IDEAS home Printed from https://ideas.repec.org/a/taf/jocebs/v7y2009i2p139-166.html
   My bibliography  Save this article

Updating China's international economic policy after 30 years of reform and opening: what position on regional and global economic architecture?

Author

Listed:
  • Wing Thye Woo

Abstract

The 30 years of reform and opening have brought great material progress to China. By becoming a big country, China's actions created huge spillovers on other countries. The result has been a rise in trade tension between China and its trade partners. Recently, some have claimed that China's prolonged large trade surpluses have undermined global financial stability and tilted the world into a deep recession, if not a 1930s-style depression. Others have claimed that the greenhouse gases from China's industrialization would soon cause cataclysmic global climate change. One blunt but effective way to eliminate these negative spillovers is to restrict imports from China. Labor in the rich countries is under considerable stress because of the deep global structural adjustments brought by: (1) the integration of the labor force of China, India and the Soviet bloc into the world economy; and (2) the acceleration of technological innovations (as exemplified by the revolution in information technology). The new global equilibrium could be a win-win outcome for the world but the process of moving to it is a painful one. Protectionism to avoid the transitional pains is, however, likely to end up in a lose-lose outcome for the world. China must therefore, in its own interests, help to reduce international tension by updating its strategy of international economic engagement. China has to go beyond being a passive beneficiary of the WTO system to being an active promoter of WTO objectives. China should work with the US to bring Doha Rounds negotiations to a successful conclusion. China must also play a stronger and more constructive role in the forthcoming international talks on global climate change. China and India are simply too big to be exempted for a long time from national ceilings on the emission of greenhouse gases. China will have to face down its internal political opposition to replace the backward state-controlled financial system with a dynamic, but well-regulated, diversified private financial system in order to eliminate the odd phenomenon of a poor country lending to a rich country. For its neighborhood, China should push for an Asian Economic Union that takes the form of a WTO-plus free trade and open investment area that has regional pooling of foreign exchange reserves. Since there is no prospect of free labor mobility within East Asia, monetary integration would produce an economically inefficient outcome. East Asia should therefore be focusing its energy on creating as large a free trade area as possible, and forgo the unrealistic goal of a common Asian currency.

Suggested Citation

  • Wing Thye Woo, 2009. "Updating China's international economic policy after 30 years of reform and opening: what position on regional and global economic architecture?," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 7(2), pages 139-166.
  • Handle: RePEc:taf:jocebs:v:7:y:2009:i:2:p:139-166
    DOI: 10.1080/14765280902847601
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/14765280902847601
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gianmarco I.P. Ottaviano & Giovanni Peri, 2005. "Rethinking the Gains from Immigration: Theory and Evidence from the U.S," NBER Working Papers 11672, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jocebs:v:7:y:2009:i:2:p:139-166. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: http://www.tandfonline.com/RCEA20 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.