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Published online by Cambridge University Press: 24 February 2004
This book assesses the extent of China's increasing integration into the global economy during the reform era and explores the likely global impact of China's membership in the World Trade Organization (WTO). The five chapters of the book cover China's pre-WTO trade reforms; the terms of China's final WTO accession package; and the implications of China's WTO membership for foreign companies, world trade, the international trading system, and US-China relations. It presents sober and reasoned analyses of these issues and represents a solid attempt to take stock of China's economic progress to date and its prospects over the coming decade.
Witnessing the mounting publications on this subject, one may wonder what perspectives or insights from this book are still worth repeating and remembering. Within this short review, I would like to highlight the following three.
First, Lardy contends that, contrary to popular wisdom in the media and research literature, China's economy had become far more open than Japan's and it was ready to join the WTO. Before WTO entry China had already achieved the lowest tariff protection of any developing country and had also shrunk non-tariff barriers impressively. Most price distortions were eliminated in the decade before WTO entry and much of the necessary industrial and agricultural restructuring was already underway before accession. Other substantial progress included expansion of trade rights, adoption of current account convertibility, vast expansion of the legal scope for foreign investment, legalized development of the private sector, and establishment of basic social security systems in urban areas. If this assessment is correct, why did it take 15 years for China to get into the WTO? Lardy argues that the long waiting “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). This leads to the second insightful message.