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Economic Integration

  • Yongjin Zhang
Part of the St Antony’s Series book series

Abstract

Writing in 1992, Larry Summers, chief economist of the World Bank, drew the world’s attention to the take-off of the Chinese economy in the 1980s, which, he believed, may prove to be the most important economic development of the decade.1 The rise of China as an economic power in East Asia has increasingly become a topical subject for many economists concerned with development economics and for political scientists interested in East Asia and the Pacific rim. Both the IMF and the World Bank have revised their wisdom and claimed that the Chinese economy has already become either the second or the third largest in the world, just after the United States, or the United States and Japan. Recent studies identify China as the leading Pacific economy, and a report by PECC (Pacific Economic Cooperation Council) experts in 1994 characterised the Chinese economy as the engine of growth for the Asia-Pacific region in the years leading up to the twenty-first century. China, it is claimed, has become the fourth growth pole of the world economy after the United States, the European Community and Japan.2

Keywords

Foreign Direct Investment Foreign Trade Chinese Economy Asian Development Bank International Capital Market 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Notes

  1. 1.
    The Independent, 14 Nov. 1992.Google Scholar
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    For example, as early as 1986, Dwight H. Perkins already noticed the emergence of China as an economic power in Asia. See D. H. Perkins, China:Asia’s Next Economic Giant? See also N. Lardy, Foreign Trade and Economic Reform in China, 1978–1990; World Bank, The East Asian Miracle: Economic Growth and Public Policy; and K. Fukasaku, et al, China’s Long March to an Open Economy, pp. 59–87.Google Scholar
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    Renmin Ribao (overseas edn), 6 Oct. 1994. The statistics are from the State Administration for the Management of State-owned Assets (Guowuyuan Guoyou Zichan Guanliju). They must be treated with caution..Google Scholar
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    The ranking of China’s position in the world trading nations is an intriguing one. According to the GATT data, China is the eleventh largest trading nation, while Hong Kong is the tenth. Lardy argued, however, that given that a large proportion of Hong Kong’s exports are re-exports of goods produced in China, China should be counted as the tenth largest producer of export goods. N. Lardy, China in the World Economy, p. 2.Google Scholar
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    China did use deferred payments in the 1960s in procuring 65 items of advanced technologies and equipment from Austria, Belgium, Britain, France, Germany, Holland, Japan, Sweden, and Switzerland. The total value of these sellers’ credit (including interest) was $280 million. See ibid., pp. 319–20.Google Scholar
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    The MOFERT is responsible for all concessional and other bilateral borrowing from foreign governments and aid agencies, frame agreements and/or guarantees for export credit agencies. The Ministry of Finance is responsible for all borrowing from the World Bank. The Ministry of Agriculture is responsible for all borrowing from the International Fund for Agricultural Development, and some borrowing from the United Nations Development Programme (UNDP). The People’s Bank of China is responsible for borrowing from the IMF and later from the Asian Development Bank when China joined it in 1986. Finally, the Bank of China is responsible for undertaking commercial borrowing on behalf of the Chinese government..Google Scholar
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    Zhongguo Tongji Nianjian, 1995, p. 578. For a different estimate of China’s international equity issues in the period, see Lardy, ‘The Role of Foreign Trade and Investment in China’s Economic Transformation’, China Quarterly, 144 (Dec. 1995) 1069–71.Google Scholar
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    At the end of 1996 and in early 1997, the People’s Bank of China, China’s central bank, approved eight foreign banks to conduct Chinese currency business on a trial basis from Shanghai’s Pudong area. The eight foreign banks are Hong Kong and Shanghai Banking Group, Citibank N A, the Bank of Tokyo-Mitsubishi and Industrial Bank of Japan, Dai-Ichi Kangyo Bank, Sanwa Bank, Standard-Chartered Bank and the International Bank of Paris and Shanghai. See China Daily 5 Jan. 1997 and 19 Feb. 1997.Google Scholar
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    At the end of August 1991, China’s contractual value of external borrowing was $61.35 billion, of which $50.51 billion was actually used. The total agreement value of foreign direct investment, on the other hand, was $43.3 billion, of which only $18.3 billion was realised. See Li Lanqing, ‘Achievements, of China’s Foreign Trade’, Bulletin of the MOFERT, 5 (19 Dec. 1991), 3 and 10.Google Scholar
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    In the official account of China’s foreign economic cooperation, it was briefly mentioned that from the early 1950s to the 1970s, China had invested abroad and established some joint ventures or wholly-owned companies in foreign countries engaged in shipping, finance and trade. A notable example is a joint venture between China and Poland in shipping. Sino-Polish Shipping Ltd was opened in 1951 and is still in operation today. See Shi Lin et al, Dangdai Zhongguo de Duiwai Jingji Hezuo, pp. 319 and 450. It should also be pointed out that government aid from China as a form of international capital flow is not to be included in our discussion.Google Scholar
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    It is $9.8 billion and $9.77 billion respectively; Zhongguo Tongji Nianjian, 1995, p. 579. Estimates by the World Bank are much higher, at $24.9 billion in 1992 and $20.9 billion in 1993. See Lardy, ‘The Role of Foreign Trade and Investment in China’ s Economic Transformation’, China Quarterly, 144 (Dec. 1995), 1071.Google Scholar
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    Some look at this capital outflow as capital flight. See, for example, F. R. Gunter, ‘Capital Flight from the People’s Republic of China: 1984–1994’, China Economic Review, 7, 1 (1996), 77–96. My thanks to Wen Jie of the Department of Economics, University of Queensland, for bringing this article to my attention.Google Scholar
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Copyright information

© Yongjin Zhang 1998

Authors and Affiliations

  • Yongjin Zhang
    • 1
    • 2
  1. 1.Department of Political StudiesUniversity of AucklandNew Zealand
  2. 2.St Antony’s CollegeOxfordUK

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