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

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

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

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

Synopsis

"China's transformation from a virtually closed economy to a major trading nation is an incredible success story. Since 1979 the country has changed its 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 from the world economy, did China open its door?" "This book, part of the Brookings Integrating National Economies series, tells the story of how China ended its 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 turnaround 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 policies among Communist Party and government officials. Despite strong vested interests 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." Title Summary field provided by Blackwell North America, Inc. All Rights Reserved

Excerpt

Foreign trade and investment reforms have transformed the People's Republic of China from a closed economy to a major trading power. China has become the world's tenth largest exporter and the largest recipient of foreign direct investment in the developing world. in this book, Susan Shirk tells the story of how China ended its long-held policies of economic isolationism and rejoined the world economy during the decade and a half between 1979 and 1994.

In addressing the question of how such a turnaround was accomplished, the author looks for answers in politics instead of economics. She describes how China's political institutions have shaped economic policymaking and produced reforms characterized by gradualism, administrative decentralization, and particularism. the author examines several of the most important foreign economic reforms: the establishment of special regional zones, decentralization of trade management, reform of the foreign exchange regime, and opening of the domestic market. the book concludes by considering the international pressures for and domestic political obstacles to China's deep integration with the world economy, which would involve adoption of international standards for intellectual property, environmental protection, and the treatment of labor.

Susan L. Shirk is the director of the University of California's systemwide Institute on Global Conflict and Cooperation and a professor in the Graduate School of International Relations and Pacific Studies and the Department of Political Science at the University of California, San Diego. She is grateful to Nicholas Lardy for his extensive suggestions about the manuscript, Tim Fitzpatrick for re-

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