Competing Perspectives on the Liberalization of China’s Foreign Trade and Investment Regime

Abstract

China has been experiencing a social and economic transformation that is no less dramatic than those experienced since 1989 by the nations of central and eastern Europe. In a span of twenty years, this once sleeping giant has evolved from a centrally planned, autarkic, socialist economy to a rapidly growing, decentralized, open, market-driven economy. What makes this transformation especially remarkable is the fact that it was initiated, guided, and encouraged by the Chinese Communist Party (CCP) itself. China's transformation, which began in 1978, has enormous consequences for the global economy because of the strategic position that an awakening China occupies in Asia and, indeed, in the world. The effect China's economy is bound to have on the allocation of the world's resources will be enormous, and so too will its effect on the well-being of the historically dominant western capitalist nations. It is therefore understandable that the Western nations, especially the United States, have been eager to integrate China into the world trading system by sponsoring China's membership in the World Trade Organization. The hope is that WTO membership will constrain if not neutralize an independent and possibly obstructionist China while at the same time prying open China's doors for global businesses. The Chinese, on the other hand, see membership in the global economic community as essential to their own continued economic growth and development and as an opportunity to influence to their own advantage the future of trade liberalization, although they hope the terms of such membership would preclude excessive foreign interference with their domestic economy.