7 - Building institutional capacity for China's new economic opening

Summary

Introduction: is China a neoliberal state in the making?

Few people would deny that China's economic miracle is consistent with its continuing integration into the world economy. According to a survey in The Economist (Ziegler 2000: 20), economic growth in China averaged nearly 8 per cent a year from 1979, and exports grew by 15 per cent and imports by 13 per cent a year between 1979 and 1999 – ‘a faster rate of growth than Japan managed during its golden period in 1953–73’. China became the tenth biggest exporter in the world in the mid-1990s, and the amount of foreign direct investment (FDI) it has received in recent years is exceeded only by that of the United States. Nicholas Lardy (1994: 110), a US expert on China's foreign economic relations, notes that in many respects, ‘China is already somewhat more integrated into the world economy than Japan, Taiwan, or South Korea were at comparable stages of their economic development’. As China has just entered the World Trade Organisation (WTO), the Chinese economy is set to become even more integrated into the world market.

Given China's two-decade experience of rapid growth and increasing openness, it seems a good test case for the main theme of this book: the role of domestic institutions in an era of intensifying economic interdependence. Thomas Moore (1996) argues that there is a ‘global’ logic behind China's economic opening.