APEC and liberalisation of the Chinese economy

APEC and liberalisation of the Chinese economy

Peter Drysdale
Zhang Yunling
Ligang Song
Copyright Date: 2012
Published by: ANU Press
https://www.jstor.org/stable/j.ctt24hb57
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  • Book Info
    APEC and liberalisation of the Chinese economy
    Book Description:

    “China is so large that its trading interests and influence are global. But its interests are disproportionately powerful in its immediate Western Pacific and Asia Pacific partners. The evolution of China's economic relationships with its Asia Pacific partners, in which APEC came to play a significant role in the 1990s, is thus a central part of the story of China's rapidly growing and changing interaction with the global economy.” - Ross Garnaut APEC is an important forum thorugh which China can demonstrate its commitment to economic openness. APEC has also been an important vehicle for China's trade liberalisation on the way towards accession to the WTO. In facilitating trade liberalisation, APEC and te WTO are mutually reinforcing. APEC prepares China for the WTO and WTO accession encourages China's active participation in the APEC process. Both APEC membership and WTO accession help with the huge task of China's domestic reform. This book sets out China's strategic interests in APEC in the lead-up to the APEC summit in Shanghai in 2001. Contributors include leading Chinese economists from the APEC Policy Research Centre in the Chinese Academy of Social Sciences-Zhang Yunling, Zhang Jianjun, Sun Xuegong, Li Kai, Chen Luzhi, Zhou Xiaobing, Zhao Jianglin-and from the Asia Pacific School of Economics and Management at The Australian National University-Peter Drysdale, Ligang Song, Ross Garnaut, hristopher Findlay, Andrew Elek, Yongzheng Yang, Yiping Huang, K.P. Kalirajan, Hadi Soesastro and Chen Chunlai.

    eISBN: 978-1-922144-57-7
    Subjects: Business

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-ix)
  3. ABBREVIATIONS
    (pp. ix-xi)
  4. CONTRIBUTORS
    (pp. xii-xiii)
  5. PREFACE
    (pp. xiv-xiv)
    Peter Drysdale, Zhang Yunling and Ligang Song
  6. Introduction: CHINAʹS INTERESTS IN APEC
    (pp. xv-xxvi)
    ROSS GARNAUT, LIGANG SONG and PETER DRYSDALE

    China’s integration into the international economy since 1978 has presented an immense challenge for domestic and international economic policy, both in China and in its trading partners. China is so large that its trading interests and influence are global. But its interests and influence are disproportionately powerful in its immediate Western Pacific and Asia Pacific neighbourhoods. The evolution of China’s economic relationships with its Asia Pacific partners, in which APEC came to play a significant role in the 1990s, is thus a central part of the story of China’s rapidly growing and changing interaction with the global economy.

    China’s economic...

  7. APEC AND THE CHINESE ECONOMY:: STRATEGIC ISSUES

    • 1 LIBERALISATION OF THE CHINESE ECONOMY: APEC, WTO AND TARIFF REDUCTIONS
      (pp. 3-14)
      ZHANG YUNLING

      Significant progress has been made in the liberalisation of the Chinese economy since the late 1970s, a natural result of the reform and opening up of the economy. Gradual integration into the world market has promoted economic development. China’s involvement in regional and international organisations is an integral part of this process.

      Since 1979, China’s foreign trade system has undergone remarkable changes. In 1988, foreign trade companies began to apply the contract management responsibility system. In 1991, export subsidies were abolished and companies were made responsible for their own profits and losses. In 1994, with the merging of the official...

    • 2 OPEN REGIONALISM, APEC AND CHINAʹS INTERNATIONAL TRADE STRATEGIES
      (pp. 15-30)
      PETER DRYSDALE

      While developments over the past few years have raised many questions about the immediate prospects for East Asia’s economic growth, the force of East Asian industrialisation has already transformed the contours of world economic power and influence (Drysdale and Elek 1997). Japan was the leading edge of East Asian industrialisation and, in the postwar period, emerged to join the same league as the industrial economies of North America and Europe. The new role that East Asia began to assume more clearly in the 1980s was defined in a pluralist structure of economic power, encompassing the effective representation of broader Asia...

    • 3 THE FUNCTIONS OF APEC AND IMPLICATIONS FOR CHINA: A CRITICAL REVIEW
      (pp. 31-42)
      ZHANG JIANJUN

      Asia Pacific Economic Cooperation (APEC) is experiencing a critical time in its short history. Founded in 1989, APEC includes all the major economies of the region and the most dynamic, fastest growing economies in the world and claims to be a major contributor to global prosperity and stability. Its 18 members had a combined GDP of over US$16 trillion in 1995, and 42 per cent of global trade. With the arrival of the new millenium, there are some key questions to ask. Ten years after its establishment, is APEC able to deliver? What are the factors behind its present situation?...

  8. AUSTRALIA-CHINA COOPERATION IN APEC

    • 4 AUSTRALIAʹS APEC AGENDA—IMPLICATIONS FOR AUSTRALIA AND CHINA
      (pp. 45-58)
      CHRISTOPHER FINDLAY and CHEN CHUNLAI

      Trade between two countries can be impeded by a variety of constraints. Some are the consequences of government policy; for example, border barriers to trade. Others include internal constraints, such as local business practices in the importing country. These too may be the consequence of deliberate policy choices. They may also reflect features of local markets and the stage of development of the importing country, including the depth of its institutions which reduce transactions costs. This chapter considers both types of impediments. The focus is on the economic relationship between Australia and China, and Australia’s APEC agenda is examined to...

    • 5 AUSTRALIA AND CHINA—SHARED OBJECTIVES IN APEC AND THE INTERNATIONAL ECONOMIC SYSTEM
      (pp. 59-86)
      ANDREW ELEK

      The ability of APEC governments to handle short-term financial or macroeconomic crises depends, to a large extent, on awareness of the shared interest in limiting needless underemployment of people and productive capacity. The limited success in terms of responding to the problems which became evident in mid-1997 should not be seen as a failure of APEC leaders in Vancouver, but an indication that more needs to be done to nurture a sense of community in the Asia Pacific. This is not surprising in a remarkably diverse region, whose diversity has been substantially increased by the decision to include Russia in...

  9. APEC, STRUCTURAL REFORM AND SECTORAL LIBERALISATION

    • 6 HOW IMPORTANT IS APEC TO CHINA?
      (pp. 89-108)
      YONGZHENG YANG and YIPING HUANG

      China has actively participated in the APEC process since its inception in 1989. China seems to accept that APEC is important to its overall economic relations with the rest of the world. This judgment is not without empirical basis. The APEC region accounts for more than 60 per cent of China’s trade, and a much higher percentage of its foreign capital inflows. However, China seems to have given a high profile to merchandise trade in the APEC process. This is manifested in President Jiang Zemin’s announcement in the Osaka APEC summit in 1995 that China would slash its overall tariff...

    • 7 APEC INVESTMENT, TRADE LIBERALISATION AND CHINAʹS ECONOMIC ADJUSTMENT
      (pp. 109-118)
      SUN XUEGONG

      The 15th National Congress of the Chinese Communist Party (CPC), concluded in September 1996, reaffirmed that China would continue its reform and open-door policy. Investment and trade liberalisation are important parts of the strategy to bring a prosperous and stable China into the new millennium. At the APEC Osaka summit, China pledged to take an active part in the APEC liberalisation process. Since then, China has unilaterally taken major steps to cut tariff rates and dismantle non-tariff barriers, bringing China’s average tariff rate from 36 per cent—almost the highest in the world—to 15 per cent—the target set...

    • 8 TRADE PROTECTION IN CHINAʹS AUTOMOBILE AND TEXTILE INDUSTRIES AND ITS IMPACT ON TRADE LIBERALISATION
      (pp. 119-134)
      LI KAI

      China has become a significant player in the international market and foreign trade has assumed an important role in China’s economic development. In 1997, China’s total foreign trade volume was recorded as US$325 billion, an increase of 15 per cent on the previous year, ranking the country as the tenth largest trader in the world. In the same year, China’s trade surplus was approximately 4.4 per cent of GDP.

      With such a large external orientation, it is essential for China to investigate the impact of global trade liberalisation before further integrating itself into an increasingly open international trading system. The...

    • 9 THE COMPETITIVENESS OF CHINAʹS CHEMICAL SECTOR: ASSESSMENT AND IMPLICATIONS FOR EVSL POLICY
      (pp. 135-154)
      SUN XUEGONG

      The negotiation of the APEC early voluntary sectoral liberalisation (EVSL) policy has gone through a critical stage. Among the nine pilot sectors nominated by the APEC summit in Vancouver, the chemical sector is of most concern to policymakers in China and its major trading partners. This is not only because the chemical sector is the largest sector in terms of trade volume and output, but also because the chemical sector has a significant impact on other industrial sectors, and on people’s lives. Subsequently, the question of the inclusion of China’s chemical sector in early sectoral liberalisation is an important one...

  10. ECOTECH COOPERATION

    • 10 ECOTECH AT THE HEART OF APEC: CAPACITY-BUILDING IN THE ASIA PACIFIC
      (pp. 157-196)
      ANDREW ELEK and HADI SOESASTRO

      The financial crises of 1997 and 1998 reminded everyone in the Asia Pacific region that sustained economic development requires careful attention to its foundations. The institutions of several East Asian economies proved inadequate, especially in terms of financial sector management. These weaknesses, combined with great instability in international capital markets, led to a severe and widespread economic downturn in activity in the region, shaking confidence in the prospects for further rapid improvements in living standards as well as in the prospects for effective economic cooperation in the Asia Pacific.

      Until 1997, rapid growth was taken for granted and the success...

    • 11 PROMOTING APECʹS ECOTECH INITIATIVE
      (pp. 197-206)
      CHEN LUZHI

      The Bogor Declaration was adopted by the APEC in 1994 to make trade and investment liberalisation and development cooperation the two wheels of the APEC process. The Action Agenda adopted by the APEC Osaka meeting in 1995 was accordingly divided into two major parts: trade and investment liberalisation, and economic and technical cooperation (the equivalent of development cooperation). The Manila meeting in 1996 adopted the Action Plan which also included these two parts and the ‘Declaration on an Asia Pacific Economic Cooperation Framework for Strengthening Economic Cooperation and Development’, which lay down the guiding principles and priorities of economic and...

    • 12 ECONOMIC AND TECHNICAL COOPERATION: CREATING THE ENVIRONMENT TO REMOVE THE BARRIERS
      (pp. 207-222)
      ZHOU XIAOBING and ZHAO JIANGLIN

      With the ongoing process of economic integration in the Asia Pacific region, APEC members have made many positive contributions to realising sustainable economic development in the region. However, integration has failed to narrow the gaps in economic development among members. Indeed, the disparity has widened in some respects. Enhancing technical cooperation and improving the capacity for technical renewal is one means of promoting sustainable development in the region. In the words of the Eminent Persons Group (EPG), the flow of new and high technology accelerates economic development and enhances scientific and technological capability, promotes trade and investment liberalisation and reduces...

  11. CAPITAL FLOWS, TECHNOLOGY AND TRADE LIBERALISATION

    • 13 IMPACT OF CAPITAL INFLOWS AND TECHNOLOGY TRANSFER ON THE CHINESE ECONOMY
      (pp. 225-242)
      ZHOU XIAOBING

      Since 1978, China has increasingly been making use of overseas capital for the development of its domestic economy. In retrospect, China has gone through four distinct stages.

      During the initial stage, China began to utilise foreign direct investment (FDI). But as China’s overall framework for attracting overseas capital, such as legislation, policy and infrastructure was still rather backward, overseas investors generally adopted an exploratory attitude, making only minimal direct investments in the country. During this stage, the total amount of actually utilised overseas direct investment was US$l0.6 billion—only US$1.18 billion a year on average.

      During the development stage, China...

    • 14 EXCHANGE RATE CHANGES, TRADE DEVELOPMENT AND STRUCTURAL ADJUSTMENT IN THE EAST ASIAN ECONOMIES
      (pp. 243-258)
      ZHOU XIAOBING and LIGANG SONG

      Discussion of the relationship between exchange rate movements and the growth of trade in the East Asian economies has drawn renewed attention among economists and policymakers alike since the Asian financial crisis broke out in mid-1997. Understanding the pattern of this relationship may partly explain the occurrence of the financial crisis in these export-oriented economies. Exchange rate movements (large scale depreciations), directly caused by the financial crisis, will shape the way in which the regional economy recovers from the crisis. Discussion of exchange rate policies in the regional economy can be put into the broader context of trade reform and...

    • 15 CHINAʹS TRADE EFFICIENCY: MEASUREMENT AND DETERMINANTS
      (pp. 259-271)
      PETER DRYSDALE, YIPING HUANG and K.P. KALIRAJAN

      China’s open door policy has led to its increasingly deeper integration into the global economy during the reform period. Between 1978 and 1997, China’s real GDP grew at an annual rate of 9.6 per cent. The average growth rate of trade was even higher, at 12.9 per cent, for the same period. According to the official statistics, China’s export/GDP ratio increased from 9.1 per cent in 1978 to 25.6 per cent in 1997 (SSB 1997; APEG 1998). There is now consensus among economists that the official GDP data are under-estimated and that the per capita GNP in 1990 was about...

  12. INDEX
    (pp. 272-286)