The Transformation in the Political Economy of China's Agricultural Trade Liberalisation

This paper attempts to explore how reform since the late 1970s has transformed the management of China's bilateral economic relations with Japan. The pursuit of comparative advantage changed the pattern of bilateral trade relations between the two countries, with manufactures replacing resources as China's major exports to Japan in the mid-1980s. Internationalisation of the Chinese economy placed China's bilateral economic links with Japan in both a regional and a global context. Decentralisation of foreign trade and investment meant that management of economic relations between the two countries was no longer a centrally planned affair as in the pre-reform era. As their bilateral economic interdependence deepended, China and Japan found that adjustments to domestic interests in one country increasingly resulted in the need for adjustments in the other, at times contributing to bilateral economic disputes. While the bilateral mechanism has been useful in dealing with these bilateral economic disputes, multilateral rules-based institutions and regional and global cooperation have become increasingly important to management of the relationship.