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Impact of Globalization on the Chinese Economy

Singapore Workshop

January 12–13, 1999
Co-hosted by the World Bank and
The Institute of Southeast Asian Studies

Abstracts of Papers Presented

Impact of Globalization on the Chinese Economy
Guo Shuqing, Vice Governor, Guizhou Province

The paper opens by discussing the links between globalization and China's reform program, noting that the coastal areas that were the first to experience the open door policy are also the ones furthest along in reform efforts. The open door policy has spurred significant growth, and improved economic efficiency and technology adaptation rates. Openness has also increased regional income disparities, created serious sectoral shocks and damaged the prospects for internal research and development efforts. The paper discusses China's response to economic globalization, noting that opening up has to be seen as a long term process concentrating at first on commodity markets and only later on factor markets. Liberalization has widened regional disparities, but China is taking measures to overcome them and lessen unemployment in the interior regions. But the country still has some way to go in reforming sectors such as state owned industries and social security mechanisms. In response to the Asian crisis, China has attempted to boost domestic consumption and investment, push ahead with reform, control smuggling and illegal foreign exchange transactions and encourage more regional equity in investment. The paper concludes by noting both the irreversibility of globalization and the continuing importance of government reform efforts.

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