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Recent Claims of China's Economic Exceptionalism: Reflections Inspired by WTO Accession

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  • Wing Thye Woo

    (Department of Economics, University of California Davis)

Abstract

The desirability of WTO membership for China depends on whether its economic successes have been the result of its discovery of new institutional forms (e.g. dual track pricing, SOE contracts, and fiscal contracts) that are optimal for China''s particular economic circumstances, or have been the result of the convergence of its economic institutions to those of a typical advanced member of WTO. If the experimentalist interpretation of China''s phenomenal growth is correct, then WTO membership is a negative development because it could be a straitjacket for WTO-enforced institutional harmonisation that would constrain China''s scope for experimentation. But if the experimentalist interpretation is wrong, then WTO membership is a positive development that will lock China on to the path of deepening economic reform. We assess several recent claims of China''s economic exceptionalism, and conclude that they neglected the considerable costs associated with the use of these innovative mechanisms (which have led to the repeal of every one of these ""optimal"" mechanisms) and that these mechanisms were unlikely to have produced positive results in the transition economies in Europe. Because a major reason for the failure of Gorbachev''s reforms was opposition from the entrenched interests within the ruling structure, China''s forthcoming WTO accession could be seen as an attempt by reformers to lock economic policies on to a market-oriented course that is costly to reverse.

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Bibliographic Info

Paper provided by University of California, Davis, Department of Economics in its series Working Papers with number 13.

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Length: 35
Date of creation: 16 Jan 2003
Date of revision:
Handle: RePEc:cda:wpaper:01-3

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Keywords: Economics of Transition; WTO; Economic Reform in China; Dual Track Pricing; State Enterprise Reform; Privatization; Fiscal System; Convergence School; Experimentalist School;

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References

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  1. Jefferson, Gary H. & Rawski, Thomas G. & Zheng, Yuxin, 1994. "Productivity change in chinese industry: A comment," China Economic Review, Elsevier, vol. 5(2), pages 235-241.
  2. Jeffrey D. Sachs & Wing Thye Woo, 1997. "Understanding China's Economic Performance," Harvard Institute of Economic Research Working Papers 1793, Harvard - Institute of Economic Research.
  3. Woo, W.T., 1993. "The Art of Reforming Centrally-Planned Economies: Comparing China, Poland and Russia," Papers 93-09, California Davis - Institute of Governmental Affairs.
  4. Groves, Theodore, et al, 1994. "Autonomy and Incentives in Chinese State Enterprises," The Quarterly Journal of Economics, MIT Press, vol. 109(1), pages 183-209, February.
  5. Sachs, J.D. & Woo, W.T., 1994. "Structural Factors in the Economic Reforms of China, Eastern Europe and the Former Soviet Union," Papers 94-01, California Davis - Institute of Governmental Affairs.
  6. Jefferson, Gary H. & Rawski, Thomas G. & Zheng, Yuxin, 1996. "Chinese Industrial Productivity: Trends, Measurement Issues, and Recent Developments," Journal of Comparative Economics, Elsevier, vol. 23(2), pages 146-180, October.
  7. Jefferson, Gary H & Rawski, Thomas G & Yuxin, Zheng, 1992. "Growth, Efficiency, and Convergence in China's State and Collective Industry," Economic Development and Cultural Change, University of Chicago Press, vol. 40(2), pages 239-66, January.
  8. Woo, Wing Thye & Fan, Gang & Hai, Wen & Jin, Yibiao, 1993. "The efficiency and macroeconomic consequences of Chinese enterprise reform," China Economic Review, Elsevier, vol. 4(2), pages 153-168.
  9. Woo Wing Thye & Hai Wen & Jin Yibiao & Fan Gang, 1994. "How Successful Has Chinese Enterprise Reform Been? Pitfalls in Opposite Biases and Focus," Journal of Comparative Economics, Elsevier, vol. 18(3), pages 410-437, June.
  10. Kornai, Janos, 1992. "The Socialist System: The Political Economy of Communism," OUP Catalogue, Oxford University Press, number 9780198287766.
  11. Wing Thye Woo & Michael Magill & Julian R. Betts, 2003. "Chinese Economic Growth: Sources and Prospects," Working Papers 968, University of California, Davis, Department of Economics.
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Citations

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Cited by:
  1. Wing Thye Woo, 2006. "The Structural Nature of Internal and External Imbalances in China," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 4(1), pages 1-19.
  2. Peter Drysdale & Xinpeng Xu, 2004. "Taiwan'S Role In The Economic Architecture Of East Asia And The Pacific," Trade Working Papers 22865, East Asian Bureau of Economic Research.
  3. Wing Thye Woo, 2007. "The Challenges of Governance Structure, Trade Disputes and Natural Environment to China's Growth," Comparative Economic Studies, Palgrave Macmillan, vol. 49(4), pages 572-602, December.
  4. Yu, Miaojie, 2009. "Revaluation of the Chinese Yuan and triad trade: A gravity assessment," Journal of Asian Economics, Elsevier, vol. 20(6), pages 655-668, November.
  5. Yeung, Godfrey & Mok, Vincent, 2005. "What are the impacts of implementing ISOs on the competitiveness of manufacturing industry in China?," Journal of World Business, Elsevier, vol. 40(2), pages 139-157, May.
  6. Wing Thye Woo and Shuming Bao, 2003. "China: Case study on Human Development Progress towards the Millennium Developmental Goals at the Sub-National Level," Human Development Occasional Papers (1992-2007) HDOCPA-2003-14, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
  7. Jeffrey Sachs & Wing Thye Woo, 2003. "China's Economic Growth After WTO Membership," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 1(1), pages 1-31.
  8. Wing Thye Woo, 2003. "The Travails of Current Macroeconomic and Exchange Rate Management in China: The Complications of Switching to a New Growth Engine," Development and Comp Systems 0310001, EconWPA.

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