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Lee Branstetter Nicholas Lardy July, 2006

Lee Branstetter Nicholas Lardy July, 2006. NBER working paper: China’s Embrace of Globalization. Abstract. Attempt to provide the international economics community with a brief summary of the major steps in the evolution.

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Lee Branstetter Nicholas Lardy July, 2006

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  1. Lee Branstetter Nicholas Lardy July, 2006 NBER working paper:China’s Embrace of Globalization

  2. Abstract • Attempt to provide the international economics community with a brief summary of the major steps in the evolution. • On Chinese policy toward international trade and FDI and their consequences since the late 1970s. • Draw upon and update treatment of the subject. 输入标题输入标题

  3. Background of China’s Economic Growth • 1978: started open market to foreign trade and investment (economic reform)--$21 billion foreign trade. • 2004: $1.1 trillion • 2005: world’s third largest trading economy Study focus on1978-2001Chinese trade and investment policy

  4. Prior to WTO Accession • Before: planned economy, state commission’s plan covered more than 90% of imports, 3000 individual commodities to export. Few foreign trade corporation owned and controlled by the Ministry of Foreign Trade. • Chinese volume of trade: 1.5 percent in 1953 to 0.6 percent in 1977.

  5. Prior to WTO Accession (cont.) • Reduce import tariff: 56% in 1982, 43% in 1985, certain categories of domestic firms were duty free in the second half of the 1990s. • Licenses and quotas: half of imports by end of 1980s. • Increased domestic firms: 12 firms to 800 firms by 1985, to 35,000 by 2001. • Foreign exchange reform and Tax policy: RMB 1.5 to the dollar in 1981 to 8.7 in 1994, rely on indirect tax.

  6. FDI Prior to WTO Accession • 1979: Law on joint ventures was passed Four special economic zones • 1984: 14 additional units (opened cities) on Pacific coast. • 1986: 22 regulations for “export oriented” projects and “technologically advance” projects

  7. China’s WTO Accession Agreement • Trade in Manufactures: agree to lower average tariff levels on industrial products to 8.9% in 1999---Phased in mid-2005. Retain state monopoly: petroleum products, cotton, grain, vegetable oil, tea, silk. Right to import and export to all firms active in China: foreign and domestic

  8. China’s WTO Accession Agreement • Agricultural Trade: reduce the average statutory import tariff from 21% to 15%. Agreement on WTO Sanitary and phytosanitary standard to avoid health standards problem. 100 more health standards.

  9. China’s WTO Accession Agreement (cont.) • Services Sector: significant in distribution, telecommunications, and financial services. also for professional, audiovisual, and construction services open its market in banking, insurance, securities, fund management, and other financial services (fully opened after 5 years)

  10. Implication • Structure change: China: leading exports of crude oil, refined petroleum products and apparel to a major producer and exporter of electronic and information technology products • Reduces the exports of Vietnam, the Philippines, Thailand, Indonesia, and Malaysia. ASEAN exports drop. • Benefit Japan and the NIES, mainly due to increased exports to China

  11. QUESTIONS

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