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Review of "Integrating China into the Global Economy"
By James A. Dorn
Introduction
Integrating China into the Global Economy
Nicholas R. Lardy
Washington: Brookings Institution Press, 2002, 244 pp.
China's total trade (the sum of its imports and exports) was $20 billion in 1977 but by the end of the 20th century that figure had increased to $475 billion. In his new book, Nicholas Lardy, a long-time senior fellow in the Foreign Policy Studies program at the Brookings Institution and currently senior fellow at the Institute for International Economics, presents a detailed study of China's integration into the global economy. He examines China's pre-reform trade regime and contrasts it with the substantial liberalization that took place after 1978, especially in the decade prior to China's accession to the World Trade Organization in December 2001. His central thesis is that the Middle Kingdom was well on its way toward global economic integration before entering the WTO. Lardy explains the expected benefits and costs of accession, why Beijing agreed to join even though certain conditions are discriminatory, and the implications for U.S.-China relations.
China's rapid economic growth since its opening to the outside world, which began with the 1979 law on joint ventures and the creation of special economic zones in 1980, has proven that economic freedom and wealth creation go hand in hand. Prior to joining the WTO, China already had significantly reduced its tariff and nontariff barriers and increased trading rights (that is, the right to import and export). By 2000, foreignfunded enterprises accounted for 48 percent of China's exports and 52 percent of its imports. In chapter 1, Lardy argues that China's long 14-year wait for entry into the WTO "reflects as much the rising bar imposed by members of the Working Party . . . as China's slowness to embrace the principles of the multilateral trading system" (p. 9).
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