One of the most important features of China's foreign trade is that it fluctuates closely with the level of investment in fixed capital (Chapter 1). The main reason why they fluctuate closely with each other is that when the country raises its level of investment a large proportion of the required machinery and equipment will invariably be imported from abroad, and when the country lowers the level of investment imports of machinery and equipment will be reduced, with foreign trade serving mainly to balance consumer goods and raw material shortages. Because of its close association with investment, the volume of foreign trade, though small in proportion to national output, can have significant effects on the level of aggregate production and consumption, thus indirectly affecting the degree of consumer goods imbalance, or the inflationary pressure, in the economy.

The volume of foreign trade can have direct effects on the degree of consumer goods imbalance as well. On the one hand, any changes in exports will affect the availability of domestic goods for consumption, since the exports of consumer goods will compete directly with domestic consumption, whereas the exports of raw materials, such as petroleum and coal, will reduce their own supplies to industrial uses at home, thus competing indirectly with domestic consumption. On the other hand, change in exports or imports of capital goods will cause a change in the amount of resources employed in the production of consumer goods, thus affecting their supply.