The Politics of China’s Accession to the World Trade Organization China’s accession to the World Trade Organization marked a major mile- stone in the country’s return to the international economic regime. However, although much research has been carried out into the economic impact of China’s WTO membership, Chinese policy-making processes have in the main been ignored. The Politics of China’s Accession to the World Trade Organization tackles this omission by providing an ‘inside’ look at Chinese WTO accession negotiations and establishing a systematic political economy model in analysing Beijing’s decision-making mechan- isms. Grounded on a series of interviews with Chinese government officials directly involved in the policy-making process, the book argues that China’s WTO policy making is a state-led, leadership driven, top-down process. Feng explores how China’s determined political elite partly bypassed and partly restructured a largely reluctant and resistant bureau- cracy, under constant pressure from an increasingly globalized inter- national system. In addition, local governments and societal actors other than the large state enterprises were for the most part excluded from the policy arena. The Chinese political leadership was, therefore, the initiator and driver of China’s WTO quest, steering the accession to the end. Addressing China’s accession to the WTO from a political analysis perspective, the book provides a theoretically informed and intriguing examination of China’s foreign economic policy-making regime. The Poli- tics of China’s Accession to the World Trade Organization sheds light on the contemporary debates relating to state and institutionalist theory and provides new and useful insight into a significant development of this century. Hui Feng is a Research Fellow in the School of Political Science and Inter- national Studies at the University of Queensland, Australia. Routledge contemporary China series 1 Nationalism, Democracy and National Integration in China Leong Liew and Wang Shaoguang 2 Hong Kong’s Tortuous Democratization A comparative analysis Ming Sing 3 China’s Business Reforms Institutional challenges in a globalised economy Edited by Russell Smyth and Cherrie Zhu 4 Challenges for China’s Development An enterprise perspective Edited by David H. Brown and Alasdair MacBean 5 New Crime in China Public order and human rights Ron Keith and Zhiqiu Lin 6 Non-Governmental Organizations in Contemporary China Paving the way to civil society? Qiusha Ma 7 Globalization and the Chinese City Fulong Wu 8 The Politics of China’s Accession to the World Trade Organization The dragon goes global Hui Feng The Politics of China’s Accession to the World Trade Organization The dragon goes global Hui Feng I~ ~?io~;~;n~~~up LONDON AND NEW YORK First published 2006 by Routledge Published 2017 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN 711 Third Avenue, New York, NY 10017, USA Routledge is an imprint of the Taylor & Francis Group, an informa business Copyright © 2006 Hui Feng Typeset in Times by Wearset Ltd, Boldon, Tyne and Wear The Open Access version of this book, available at www.tandfebooks.com, has been made available under a Creative Commons Attribution-Non Commercial-No Derivatives 4.0 license. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book has been requested ISBN 978-0-415-36921-3 (hbk) In memory of Shouci Tao Contents List of illustrations x Acknowledgements xi List of abbreviations xiii Introduction 1 WTO: a gamble with high stakes 2 The state under a microscope 3 The principal findings 6 Contributions and limitations 7 The chapter structure 8 The interviews 10 1 The iron bloc inside out: theory and methodology 11 Introduction 11 The state 12 The Chinese party-state 17 The international dimension of foreign economic policy making 29 Towards a synthesis 31 Game and process: the analytical model 32 Conclusion 38 2 The road to the WTO 40 Introduction 40 China’s foreign trade before 1949 41 Import-substitution: China’s foreign trade between 1949–79 41 China’s trade liberalization after 1979 43 viii Contents The WTO 50 The road to the WTO 53 Conclusion 64 3 Contending views on the WTO 65 Introduction 65 Policy orientation cleavages 66 Reformists’ support for the WTO membership 69 A difficult policy arena 78 Opposing views and the WTO debate 82 Policy debate? 87 Public opinion? 88 Conclusion 89 4 Elite politics and the WTO accession 91 Introduction 91 The power structure of the top party leadership 92 WTO accession: leadership in action 98 The dramatic year of 1999 104 Conclusion 111 5 Bureaucratic politics and WTO accession 113 Introduction 113 The institutional factor in policy making 114 The Party and the government 115 Fragmented bureaucratic structure 117 Resistance from within 119 Weak policy coordination 122 The MOFTEC 125 The 1998 government restructuring 129 The new coordination regime since 1999 131 Local government in WTO policy making 134 Conclusion 135 6 Foreign pressures on China’s WTO accession 136 Introduction 136 The international sources of WTO policy making 137 The United States 139 Coalition politics 150 Contents ix The race against Taiwan 151 International education/learning 157 Conclusion 160 Conclusion 162 WTO accession: politics behind the great leap forward 162 Theoretical implications 165 The road ahead 167 Appendix: chronology of China’s accession to the WTO 172 Notes 175 Bibliography 183 Index 197 Illustrations Figures 1.1 Policy-making process: an analytical framework 35 2.1 China’s foreign trade with communist and non-communist countries, 1950–1978 45 2.2 China’s export/GDP ratio, 1981–2000 48 2.3 China’s foreign trade, 1950–2000 51 3.1 SOE’s contribution in the domestic economy in 1999 73 5.1 The bureaucratic structure of China’s WTO policy making 118 Tables 2.1 China’s balance of trade, 1950–78 44 2.2 China’s foreign trade, 1980–2000 50 3.1 Projected macroeconomic outcomes in 2005 after China accedes into WTO 70 3.2 Annual growth rate of China’s GDP, 1993–99 72 3.3 Subsidies to loss-making SOEs, 1995–99 73 3.4 Inequality in comparative perspective 79 3.5 Employment in China, 1995–99 81 Acknowledgements China’s return to the international economic regime and the gradual inter- nationalization in the last two decades has been arguably one of the key events in the late twentieth century. As a Chinese national, I, myself, wit- nessed the drama of economic opening and am part of this fascinating story of going global: after finishing my Master’s study in international relations at Peking University, I worked for a Canadian law firm practising in Beijing before going to Australia to fulfil my academic aspiration as a PhD candidate and to continue my spiritual journey of inquiring the process and implications of China’s deep integration into the international regimes. This book builds upon the comparative work that I developed in my PhD thesis in the School of Political Science and International Studies at the University of Queensland, Australia. In writing this book, I am greatly indebted to a number of people without whose help and support its com- pletion would have been impossible. First of all, I am mostly grateful to my supervisor and mentor, Stephen Bell. As a student new to the field of political economy, my research and publication could not have been in the current form without his continuous patience, guidance and encourage- ment as well as his invaluable advice and comments. His insights and personality have had a great influence on my academic life. I would also like to extend my thanks to Yong Wang and Dennis Woodward, whose critical reading and innovative suggestions on my thesis are incorporated into the manuscript. Mark Beeson and David Hundt provided constructive comments to earlier versions of the manuscript in my seminars, which are most appreciated. My field trip to Beijing in August 2002 benefited from communications with a number of Chinese scholars, particularly with Yong Wang (School of International Studies at Peking University) and Honghua Men (Central Party School). My thanks also go to friends who arranged and coordinated the interviews with Chinese government officials but who have to be kept anonymous for political reasons. Although the interviewees also requested anonymity, their contributions must be acknowledged. Over the years I have benefited from discussions with many scholars xii Acknowledgements and friends whose contribution to this volume are important but cannot often be singled out individually. Nevertheless, I want to make special mention of Bill Tow, C. L. Chiou, Mark Ottor, Jean-Louis Durand, David Ip, Lai Chi-kong, Vivian Fung, James C. P. Chang, Gabriela West, Alexandra Copley, Bongus Adhi Chandra, Lloyd Fan and Hong Chen. My thanks also go to Tony Bunny, Timothy Scott and Roslyn Nicol who offered computing and administrative support for this research, and the School of Political Science and International Studies and the Graduate School of the University of Queensland which provided valuable resources and funds. Stephanie Rogers and Helen Baker at Routledge guided me through the publication process, and have put tremendous efforts into securing this project. The anonymous readers of an early version of the manuscript added valuable perspective. Any remaining errors in this book, however, are my own responsibility. Special acknowledgement must be made to my whole family, especially