Peter Drysdale

China’s Entry to the WTO: Strategic issues and quantitative assessments

Preface. Part I Strategic issues and policy choices 1. Chinas entry to the WTO: an overview Peter Drysdale and Ligang Song 2. China and the future of the International Trading System Ross Garnaut and Yiping Huang 3. Economic reform and development strategy in China Justin Yifu Lin 4. The WTO and Chinas trade strategies in the 1990s Yang Shengmin 5. Trade liberalisation and development of Chinas foreign trade Ligang Song 6. Agricultural policy adjustment in the process of trade liberalisation Wen Hai 7. The implications of Chinas membership of the WTO for industrial transformation Peter Drysdale Part II Impact of Trade Liberalisation: quantitative assessment. 8. Chinas entry to the WTO: a general equilibrium analysis of the recent tariff reductions Xiao-guang Zhang 9. China and the WTO: tariff offers, exemptions and welfare implications Christian F. Bach, Will Martin and Jennifer A. Stevens Spatz 10. Chinas trade liberalisation and structural adjustments for the world economy Feng Lei and Yiping Huang 11. Chinas textile and clothing exports in the post Uruguay round Zhong Chuansui and Yongzheng Yang 12. Rapid economic growth in China: implications for the world economy Warwick J. McKibbin and Yiping Huang

International and regional cooperation: Asia's role and responsibilities

Asia has emerged from the global financial crisis as an important stabilizing force and engine of global economic growth. The establishment of the G20 gives Asian economies the global forum that they have needed to both represent their interests in global governance and to deliver on responsibilities concomitant with their growing weight in the global economy. The region has a host of cooperation arrangements in APEC, ASEAN+3 and EAS, all with ASEAN as the fulcrum. They are huge assets but they need to be re-positioned to relate effectively to the G20 process and other global arrangements. They also need to comprehend the politics of the changing structure of regional power. This paper discusses the challenges that Asia faces in aligning regional and global objectives in financial, trade and other areas of cooperation, such as on climate change and on foreign investment. It argues that Asia is now a critical player in the global system and has a central contribution to make in strengthening global governance and international policy outcomes. Currently, there is a disconnect between the regional cooperation and the global agenda. The paper sets out ways to address this problem through filling gaps in regional cooperation and linking the agenda for regional cooperation more effectively to Asias new role globally. That is essential to sustain Asias superior growth performance, correct imbalances and support the global economic system.

Chinese Foreign Direct Investment in Australia: Policy Issues for the Resource Sector

The past 18 months have seen Chinese foreign direct investment (FDI) in the Australian resource sector become an issue of policy interest. There are two big questions that the prospects of a significant rise in FDI from China into the Australian resources sector have raised. Is the surge of FDI into Australian mining and energy consistent with achieving the traditional gains from foreign investment? And are there any particular problems associated with investment from foreign state-owned enterprises or state-managed sovereign wealth funds? These are among the questions addressed in this paper. The paper argues that there are no issues that cannot be dealt with under the umbrella of the established test of ‘national interest’ in managing the growth of Chinese FDI into the Australian minerals sector. It argues that a confusion has been introduced into policy over the questions of state ownership and supplier–buyer relations in respect of Chinese investments and that clarifying these issues is likely to be important to Australias capturing the full benefits from the growth of Chinese resources demand and longer term economic and strategic interests in China.

Asian Trade Structures and Trade Potential: An Initial Analysis of South and East Asian Trade

A frontier of potential trade is constructed for trade flows from a world trade matrix of trade determinants to compare East Asian trade performance with that of South Asia. The results suggest that East Asian trade, led by ASEAN, is outperforming the world while South Asia lags behind significantly. Within East Asia, the transformation of Chianis trade performance is remarkable with its accession to the WTO. Australia is efficiently integrated with East Asia and performing close to its trade frontier. There is scope to lift intraregional trade among the East Asian economies but South Asia has even more unrealised potential, including within its own region.

A New Look at Chinese FDI in Australia

Australia is Chinas largest destination for FDI, most of it directed to the resource sector. The scale and speed of the surge of Chinese investment into Australia, largely from state-owned enterprises (SOEs), has raised the question of whether investments by SOEs require special scrutiny. In China, the question is about the treatment of Chinese investment compared with investment from other countries. Clearly, Australia has had a policy environment that is very open to foreign investment, including investment from China. Nevertheless, it is questionable whether measures recently introduced in Australia to review investment by SOEs will restrict Chinese access to the Australian market or encourage a change in the nature of investment projects. How will Chinese enterprises need to adjust to the disciplines and rules in foreign markets? Will the Chinese Government need to take the regulations of host countries like Australia into account in its supervision of SOEs? Australia remains more open to Chinese investment than any other country in the world. Although the issue of SOE investment raises important new questions for policy-makers in Australia and other countries, Chinese investment in Australian resources is very beneficial and, with appropriate institutional and policy initiatives, will continue its strong growth.

The Influence of Economics and Politics on the Structure of World Trade and Investment Flows

The Asia Pacific region, and especially East Asia, has experienced rapid economic integration without the hard politics of legally binding economic and political treaties, unlike Europe where integration has been institutionled. The soft politics and marketled integration in East Asia set against a background of political tensions and rivalries in key relationships in the region. The paper measures trade and investment performance in the world economy. This allows comparison of bilateral and regional trade and investment flows. A measure of the effect of political distance on both trade and investment flows is also defined. The growth of ChinaJapan trade and investment, despite political distance between the two countries is discussed to highlight and elaborate on key findings. The analysis leads to five conclusions. Multilateral institutions are important in reducing economic and political distance between trading partners. While political relations do affect economic relations, their effect is not important across the vast majority of trading relationships. The important effects of political relations on economic relations come in todays world via international investment rather than through international trade. East Asian economies are leading trade and economic integration, measured in terms of their trade and investment performance and their impact on global trade and investment frontiers. Finally, of all the major regional groupings, APEC and ASEAN stand out as arrangements in which there has been no trade diversion, unlike the other formal regional groupings such as NAFTA and the EU in which trade diversion is measurable. The paper finds an APEC effect, explains how economics can dominate politics in international economic relations and recommends priority to strengthening regional and international investment regimes to help ameliorate the likely effects of politics on economic integration in the future.

China's New Role in the International Financial Architecture

The rise of China is challenging the international financial architecture in a number of ways. This paper highlights three that are of critical importance: the challenge of absorbing massive Chinese savings; the incorporation of China into a cohesive global financial safety net; and the organisation of Chinas participation in funding the demand for international investment projects. The global financial architecture needs to be reformed. But what role should China play? The paper defines the options open to China and the opportunities and barriers it will face. We argue that China can work with the established economic powers in reforming the existing architecture. At the same time, China seeks cooperation in building new institutions and organisations that fill gaps in the existing arrangements. But no matter how international financial diplomacy plays out in the near term, deep financial and economic reform at home will alone deliver China a central role in the international financial architecture. Domestic reform could also attend to some of the challenges that currently plague Chinas impact on the system. The success or failure of these domestic reforms will be at the crux of the strength or fragility of the international financial architecture in the years ahead.

Did the NARA Treaty make a difference

The Basic Treaty of Friendship and Cooperation between Australia and Japan (the NARA Treaty) was the first treaty of friendship and amity signed between Australia and any other country. Importantly it extended most-favoured-nation status or non-discriminatory treatment beyond trade to all commercial dealings between Australia and Japan, including investment and migration and stay. It was a framework agreement that established a comprehensive basis of equality and fairness in economic and political relations. Yet it is frequently seen as not having had any substantial economic impact on the relationship. This article argues otherwise. It demonstrates that the NARA Treaty had a large and measurable effect on the intensity of investment flows and suggests that it had similar effects on the movement of people between the two economies.1

Japan's approach to Asia Pacific economic cooperation

Since emerging as a leading industrial economy, Japan has played an important role in promoting Asia Pacific economic cooperation. Japan has been instrumental in every major initiative in economic cooperation in the region over the past three decades, including the Asia Pacific Economic Cooperation (APEC) forum launched in 1989. Japan’s commitment to free trade, reinforced by its own experience of discriminatory trade policies in the immediate postwar period, has made it a strong advocate of the principle of ‘open regionalism’ on which APEC is founded. Commitment to this principle has provided the basis for a process of unilateral liberalisation of trade, including agreed time frames, which allows the developing economies of the Asia Pacific region to progress towards free trade in a flexible manner and provides some protection against ‘free riders’. The strength of this commitment will assist member economies to counter pressure for preferential trading arrangements and facilitate the extension of free trade to sectors which involve cooperation with economies outside the Asia Pacific region.

The APEC experiment: an open economic association in the Asia Pacific

Presents an essay on Asia Pacific Economic Co‐operation (APEC), an innovative and flexible form of co‐operation designed to accommodate the diversity of the economies on the Pacific Rim. The main challenge for the APEC process is finding a workable compromise between different approaches to economic co‐operation. Points out that the structure of APEC will need great flexibility to accommodate the declining influence of the USA in the Asia Pacific and the increasing strength of the Chinese and South East Asian economies compared to both Japan and the USA. Appendix contains an executive summary of the targets which were agreed by APEC governments, at Bogor, Indonesia, in 1994, in order to realize their vision of free and open trade and investment.