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Recent claims of China's economic exceptionalism: Reflections inspired by WTO accession

  • Woo, Wing Thye

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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Article provided by Elsevier in its journal China Economic Review.

Volume (Year): 12 (2001)
Issue (Month): 2-3 ()
Pages: 107-136

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Handle: RePEc:eee:chieco:v:12:y:2001:i:2-3:p:107-136
Contact details of provider: Web page: http://www.elsevier.com/locate/chieco

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  1. 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.
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  3. Kornai, Janos, 1992. "The Socialist System: The Political Economy of Communism," OUP Catalogue, Oxford University Press, number 9780198287766, March.
  4. J√°nos Kornai, 2001. "Ten years after the road to a free economy: the author's self-evaluation," Politick√° ekonomie, University of Economics, Prague, vol. 2001(5).
  5. 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.
  6. Wing Thye Woo, . "Chinese Economic Growth: Sources And Prospects," Department of Economics 96-08, California Davis - Department of Economics.
  7. 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.
  8. 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.
  9. 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.
  10. Nolan, Peter & Xiaoqiang, Wang, 1999. "Beyond privatization: Institutional innovation and growth in China's large state-owned enterprises," World Development, Elsevier, vol. 27(1), pages 169-200, January.
  11. 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.
  12. 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.
  13. 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.
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