $118.51 billion in year 2004 and $130.55
billion in year 2005. The import rate had continuously increased from year 2006 until 2008,
which are $147.06 billion in year 2006, $167.03 billion in year 2007, $178.25 billion in year
2008. However, it had decreased into $143.89 billion in year 2009 which is the lowest import
rate in Malaysia in these ten years. The import rate had increase back to $ 189.03 billion and
$217.86 billion in year 2011. In year 2012, it had rise into $ 224.76 billion and it was the
most highest import rate in Malaysia in these ten years.

Besides that, we also can see that the import rate of China from 2003 until 2012 is
inconsistently. In year 2003, the import rate of China is $448.92 billion and it continuously
rises into $606.54 billion in year 2004 and $712.10 billion in year 2005. From the graph, we
clearly see that the import rate are showing continuously increase from year 2006 until 2008
which are $852.77 billion in year 2006, $1034.73 billion in year 2007 and $1232.84 billion
in year 2008. In year 2009, it had drop to $1113.20 billion and increase back to $1583.36
billion in year 2010. The import rate had continuously increase to $1998.30 billion in year
2011. In year 2002, the import rate of China had increased to $ 2258.50 billion which are the
most highest import rate between year 2007 to year 2011 in China.

In year 2009, both import rate in Malaysia and China had fall deeply because of the global
financial crisis but it had increased back in year 2010. In that time, the western economic are
still struggling to recover from the 2008 global economic collapse China bounced back after a
single quarter. It is because of a massive stimulus plan which has maintained breakneck
economic growth. All the measures that China took have been proven to be entirely correct.
China’s GDP increase had show that China had quickly overcome the economic slump and
back to explosive growth as usual. All is because of the government stimulus measures,
strong consumer spending and increase of exports. On the other hand, Malaysia also had pay
effort to increase back the import rate in year 2010.

In overall, it clearly show that the import rate of China Is higher than Malaysia in these few
years. One of the reasons is because of the finish manufactured. China is a net importer of
manufactures from Asian country because there are less manufacturing industry in China.

21
This had make China need to be import from other country to produce a product. In addition,
the import rate of China is higher than Malaysia is because of China had lower the import
tariffs to satisfy the domestic demand especially for the luxury goods. According to a survey
from Bain & Company in year 2010, it prove that Chinese people was spending around 68.4
billion yuan to the luxury goods suppliers. Because of the low tariff and high domestic
demand, it had make China to import more from other country to fulfilled the demand of
local market. Moreover, China will attract the foreign country to export to their country
because if the low import tariffs.

5.3 Bilateral trade relationship between Malaysia and China

Malaysia-China’s bilateral trade has longer and larger than 10 years ago. They share a long
history of trade. When in the Ming Dynasty, Chinese had merchants exchange skills and
satins, cloth, ceramic ware and other food with the local products of the Malaysia such as
bird nest, rhinoceros horn and ivory. Nowadays, China had become an important trading
partner for Malaysia. It is the fourth largest trading partner for Malaysia. China had mainly
exported cereal, machinery and electronic product, textile yarn and products thereof, clothing
and accessories, steel, crude oil, footwear, vegetable and so on to Malaysia nowadays. On the
other hand, Malaysia had export machinery and electronic products, palm oil, plastics, natural
rubber, unprocessed wood, product oil, steel and crude oil to China.

According to the statistical in Chinese Customs Department, total bilateral trade between
Malaysia and China in year 2001 is US$9.4 billion and it had increased to US$14.3billion in
year 2002.In year 2003, the bilateral trade had decreased into US$8.7 billion. In year 2005,
the bilateral trade had reached US$23.0 billion. In addition, the volume of completed labor
services cooperation contrast was US$26.18 million and the new signed labor service
cooperation was US$25.07 million. Moreover, the turnover of finished designs and
consultations was US$0.78 million. Until the end of year 2005, Chinese companies had
reaches US$2.07 billion of aggregate turnover of engineering contrast in Malaysia.

There have 15 Chinese funded and non-financial enterprise were establish in Malaysia in year
2005 with a total contractual investment of US$15.85 million. On the other hand, Malaysia
also invest a contractual investment of US$1.27 billion in China in year 2005.

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6.0 Conclusion

Export and import is a very important economic activity for a country and the trades of the
country bring a lot of advantages to the country. For example, it can increase the welfare of
the country, increase in GDP (Gross Domestic Products), increased industrialization and etc.

In this research, we found that the China’s export and import rate are higher than Malaysia
due to several reasons such as China is a second largest exporter and importer in the world so
they have more trade compare to Malaysia. Besides that, China has lower labor cost and raw
materials which are highly demand by the market. China’s exported products increased in its
competitiveness and expanded their shares in the international market. In addition, China’s
utilization of foreign investment increased over the years and this had made the foreign
investment realize the growth of export production. Government of China had paid effort in
increased the export products to U.S, EU, Hong Kong, Japan, ASEAN and South
Korea. Furthermore, rise of partnership and private enterprise which contribute to the
exporting number. Besides that, the import rate of China is higher than Malaysia are because
China has lower their tariff to attract more trade from other countries.

Moreover, we also found that the economic environmental will affect the trade of the country
as well. For example, the export and import rate of Malaysia and China decline rapidly in
year 2009 due to the global financial crisis in year 2008. The crisis had bring the a wide-
ranging impact in the world which include the economic slowdown, deceleration of growth,
contraction in world trade, reduced access to trade finance, reduced public confidence in
financial situation and cause the negative effect on trade balances and balance of payments.

Overall, the recommendations to increase the export and import rate in Malaysia are
improving productivity and competitiveness of the goods and services. Besides that, Malaysia
also can organize training programs to improve the international marketing skills of the
Malaysian exporter.

23
7.0 References

1. Dr. Mahani Zainal Abidin, D. R. (2009, November). The Global Financial Crisis and
The Malaysian Economy . Retrieved April 20, 2013, from www.undp.org.my:
http://www.undp.org.my/uploads/undp%20report%20-
the%20global%20financial%20crisis%

2. Export . (n.d.). Retrieved April 15, 2013, from en.wikipedia.org:

http://en.wikipedia.org/wiki/Export

3. Exports of goods and services( current US$). (n.d.). Retrieved April 10, 2013, from
data.worldbank.org: http://data.worldbank.org/indicator/NE.EXP.GNFS.CD

4. The Global Financial Crisis and the Malaysia Economy . (n.d.). Retrieved April 20,
2013, from www.isis.org.my:
http://www.isis.org.my/index.php?option=com_content&view=article&id=456:curr&
catid=92:recent-papers&Itemid=168

5. World Bank Search . (n.d.). Retrieved April 12, 2013, from search.worldbank.org:
http://search.worldbank.org/data?qterm=import+of+good+and+services%28current+
US%24%29&language=EN&format=

6. China . (n.d.). Retrieved April 20, 2013, from en.wikipedia.org:

http://en.wikipedia.org/wiki/China

7. China Background . (n.d.). Retrieved April 28, 2013, from clinton4.nara.gov:

http://clinton4.nara.gov/WH/New/China/china.html

8. Economy of Malaysia . (2013, May 6). Retrieved May 8, 2013, from en.wikipedia.org:
http://en.wikipedia.org/wiki/Economy_of_Malaysia

9. The World Bank . (n.d.). Retrieved April 5, 2013, from www.worldbank.org:

http://www.worldbank.org/en/country/malaysia

10. Top 10 Major Import Products, 2012. (n.d.). Retrieved May 2, 2013, from
www.matrade.gov.my: http://www.matrade.gov.my/en/malaysia-exporters-
section/33/1945-top-10-major-import-products-2012

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11. Top Chinese Import from the World . (n.d.). Retrieved April 23, 2013, from
www.worldsrichestcountries.com:
http://www.worldsrichestcountries.com/top_china_imports.html

12. China Import and Export News . (n.d.). Retrieved May 3, 2013, from
www.chinawhy.net: http://www.chinawhy.net/news/Article.asp?id=113

25
8.0 Appendix

Export goods of China

Export mold in China, China mold make

Rapid Prototyping in China, china tool maker

Chinese export porcelain

26
Imports goods of China

Machinery Products

Slag

27
Export of goods of Malaysia

Rubber products

Iron & steel products

28
Manufacturers of metal

Processed food products

29
Imports goods of Malaysia

Instant foods

Chemical products

30