APEC and Liberalisation of the Chinese Economy

312 Pages·2013·14.907 MB·English

by  Peter Drysdale, Zhang Yunling, Ligang Song

PEC
AN LI ER LIS JION
F THE
C INESE ECONO Y

Published by ANU E Press
The Australian National University
Canberra ACT 0200, Australia
Email: [email protected]
This title is also available online at http://epress.anu.edu.au
National Library of Australia Cataloguing-in-Publication entry
Title:: APEC and liberalisation of the Chinese economy / Peter Drysdale,
Zhang Yunling and Ligang Song, editors.
ISBN: 9781922144560 (pbk.) 9781922144577 (ebook)
Notes: Includes index.
Free trade--China.
International trade.
China--Economic policy--1976-
China--Commercial policy.
China--Economic conditions--1976-
Other Authors/Contributors:
Drysdale, Peter.
Zhang, Yunling.
Song, Ligang.
Australia-Japan Research Centre.
Dewey Number: 382.951
All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system or transmitted in any form or by any means, electronic, mechanical, photocopying
or otherwise, without the prior permission of the publisher.
Editor: Julia Minty
Pagesetting: Debra Grogan and Julia Minty
Cover design: Annie Di Nallo Design
Cover photograph of APEC leaders by David Scull, AFP/ AAP Image. Reprinted with
permission.
Cover photograph of President Bill Clinton and President Jiang Zemin by Greg Baker,
AP/ AAP. Reprinted with permission.
This edition © 2012 ANU E Press
CONTENTS
ABBREVIATIONS ix
CONTRIBUTORS
Xll
PREFACE xiv
INTRODUCTION: China's interests in APEC xv
Ross Garnaut, Ligang Song and Peter Drysdale
APEC AND THE CHINESE ECONOMY: STRATEGIC ISSUES
1 Liberalisation of the Chinese economy: APEC, WTO and 3
tariff reductions
Zhang Yunling
2. Open regionalism, APEC and China's international trade strategies 15
Peter Drysdale
} The functions of APEC and implications for China: a critical review 31
Zhang Jianjun
AUSTRALIA-CHINA COOPERATION IN APEC
:± Australia's APEC agenda-implications for Australia and China 45
Christopher Findlay and Chen Chunlai
~ Australia and China-shared objectives in APEC and the 59
international economic system
Andrew Elek
APEC, STRUCTURAL REFORM AND SECTORAL LIBERALISATION
.6 How important is APEC to China? 89
Yongzheng Yang and Yiping Huang
1 APEC investment, trade liberalisation and China's economic 109
adjustment
Sun Xuegong
.8. Trade protection in China's automobile and textile industries and 119
its impact on trade liberalisation
Li Kai
v
2. The competitiveness of China's chemical sector: assessment
and implications for EVSL policy 135
Sun Xuegong
ECOTECH COOPERATION
10 Ecotech at the heart of APEC: capacity-building in the Asia Pacific 157
Andrew Elek and Hadi Soesastro
11 Promoting APEC's ecotech initiative 197
ChenLuzhi
12. Economic and technical cooperation-creating the environment
to remove the barriers 207
Zhou Xiaobing and Zhao lianglin
CAPITAL FLOWS, TECHNOLOGY AND TRADE LIBERALISATION
U Impact of capital inflows and technology transfer on the
Chinese economy 225
Zhou Xiaobing
14 Exchange rate changes, trade development and structural
adjustment in the East Asian economies 243
Zhou Xiaobing and Ligang Song
15. China's trade efficiency: measurement and determinants 259
Peter Drysdale, Yiping Huang and K.P. Kalirajan
INDEX 272
Vi
TABLES
1.1 Impact of35.9% to 5% tariff reduction on the Chinese economy 6
1.2 APEC members gain from Manila Action Plan for APEC 10
2.1 China's geographic trade structure, 1970-96 24
4.1 Australia's import weighted average tariffs by source 48
5.1 Agencies active in the Asia Pacific economies 64
5.2 Catalysing economic and technical cooperation within APEC 66
6.1 Projected annual average growth of macroeconomic variables, 1992-2005 95
6.2 The impact on China of APEC and unilateral trade liberalisation, 2020 97
6.3 The impact on China's production of APEC and unilateral trade
liberalisation, 2020 98
6.4 The impact on China's exports of APEC and unilateral trade liberalisation, 2020 98
6.5 The impact on China's imports of APEC and unilateral trade liberalisation, 2020 99
6.6 APEC and unilateral trade liberalisation versus global trade liberalisation, 2020 101
6.7 The impact of trade liberalisation on China: sensitivity analysis, 2020 102
A6.1 Region descriptions 104
A6.2 Commodity descriptions 104
B6.1 Central scenario trade elasticities used in this study 105
7.1 The effect of trade liberalisation on employment in selected industries 113
7.2 Market structure of manufactures and expected trade policy industry 115
8.1 Protection in the form oftaxes and fees for automobiles 123
8.2 Level of non-tax protection of selected imported automobiles 124
8.3 China's textile import tariff rates structure 125
8.4 Import trade structure of textile products and their applied tariff rate, 1994 126
8.5 Textile price comparison of imported and domestic products 127
8.6 Effect of tariff changes on automobile imports and domestic supply
under different schemes 130
8.7 Cost of automobile trade protection under different schemes 130
8.8 Impact of tariff rate change on selected textile products' imports,
domestic production and total demand 132
8.9 Effect of textile import protection 133
9.1 Trade competitiveness index of the chemical sector 137
9.2 Domestic to international price ratio for selected products 138
9.3 Export to import price ratio for selected products, 1995 138
9.4 Equipment status of large and medium-size chemical enterprises, 1995 141
9.5 R&D activities by large and medium enterprises, 1995 142
9.6 Change in industrial concentration in China's chemical sector 143
9.7 Degree of concentration of selected products in China and Japan 143
9.8 Current and planned capacity of ethylene 144
vu
9.9 Estimation of the effect of imports on China's chemical sector 146
9.10 Involvement ofFDI in China's chemical sector 147
9.l1 Domestic market share ofFFEs in China's chemical sector 148
12.1 Activities in the 13 ecotech areas, November 1996 213
12.2 Types of and priorities for harnessing technologies for the future 214
13.1 Utilisation of foreign capital by China, 1979-96 228
13.2 FDI by form, 1979-96 229
13.3 FDI by source area, 1979-96 229
13.4 FDI by industry, 1979-95 229
13.5 FDI by region in China, 1990-94 229
13.6 FDI by amount of average program and the ratio of actually paid
principal, 1991-95 230
13.7 FDI enterprises' performance during 8th Five-year Plan 231
13.8 FDI as a ratio of China's GDP and investment in fixed assets 232
13.9 Imports and exports of FDI enterprises as a share of China's total
foreign trade 232
13.10 The foreign exchange balance ofFDI enterprises 232
13.11 Taxes paid by FDI enterprises as a proportion of China's total tax revenue 234
13.12 Technology import projects and contracted value by type of import 237
13.13 Technology import projects and contracted value by type of import 238
13.14 Exports and imports ofhigh-tech products, manufactured industrial
products and primary products 239
13.15 Scientific and technological research institutions 240
13.16 Technology import projects and contracted value by region of import 241
14.1 East Asian balance of trade, 1986-96 251
14.2 Growth rates of exports of labour-intensive products of ASEAN 4,1986-96 253
14.3 Trade orientation of capital-intensive products by ASEAN 4 and NIEs,
1986 and 1996 254
14.4 Changing industrial structure of Japan and NIEs, 1986 and 1994 256
15.1 Estimation of the gravity model 264
15.2 Average trade efficiency indexes for sample countries 265
15.3 Bilateral trade efficiency indexes for China 266
15.4 Determinants of trade efficiency 268
FIGURES
1.1 China's tariff reduction trend 5
2.1 China's tariff reductions 22
4.1 The relationship between Australia's average tariff rates and per capita
GDP of APEC member economies (with a dummy variable for China), 1997 49
4.2 Australia's net export ratios in the bilateral food product trade with China, 1996 52
viii
4.3 China's food sector import tariffs, 1997 53
14.1 Changes in East Asian exchange rate (composite) and trade growth, 1966-96 245
14.2 Changes in the East Asian exchange rate against the US dollar 246
14.3 Changes in yenlUS dollar exchange rate and East Asian GDP growth, 1970-98 248
14.4 Real exchange rate for Southeast Asian economies, 1975-98 250
14.5 Real exchange rate for Northeast Asian economies, 1975-98 250
14.6 East Asian share oflabour-intensive products in US market, 1965-95 252
14.7 Product structure of East Asian exports to the United States, 1965-95 252
15.1 Conventional versus frontier gravity models 262
ABBREVIATIONS
ABAC APEC Business Advisory Council
ADB Asian Development Bank
AFTA ASEAN Free Trade Area
AIMS APEC Impediments Management System
AMF Asian Monetary Fund
APEC Asia Pacific Economic Cooperation
ARF ASEAN Regional Forum
ASEAN Association of South East Asian Nations
ASEM Asia-Europe Meeting
ASPAC Asia and Pacific Council
AusAID Australian Agency for International Development
BOT build--operate-transfer
CAP Collective Action Plan
CIF Cost including freight
CCP Chinese Communist Party
CIA Central Intelligence Agency
CITIC China International Trust and Investment Corporation
CNOOC China National Offshore Oil Corporation
CSCAP Council on Security Cooperation in Asia Pacific
cn
Committee for Trade and Investment
EAEC East Asian Economic Caucus
EAFTZ East Asian Free Trade Zone
EAMF East Asian Monetary Fund
EC European Community
ecotech economic and technical cooperation
EEC European Economic Community
EPA Economic Planning Agency
ESC Sub-committee on Economic and Technical Cooperation
EU European Union
IX
EVSL Early Voluntary Sectoral Liberalisation
FDC Foundation for Development Cooperation
FDI foreign direct investment
FFE foreign funded enterprise
GATT General Agreement on Tariffs and Trade
GDP gross domestic product
GNP gross national product
HRD human resource development
IAP Individual Action Plan
IMF International Monetary Fund
IST Industrial Science and Technology
ITA Information Technology Agreement
JDA Japan Defence Agency
JETRO Japan External Trade Organisation
JEXIM The Export-Import Bank of Japan
JNOC Japan National Oil Corporation
JSDF Japanese Self Defence Force
KEDO Korean Peninsula Energy Development Organisation
LDP Liberal Democratic Party
LTTA Long Term Trade Agreement
MAPA Manila Action Plan for APEC
MCEDSEA Ministerial Conference on Economic Development in Southeast Asia
MFA Multifibre Arrangement
MFN most-favoured nation
MITI Ministry of International Trade and Industry
MOFTEC Ministry of Foreign Trade and Economic Cooperation of China
NAFTA North American Free Trade Agreement
NATO North Atlantic Treaty Organisation
NGOs Non-governmental organisations
NIE newly industrialising economy
NPT Non-proliferation Treaty
OM Osaka Action Agenda
ODA Overseas Development Assistance
OECD Organisation for Economic Cooperation and Development
OECF Overseas Economic Cooperation Fund
PAFTAD Pacific Trade and Development Conference
PBEC Pacific Basin Economic Council
PECC Pacific Economic Cooperation Council
PEG Partnership for Equitable Growth
PFP 'Partners for Progress'
PLA People's Liberation Army
x