China: Foreign Trade Reform: Now for the Hard Part

Peter Harrold

Oxford Review of Economic Policy, 1995, vol. 11, issue 4, 133-46

Abstract: This article examines the factors behind China's rapid growth of foreign trade during the reform era, and the main challenges in this area for the future. It finds that trade growth has been at a spectacular rate of over 15 per cent a year, and that the trade pattern has moved steadily in the direction of China's comparative advantage in labour-intensive products. Four distinct periods of trade reform are traced: export expansion, administrative decentralization, improved export incentives, and now a stage of genuine liberalization. The current trade regime is characterized as a 'protected export promotion' system, which simultaneously encourages exports and protects domestic industry, albeit very unevenly. The true challenge for trade reform is not to solve the U.S.-China bilateral deficit, but to address the real WTO-entry agenda issues of opening up the import regime. If it does, China will be one of the biggest beneficiaries of the Uruguay round liberalizations. Copyright 1995 by Oxford University Press.

Date: 1995
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