Recent Chinese economic policies have propelled the country into the world economy at full speed. China’s gross domestic product has risen to seventh in the world, and its economy is growing at over nine percent per year (econ-gen 1). Starting in 1979, the Chinese have implemented numerous economic and political tactics to open the Chinese marketplace to the rest of the world.
Just a few areas that China’s government is addressing are agricultural technology, the medical market, and infrastructure, such as telecommunications, transportation, and the construction industry. Chinese reform measures anticipated the rush of foreign investment by opening newly expanded industries to out-of-country investors. The effects of this sudden change in economic strategy by a world power can be felt by practically every nation involved in international trade. The change in the amount of imports and exports to and from China will increase the demand on countless markets, from automobiles to petrochemicals, pharmaceuticals, and optical fiber. With all the foreign investment China is receiving, the socialist republic will only grow more interdependent upon the world economy. However, the impressive growth rate of China’s economy is not without its shortcomings.
Problems such as inflation and inefficient state-owned enterprises plague the rise of the Chinese economy. The main goal for China’s modern foreign policies is the development of the Chinese infrastructure. The significance of improved communication and transportation cannot be overstressed. Economically, enhanced means of communication and transportation allow more expedient supply and demand scheduling. Two of the latest Chinese reform measures to aid in the development of the country are the Provisional Regulations on Direction Guide to Foreign Investment and the Catalogue Guiding Foreign Investment in China.
Both of these policies prioritize specific industries, including telecommunications, machinery, and electronics. Funding for these projects comes from foreign investments and appropriations from the Chinese government in the form of grant financing, legislative support, or administrative support. Another example of China’s emphasis on industrial growth is the goal of having just under 100 million telecommunication lines by the year 2000. China’s Central Ministry of Posts and Communication has stated that in order to complete this major task, China will enlist the aid of major overseas suppliers and create manufacturing plants within the nation.
AT&T, Motorola, Northern Telecom, Alcatel, Ericsson, NEC, and Siemens are just a handful of the multinational companies that hold a considerable share of the Chinese telecom market, once again proving that China is becoming a party to global interdependence. The Chinese pharmaceutical market, much like Chinese industrial markets, is experiencing rapid growth due to reforms in China’s economic strategy. The nation’s government has decided to lower import tariffs and remove the necessity of an import license to bring pharmaceuticals into the country. Also, patented foreign drugs, such as Tylenol, are now being protected from counterfeiting by administrative action.
The result of these provisions is overseas contractual investments totaling $1.5 billion in the past five years, and income from the medical industry’s exports reaching 2.6 times the amount five years ago, according to Zheng Xiaoyu, director of the State Pharmaceutical Administration. The pharmaceutical market’s growth is another example of the economic progress China has made. Even after accounting for all the economic benefits recognized by the world, China still comes out as the country with the most gains.
However, there are more motives behind China’s market reforms than just pure economics. On the political front, China is fast becoming an integral part of international organizations. The Chinese government is making a conscious effort to re-enter GATT (the General Agreement on Tariffs and Trade), realizing the importance of creating a favorable trading status among foreign nations. The 124-nation strong trade bloc has requested that numerous conditions must be met by China before the nation can become a member of GATT once again.
Several of these provisions are the elimination of import prohibitions, restrictive licensing requirements, and other controls or restrictions; lifting of all restrictions on access to foreign exchange and full convertibility of the Chinese currency” (China-tr. 2). Other important key themes behind China’s Open-Door policies are “economic and technological cooperation with the West” (China-tr. 1) and the fact that China’s government no longer supports Third World revolution. Instead, China realizes that cooperation with developing countries would be far more practical. Although Chinese foreign policy aims to open the nation’s entire economy to the world, it neglects the agricultural market almost entirely, except for technical contracts.
These contracts are designed to improve the transfer.