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China between external pressure and domestic policy reforms: In search of a balance

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  • Langhammer, Rolf J.
  • Liu, Wan-Hsin

Abstract

The authors reveal that on the one hand China alleviates inward FDI with a clear focus on promoting "quality" FDI with potential positive impacts also on local firms without direct investment relationships with multinational enterprises. On the other hand China lowers Most Favored Nation (MFN) tariffs and simultaneously retaliates against US penalty tariffs. They identify weaknesses of China's tariff policy which should be removed to avoid trade conflicts with its partners and primarily to foster its own economic transformation. The authors conclude that the escalation of trade conflicts can trigger protectionist measures from China and other countries, thus launching a race to the bottom against openness for international trade and investment.

Suggested Citation

  • Langhammer, Rolf J. & Liu, Wan-Hsin, 2018. "China between external pressure and domestic policy reforms: In search of a balance," Kiel Policy Brief 117, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkpb:117
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    References listed on IDEAS

    as
    1. Moran, Theodore H. & Görg, Holger & Seric, Adnan & Krieger-Boden, Christiane, 2017. "How to Attract Quality FDI?," KCG Policy Papers 2, Kiel Centre for Globalization (KCG).
    2. Bickenbach, Frank & Liu, Wan-Hsin & Li, Guoxue, 2015. "The EU-China bilateral investment agreement in negotiation: Motivation, conflicts and perspectives," Kiel Policy Brief 95, Kiel Institute for the World Economy (IfW Kiel).
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    China; FDI; trade; tariff; United States;
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