Guangdong: Preparing for the WTO Challenge

Article excerpt

Guangdong: Preparing for the WTO Challenge, edited by Joseph Y. S. Cheng. Hong Kong: The Chinese University Press, 2003. viii + 370 pp. US$39.00 (hardcover).

We have not had such a comprehensive volume as this on Guangdong Province's economy since the seminal study by Ezra F. Vogel, One Step Ahead in China: Guangdong under Reform (1989). Given the importance of Guangdong as a laboratory for China's opening up and economic reforms, the book is a timely contribution, setting the southern province's development in the international context of China's WTO accession. Including a well-articulated synthesis by the editor, Joseph Y.S. Cheng, the volume is divided into 13 chapters covering almost every dimension of Guangdong's economic and social development, from industrial structural change to public finance, education and environmental issues.

One theme running through many of these chapters concerns the considerable leeway provided by Beijing for Guangdong to allow its traditional entrepreneurial spirit full sway. Although the book is sometimes insufficiently critical towards the official stance, it also does not shrink from examining the inherent difficulties that have affected Guangdong more than other regions of China, as the province undergoes a chaotic process of transition towards a market economy.

Dealing with the question of public finance, Linda Chelan Li's chapter underlines the flawed mechanism that subjects poor localities to greater pressure to enlarge government functions, while the predatory behavior of cohorts of unpaid or partly paid local officials makes the population even poorer. She analyses in great detail the reform of public administration in the province and presents the results of a field study conducted with local officials. This casts a new light on the process-occurring not only in Guangdong-of handing over to social organizations dozens of administrative services originally under the strict control of government departments.

Guangdong increased its contribution to national GDP utilizing foreign direct investment from 1995 through 2000. However, the rivalry with the Yangtse River Delta is already palpable. With Taiwanese investment moving north, Guangdong has to find creative ways to maintain its competitive edge. In this context, the growing interaction with Hong Kong constitutes a lever for southern China's economy. The Closer Economic Partnership Agreement (CEPA) starting in 2004 will surely bring extra dynamism to Guangdong, especially since the mainland has opened up more of its service sector.

The changes in industrial structure induced by ongoing reforms and WTO accession are also well documented. The emphasis put on the development of high-tech industries will affect the spatial structure of the province, and the Pearl River Delta in particular. This will exert a deep influence on the structure of exports. Lau Pui-king shows the fiscal reasons that local governments are so actively involved in the economic development of their region. However, a number of questions remain unresolved, such as how provincial authorities can successfully help private enterprises to develop into high-tech enterprises.

C. S. Tseng's chapter on Guangdong enterprises' internationalization, although sketchy in some parts, underlines the success of the province's enterprises. …