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The Political Economy of Sino-American Relations

The Political Economy of Sino-American Relations: A Greater China Perspective

Edited by Y.Y. Kueh
with the assistance of Brian Bridges
Copyright Date: 1997
Pages: 312
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  • Book Info
    The Political Economy of Sino-American Relations
    Book Description:

    In the post-Cold War world, the United States and China together forms one of the most significant relationships in the Asian Pacific region. However, this relationship cannot be considered in isolation from the dynamic economic integration of China with Hong Kong and Taiwan into what is now called 'Greater China'. This volume draws on a wide range of international expertise to examine the nature of the US economic interaction with Greater China. Set against the historical and political background of Sino-American relations, the contributors discuss in detail trade and investment flows between Greater China and the United States as well as China's entry into the World Trade Organization. The impact on regional trading partners and global trading organizations is also evaluated. The differing perspectives and analyses presented here make this volume a stimulating re-assessment of the current state of Sino-American economic relations as the region approaches the new century.

    eISBN: 978-988-220-247-4
    Subjects: Economics

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Preface
    (pp. vii-viii)
    Y.Y. Kueh
  4. List of Contributors
    (pp. ix-ix)
  5. Introduction
    (pp. 1-8)
    Y.Y. Kueh and Brian Bridges

    In the 1980s the Asia-Pacific region was the world’s fastest growing region economically and its record to date in the 1990s, despite occasional hiccups in some countries, suggests that that status will be maintained in this decade as well. The impressive growth rates of recent years are founded both on heightened flows of trade and investment within the region and on an ever-broadening range of commercial contacts with external trading partners. Both have taken place within an increasingly congenial regional political context, especially after the collapse of the Soviet Union which has brought about a basically favourable power realignment on...

  6. 1 US-China Relations, 1995-97: From Crisis to Hope to Uncertainty
    (pp. 9-28)
    Harry Harding

    In 1995-96, Sino-American relations reached what many observers regarded as their lowest ebb since the two countries’ rapprochement in the early 1970s. The most immediate issue was Taiwan. In May 1995, the United States permitted Taiwan’s president, Lee Teng-hui, to visit Cornell University, there to make a major public address. Beijing feared that this decision presaged a major change in American relations with Taiwan—perhaps a willingness to support Taiwan’s quest for enhanced international status or even formal independence. To deter both Taipei and Washington from moving in these directions, Beijing launched a major series of military exercises in the...

  7. 2 China’s Economic Reforms and Their Impact on US-China Trade Relations
    (pp. 29-48)
    Robert F. Dernberger

    I welcome the invitation to present my ‘assessment of the current state of the Chinese economic reform programme’ and speculate on’ how the reforms are impacting on trade and economic relations with the United States’. It is, however, becoming increasingly difficult to say anything original about China’s economic reforms. Almost any issue of our traditional economic journals now contain several theoretical and empirical studies of the Chinese economic reform programme. This literature has been enriched by the contributions of our colleagues in political science and sociology—both China specialists and non-China specialists alike. In short, we are accumulating a vast...

  8. 3 Taiwan’s Perspective on Sino-American Economic Relations
    (pp. 49-60)
    Tzong-shian Yu

    The purpose of this chapter is to attempt to provide a perspective from Taiwan on recent developments in Sino-American economic relations. Since 1950, Sino-American economic relations have meant both the economic relations between Taiwan and the United States and the economic relations between China and the United States. So, it is logical for us to start our exploration with an assessment of the background and current status of Taiwan’s economic relations with the United States, and to proceed to an examination of the recent development of economic relations between China and the United States, and then to consider the prospects...

  9. 4 The Role of Hong Kong in Sino-American Economic Relations
    (pp. 61-92)
    Y.Y. Kueh and Thomas Voon

    Hong Kong has traditionally been a very important source of China’s foreign exchange earnings. Prior to the 1980s, generally about one-quarter to one-third of the country’s hard foreign currency earnings were generated from exports to Hong Kong. Tiny as the British enclave may be in geographic terms, and with a population of only six million, it has nonetheless always been a very important market for China’s food and food-processing industries, as well as textile and clothing manufacturers. Sales to Hong Kong have earned the Chinese government the bulk of the hard currency needed to finance her enormous import bills incurred...

  10. 5 The United States Versus Japan in Market Shares in Hong Kong and Taiwan
    (pp. 93-104)
    Kai-cheong Lei

    The increasing importance of the Asia-Pacific rim countries, the East Asia countries in particular, in the world economy has been recognized by economists and governments all over the world. Many countries, both inside and outside Asia, have reset their economic policies accordingly in order to maximize their national interests through trading or investing in this prosperous region. As a result, the relationships between the East Asian economies and some major powers have turned down new avenues. Take the cases of Japan and the United States as an example. According to some estimates,¹ the United States has since 1992 already shifted...

  11. 6 United States Direct Investment in China: Basic Facts and Some Policy Issues
    (pp. 105-134)
    Leonard K. Cheng

    In this chapter, I shall focus on the investment relation between China and the United States. A description and analysis of the statistics of US direct investment (DI) in China will be presented,¹ to be followed by a discussion of some policy issues and areas of disagreements between the two sides in the investment arena.

    It is useful to point out at the outset that investment and trade relations are closely related and are different facets of the overall economic relations between the two countries. As we shall see, as a source country of foreign direct investment (FDI) in China,...

  12. 7 Double-Edged Trade Effects of Foreign Direct Investment and Firm-Specific Assets: Evidence From the Chinese Trio
    (pp. 135-162)
    Chin Chung

    It has been hotly debated in the literature whether foreign direct investment (FDI) is trade-reducing or trade-enhancing. Citing Japanese FDI towards Asian developing countries as an example, Kojima contended that while the traditional oligopolistic FDI (for example, US investment in Europe in chemicals and electronics during the 1950s) works to reduce trade between the home and host countries, the new form of ‘labour-oriented’ FDI (For example, Japanese investment in Asian low wage countries in the 1960s) tends to increase trade.¹ The rationale behind this argument is essentially that FDI originating in the oligopolistic industries of the Western world was largely...

  13. 8 The Impact of Renminbi Devaluation on Hong Kong and China Trade
    (pp. 163-180)
    Kui-yin Cheung

    Since China launched its economic reforms and adopted the open-door policy in the late 1970s, it has become a significant factor in world trade. From 1979 to 1993, China’s exports increased from US$13.7 billion to US$91.8 billion at more than 16 percent per year, a rate that would have been inconceivable before the adoption of the open-door strategy. As in other centrally planned economies, the price of foreign exchange had little effect on the volume of either imports or exports. In the pre-reform era, China’s exports were used to earn enough hard currency to import goods for industrialization and self...

  14. 9 The Implications of China’s Admission to the WTO for Greater China
    (pp. 181-204)
    Yun-wing Sung

    The opening of China coincided with the emergence of severe labour shortages in Hong Kong and Taiwan and the need for the latter two economies to restructure. The export-oriented, labour-intensive industries of Hong Kong and Taiwan have moved to Guangdong and Fujian on a large scale. The economic integration of Greater China has been largely market-driven, and occurred without a multilateral institutional framework. The very intense trade and investment flows among the trio (China, Taiwan and Hong Kong) has led to the emergence of Greater China, which in turn has had dramatic impacts on world trade and investment.

    Hong Kong...

    (pp. 205-222)
    Hiromi Yamamoto

    Sino-Japanese relations have developed significantly though not always smoothly since the establishment of diplomatic relations in 1972. In the next section, the basic patterns of the development process of Sino-Japanese economic relations are analysed in terms of trade, direct investment, official development assistance, and other flows. Following that, the present and future of Sino-Japanese relations are analysed by paying particular attention to perceptions on both sides. In the third section, the triangular relationship of Japan, China and the United States is examined. The fourth section follows the way that Sino-Japanese relations are linked with Japanese-American relations in order to show...

  16. 11 US-China Trade Conflict and Its Implications for Australia’s Agricultural Trade
    (pp. 223-242)
    Joseph C.H. Chai

    The US-China trade conflict is characterized by persistent bilateral trade imbalances in China’s favour since the early 1980s (see Table 11.1). According to US statistics, during the 1984-94 period, US exports to China rose at an annual average rate of only 6.2 percent, whereas Chinese exports to the United States grew at an annual average rate of 8.9 percent. As a result the US trade balance with China turned from surplus into deficit in the early 1980s and by 1993 China had become the country with which the United States had the largest deficit after Japan.¹

    The US-Japan trade imbalance...

  17. 12 Sino-American Relations: An Asian Perspective
    (pp. 243-276)
    Radha Sinha

    Nations, like human beings, acting in their self-interest aim at maximizing their gains (or minimizing their losses) over a period of time subject, of course, to constraints. Within the national boundary, the government — as the ‘guardian’ of the national interest — acting within physical, social, economic and moral constraints, tries to ‘maximize’ its own objective function. In democratic countries, this objective function may consist of the ‘maximum welfare of the maximum number’; in authoritarian countries, it is the maintenance of the regime that gets precedence. Nevertheless, in reality, in democratic countries where elections are expensive, those elected must often depend on...

  18. 13 China in the World Economy
    (pp. 277-290)
    Marcus Noland

    Since the inception of economic reforms in the late 1970s, China’s economic performance has been nothing short of spectacular. Between 1979 and 1994, China’s real growth rate has averaged more than 9 percent annually (Figure 13.1). Agriculture has been decollectivized, the management of state-controlled firms has been decentralized, and property rights reforms have facilitated an explosion of business outside central government control. Goods and factor markets have been liberalized to a Significant extent: most prices are now determined by markets, state control of labour markets has been reduced, and previously repressed capital markets have experienced rapid, if uneven, development. China...

  19. Index
    (pp. 291-299)