How China Opened Its Door The Political Success of the PRC's Foreign Trade and Investment Reforms

by Shirk, Susan L.

• ISBN13: 9780815778547
• ISBN10: 0815778546
• Format: Hardcover
• Copyright: 1994-10-01
• Publisher: Brookings Institution Press

Summary

China's transformation from a virtually closed economy to a major trading nation is an incredible success story. Since 1979 the country has changed it's policies to promote increased foreign trade and investment, thereby attracting more direct investment to China than to any other developing country in recent years. What brought about this change? How, after thirty years of being walled off form the world economy, did China open its door?This book part of the Integrating National Economies series, tells the story of how China ended it long-held policies of economic isolationism and rejoined the world economy in the decade and a half between 1979 and 1994. It shows how China's transformation into a world trading power was achieved remarkably without any major alteration in the country's communist political system. Susan L. Shirk describes the reform strategy and explains why such a turn-around was possible in China but not in the Soviet Union.Shirk's analysis details the political logic behind the economic reform, illustrating how China's leaders were able to win support for reform politics among Communist Party and government officials. Despite strong vested interest in the status quo, the communist government successfully adopted reforms through gradualism, administrative decentralization, and ad hoc particularistic negotiating with individual subordinates. Shirk explains these distinctive features of China's path to reform.China has achieved shallow integration with great success. Whether deeper integration with the world economy will automatically follow remains unclear. Shirk concludes that China will not be able to achieve reform in the areas of deep integration-intellectual property rights, environmental protection, and labor treatment-in the same way it achieved shallow integration. She argues that imposing international standards will require rapid enforcement, central regulation, and uniform rules. If China can meet these challenges, only then will the country successfully move toward greater openness and deeper international integration.A volume of Brookings' Integrating National Economies Series

Table of Contents

Preface	xi
Economic Reform without Political Reform	1	(7)
The Pre-reform System: The Closed Command Economy	8	(4)
China's Political Institutions	12	(15)
Who's in Charge? The Communist Party and the Government	13	(4)
Reciprocal Accountability and Leadership Competition	17	(2)
The Policy Process: Delegation by Consensus	19	(3)
The Chinese Version of Communist Institutions	22	(5)
Patterns in Reform Policies	27	(7)
Gradualism	27	(3)
Administrative Decentralization	30	(2)
Particularistic Contracting	32	(2)
Foreign Economic Reform Policies	34	(21)
Regional Policies toward Foreign Investment	34	(10)
The Decentralization of Foreign Trade Authority	44	(11)
Opening the Door Wider	55	(21)
Reforming the Foreign Exchange Regime	56	(11)
Opening the Domestic Market	67	(9)
The Political Challenge of Deeper Integration	76	(11)
Intellectual Property Rights	79	(2)
Environmental Protection	81	(2)
Labor Standards	83	(2)
Difficulties of Deep Integration	85	(2)
Appendix	87	(4)
Comments	91	(20)
Harry Harding
References	111	(4)
Index	115