China's move to preferential trading: A new direction in China's diplomacy

Journal of Contemporary China

Volumn 18, Issue 58, 2009, Pages 27-46

  Ravenhill, John ^a   Jiang, Yang ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

BILATERAL AGREEMENT; DIPLOMATIC RELATIONS; MULTILATERAL TRADE; NEGOTIATION PROCESS; REGIONAL TRADE; TRADE AGREEMENT; TRADE RELATIONS; WORLD TRADE ORGANIZATION;

ASIA; CHINA; EURASIA; FAR EAST;

EID: 57649167096     PISSN: 10670564     EISSN: 14699400     Source Type: Journal    
DOI: 10.1080/10670560802431420     Document Type: Article

References (87)

1. Although the 'Chinese' link figured prominently in some of these production networks, particularly those involving Hong Kong and Taiwan, the Chinese dimension can easily be overstated given the importance of US-based buyer-driven production networks. On China's role in production networks, see, for instance, Guillaume Gaulier, Françoise Lemoine and Deniz Ünal-Kesenci, 'China's integration in Asian production networks and its implications', paper presented at Resolving New Global and Regional Imbalances in an Era of Asian Integration, Tokyo, RIETI Discussion Paper Series 04-E-033, (17-18 June 2004)
2. Guillaume Gaulier, Frano̧ise Lemoine and Deniz Ünal-Kesenci, China's Emergence and the Reorganisation of Trade Flows in Asia (Paris: Centre d'Etudes Prospectives et d'Informations Internationales, 2006), available at: http://www.cepii.fr/anglaisgraph/workpap/pdf/2006/ wp06-05.pdf.
3. Nicholas R. Lardy, Integrating China into the Global Economy (Washington, DC: Brookings Institution Press, 2002)
4. Gregory W. Noble, John Ravenhill and Rick Doner, 'Executioner or disciplinarian: WTO accession and the Chinese auto industry', Business and Politics 7(2), (2005), pp. 1-33.
5. We prefer the term 'Preferential Trade Agreements' to either regional agreements or free trade agreements. Even though such agreements (when they involve industrialized economies) are referred to the WTO's Committee on Regional Trade Agreements for consideration (those involving developing economies exclusively go to the Committee on Trade and Development), their membership is often not 'regional' in any conventional geographic sense of the word. And relatively few of the large number of preferential arrangements negotiated in the last decade come close to conventional criteria for 'free' trade.
6. Interviews, Beijing, June 2006.
7. See, for instance, the remarks of Ministry of Commerce spokesman, Chong Quan, in response to criticisms of China's activism in negotiating PTAs made by WTO Director-General, Pascal Lamy: Chong asserted that free trade agreements were 'important supplements' to the WTO, and that the two mechanisms of freeing trade should be combined. See 'China to advance bilateral and regional free trade negotiation', People's Daily, (16 September 2006).
8. Officially the agreement on 'Differential and more favourable treatment, reciprocity and fuller participation of developing countries' adopted by the GATT on 28 November 1979. Like Article XXIV, the 'Enabling Clause' was incorporated into GATT 1994 and subsumed under the WTO when it was established in that year.
9. On the potential for PTAs to accelerate trade liberalization in Japan see Trade and Industry Ministry of Economy, Government of Japan, The Economic Foundations of Japanese Trade Policy - Promoting a Multi-Layered Trade Policy (Tokyo: Ministry of Economy, Trade and Industry, 2000), available at: http://www.meti.go.jp/english/report/ data/g00Wconte.html
10. Naoko Munakata, 'How trade agreements can reform Japan', The Globalist 2003(3), (February 2002), available at: http://www.brook.edu. When Chinese officials have made reference to the potentially beneficial effects of international competition, this has typically occurred in response to complaints from domestic sectors fearful that their interests will be damaged by relatively inexpensive imports.
11. Ai Hua, 'Jingji quanqiuhua diertiao daolu: Zhongguo FTA zhanlue' ['The Second Way of Economic Globalization: China's FTA Strategy'], Guangdong Shenji [Guangdong Auditing], no. 2 (2006), p. 8.
12. See, for instance, 'Commonwealth offers bright future for E. Asia', People's Daily Online, (15 January 2007), available at: http://English.peopledaily.com.cn/200701/15/eng20070115_341324.html.
13. Aaron L. Friedberg, '"Going out": China's pursuit of natural resources and implications for the PRC's grand strategy', NBR Analysis 17(3), (2006), pp. 21-22 provides a concise summary of recent increases in China's import dependence.
14. Before Australian Prime Minister John Howard's visit to Beijing in April 2005 to sign the MOU to start negotiations, He Yafei, Director of the Department for North America and Oceania at the Chinese Foreign Ministry told Australian media that Canberra 'can certainly encourage companies to take a long-term point of view in setting prices' [China Daily, (19 April 2005)]. During Hu's visit to Canberra in October 2003, on the sideline of the Framework agreement, the two countries signed a US$30 billion deal to supply 3.3 million tonnes of Australian liquefied natural gas (LNG) over 25 years, after a similar AUD$25 billion, 25-year contract of Australian LNG for Guangdong province.
15. Not least because of the vagueness of the trade liberalization provisions - their being defined in customary ASEAN fashion as tariffs between zero and 5% - and because of the historic reluctance of ASEAN economies to reduce protection of politically sensitive industries despite PTA obligations.
16. Huifeng Dong, CEPA De Lailong Qumai [CEPA's Origins and Developm ents], available at: http://www.chinanews.com.cn/n/ 2003-06-29/26/318902.html (accessed 29 June 2003)
17. CASS, 'CEPA: Yuanqi, Yiyi Ji Oingxiang' ['CEPA: origin, nature and implications'], The Pursuit of Economic Trends 48(388), (2003).
18. 'China considering to set up special trade area: Long Yongtu', People's Daily (English), (29 November 2001).
19. CASS, 'CEPA: Origin, nature and implications'. Hanying Peng (from the Customs Administration), '"Caozuo" Neidi Yu Xianggang Geng Jinmi Jingmao Guanxi' ['"Operationalize" CEPA'], China Customs no. 12, (2003).
20. Kui Hu, 'Xianggang De Xin Qidian' ['Hong Kong's new starting point'], China Newsweek, (7 July 2003)
21. Peter Y. W. Chiu, 'CEPA: A milestone in the economic integration between Hong Kong and mainland China', Journal of Contemporary China 15(47), (May 2006).
22. CASS, 'CEPA: Origin, nature and implications'.
23. Xiuli Guan (from the NDRC), 'Economic and trade relations among mainland, Hong Kong, Macau and Taiwan after CEPA', Straits Technology and Industries no. 4 and 5, (2005).
24. On interdependence with Hong Kong see Gordon C. K. Cheung, 'Governing Greater China: Dynamic Perspectives and Transforming Interactions', Journal of Contemporary China, 18(58), (January 2009), pp. 93-111.
25. Qingjiang Kong, 'Closer Economic Partnership Agreement between China and Hong Kong', China: An International Journal 1(1), (March 2003)
26. Jin Zhang and Jiang Wei, 'Mainland-HK trade fruitful', China Daily (North American ed.), (28 December 2004)
27. Nan Jia, 'CEPA De Shenhua Xuyao Shijian Erfei Tiaowen' ['The deepening of CEPA needs time not articles'], Guoji jinrong [International Finance], (28 January 2005).
28. Peng, '"Operationalize" CEPA'
29. Guan, 'Economic and trade relations among mainland, Hong Kong, Macau and Taiwan after CEPA'.
30. Also see Kong, 'Closer Economic Partnership Agreement between China and Hong Kong'.
31. CASS, 'CEPA: Origin, nature and implications'.
32. Guan, 'Economic and trade relations among mainland, Hong Kong, Macau and Taiwan after CEPA'
33. CASS, 'CEPA: Origin, nature and implications'.
34. CASS, 'CEPA: Origin, nature and implications'.
35. Ibid.
36. Zhang and Wei, 'Mainland - HK trade fruitful'.
37. Ibid.
38. Eden Y. Woon (from the HK General Chamber of Commerce), 'Wider implications of CEPA', HKGCC Chamber CEPA Papers, (July 2003).
39. Guan, 'Economic and trade relations among mainland, Hong Kong, Macau and Taiwan after CEPA'.
40. Ibid.
41. Xiuli Guan (from the NDRC of China), 'Xianggang Fuwuye Yu Fan Zhujiang Sanjiao Zhizaoye De Youshi Hubu, Hezuo Hudong' ['The complementary and cooperation between Hong Kong services and Pan-River Delta manufacturing'], Review of Economic Research no. 9, (2006)
42. Xiaoji Zhang (Development Studies Centre of the State Council), 'CEPA Yu Liangdi Shengchanxing Fuwuye Hezuo Tanlun' ['CEPA and manufacturing services cooperation between the mainland and Hong Kong'], Forward Position in Economics, (September 2006)
43. Zhang and Wei, 'Mainland - HK trade fruitful'
44. Jianping Zhang (from the NDRC), 'Zhengque Renshi He Kandai CEPA Shishi Yilai De Zuoyong He Yingxiang' ['Adequately view the impacts of CEPA since implementation'], Macroeconomic Studies no. 7, (2006)
45. Tao Qu and Shanmin Li, 'CEPA Dui Liangdi Zhizaoye Fazhan De Yingxiang' ['CEPA's impacts on manufacturing in the mainland and Hong Kong'], International Economics and Trade Research 20(4), (July 2004).
46. Interviews, Beijing, March 2006.
47. Interview with trade officials and academics in Beijing, March - May 2006.
48. Interviews with many academics and officials in Beijing, February - June 2006.
49. Also see Yunling Zhang and Zhou Xiaobing, eds, Dongya Hezuo De Jincheng Yu Qianjing i The Progress and Prospect of East Asian Coope ration] (Beijing: Shijie Zhishi, 2003), p. 14.
50. Interview with a trade official in Beijing on 23 March 2006.
51. Changwen Xu, Guanghui Li and Wei Li, Zhongguo Lingpao Dongya Jingji Hezuo [China Leading the Race of East Asian Economic Cooperation] (Beijing: China Customs Press, 2003), p. 144
52. Zhang and Xiaobing, eds, The Progress and Prospect of East Asian Cooperation, p. 130.
53. Yunling Zhang and Zhao Jianglin, eds, Yatai Quyu Hezuo De Fazhan [Developments of Asia Pacific Cooperation] (Beijing: Shijie Zhishi Press, 2003), pp. 13-16.
54. Xu et al., China Leading the Race of East Asian Economic Cooperation, pp. 157-158.
55. Ibid., p. 144.
56. Yunling Zhang, ed., Shijie Quyuhua De Fazhan Yu Moshi [The Devel opment and Models of Regionalization in the World] (Beijing: World Affairs Press, 2004), p. 14
57. Zhang and Jianglin, eds, Developments of Asia Pacific Cooperation.
58. Beijing also expected that the Chinese diaspora in Southeast Asia would facilitate Chinese investment there. Michael Jacobson, 'Navigating between Disaggregating Nation States and Entrenching Processes of Globalisation. Reconceptualising the Chinese Diaspora in Southeast Asia', Journal of Contemporary China 18(58), (January 2009), pp. 69-91.
59. Interview with an expert on ASEAN.
60. Interviews with officials at the MOA and the Bureau of Commerce of Guangxi.
61. Interview with a trade official.
62. Interview with the Director of the Business Association.
63. Also see John Ravenhill, 'Is China an economic threat to Southeast Asia?', Asian Survey 46(5), (September/October 2006).
64. Interview with the Director of the China - ASEAN Business Association.
65. Interview with trade officials. As Pan points out, the intra-industry trade between China and ASEAN has embedded China tightly in global economic networks, instead of enhancing, the Chineseness of Chinese businesses.
66. Chengxin Pan, 'What is Chinese about Chinese Businesses? Locating the "Rise of China" in Global Production Networks', Journal of Contemporary China 18(58), (January 2009), pp. 7-25.
67. Interview with a MOFCOM official in Beijing on 23 March 2006.
68. Interviews, Beijing, 2006.
69. Interview with a researcher at the Department of Policy Research of MFA and a researcher at CICIR.
70. Also see Jiechi Yang, Deepen All-Round Cooperation and Promote Common Prosperity, Speech by Vice Minister Yang Jiechi of the Ministry of Foreign Affairs of the People's Republic of China at the Asia Society of Australasia Center in Melbourne, 13 December 2005.
71. Interview with a researcher at CICIR, who participated in the preliminary evaluation, 18 April 2006, Beijing.
72. Rowan Callick, 'A mutual attraction', Australian Financial Review, (23 August 2004).
73. The small neighbourhood refers to countries adjacent to China including Southeast and Northeast Asia and countries bordering China.
74. Interview, Canberra, 2006.
75. A total of 66 countries have accepted China's status as a market economy since New Zealand stood out as first acceptor in April 2004; this group includes Australia, Brazil, South Africa and Russia.
76. See Riding the Chinese Dragon:OPportunities and Challenges for Australia and theWorld, Australian Chamber of Commerce and Industry, available at: http://www.acci.asn.au/IssuesPapersMain.htm, (accessed August 2005).
77. Interview with a MOFCOM official, April 2006, Beijing.
78. The information on MOA's views is based on interviews with MOA officials, Beijing, May 2006.
79. See 'Zhongyang guanyu zengjia nongmin shouru ruogan zhengce de yijian' ['The central government's view on policies to increase peasants' income'], People's Daily, (9 February 2004).
80. 'China fears FTA's impact on farming', ABC Australia, (22 March 2005).
81. Interview, Canberra, May 2007.
82. Technically, the Australian government is correct in that an agreement involving an industrialized economy is subject to Article XXIV. Nonetheless, the practice in many bilateral agreements between industrialized and developing economies is that the latter exempt more sectors from coverage and are afforded longer periods to implement the agreement.
83. Interview with Chinese officials, April - May 2006.
84. Under a positive list approach, liberalization only occurs in sectors that are specifically listed in the treaty (under the alternative negative list approach, liberalization occurs across all sectors except for those exempted by the treaty).
85. Budget Estimates, Australian Senate Standing Committee on Foreign Affairs, Defence and Trade, 29 May 2007, available at: http://www.aph.gov.au/hansard/senate/commttee/S10267.pdf, p. 114.
86. Interviews, Beijing, April 2007.
87. To qualify as a Hong Kong company for the purposes of the agreement, the company must be registered in Hong Kong, pay taxes on its profits there, and have 50% of its total employees from Hong Kong. A foreign company is regarded as a Hong Kong company one year after merger with or acquisition of a controlling share of a Hong Kong company.