This study seeks to analyze China’s international economic policies, evaluate their achievements and search for the path in building an understanding of the changes in Chinese international economic policies. Ultimately, the aim is to examine the impacts on the Korean-Chinese economic exchange from a perspective of economic exchange.
China’s international economic policies can be classified into two periods–before and after the 1978 reform. The period before the implementation of the economic development strategy of 1947-78 focused on allocating resources, setting priorities and selecting industrial technologies and development processes. This phase can be further classified into four stages–the planning stage of 1953-57 (First Five Year Plan); the Great Leap Forward in 1958-1960; adjustment stage of 1961-65; and the Cultural Revolution of 1966-76. As the initial planning stage was based on Stalinism, China’s main priority during this period was to transform the country from an agricultural state to an industrial state as quickly as possible. However, a rapid industrialization only brought stagnation for agricultural production and a serious lack of food and raw materials. The Great Leap Forward, mainly aimed at overcoming the problems, and exerted all efforts to attain agricultural and industrial development simultaneously. However, its goal throughout the 70s was to achieve and attain development without extra costs, including huge labor mobilization or high capital and machinery. During this period, China not only went through a sudden decrease in agricultural production and suffered a food crisis, but also went through a decrease in industrial production. To overcome this trouble, the country made economic adjustments, modifying its development priorities from an industry-centered economy to an agriculture-centered economy. After the Cultural Revolution, recognized as an expansion of class struggle, China interestingly prioritized industries in support of the agricultural sector.
After 1978, the main priority shifted into the ‘modernization of Chinese socialism,’ as the country actively went through a series of reforms in its local economy and implemented liberal international economic policies. Despite its attempts to attract new technology and foreign investment, the late 80s brought an alarming increase in currency, inflation, partial termination and postponement of plants, unstable world economy, only making its opening process more difficult. After a tough period of adjustment, China started to make full-scale openings and was able to establish a firmly-standing system of economic policy after a series of trial and errors. Such active progress brought rapid development in international trade. However, the country recorded a trade deficit of $14.9 billion due to the overheated local economy and the sudden increase in consumption goods. As a response, a tougher import-restriction and export-increase policy was adopted, which was able to reduce deficits and record a trade surplus in the 90s. Change was also evident in priorities for diplomatic strategies–from a peaceful coexistence of the 50s to an increased importance in economic importance. This signifies the country’s interest in setting modernization through economic development as the biggest goal.
Changes made in Chinese policies can be evaluated as follows: despite the narrow channels in achieving modernization, the country has successfully eradicated its exclusiveness, minimized its negative effects on reform and opening, and attempted to emphasize the balance in its scale and pace. Despite the huge success over the decade and recording an annual GNP growth of 8.6% from 1979 to 1990, there have been many issues of delays in transactions, quality of products, modifications and defaults in contracts as many companies failed to establish a fixed supplier and sales network. Instead, the low level of investment compared to expectations during the initial stage of attracting foreign investment led to a concentrated development in areas less risky with faster recollection of funds such as the hotel and service industries. As a result, the main focus is forecast to be set on emphasizing economic stability and balance while intensifying gradual reforms and actively implementing reform measures for the local economy. There is no doubt that China is in need of active reform measures in order to achieve its ‘modernization.’ For this, it is expected that China will continuously promote reform in the trade system to attract foreign exchange. In particular, the country will likely be diversifying its structure of export commodities and trade systems of the different regions. In addition, China will also be likely to take measures against the formation of world economic blocs by increasing its economic exchange with neighbor countries, trying to improve its technological level.
China is at a very important location in terms of history and geopolitics. Showing a rapid change since early 80s, it has attained regional stability with neighboring powerful nations while exerting influence in the process of building a new order. Soviet’s increased role, improved relations with neighbor countries and a developed politics are some of the factors that affect the country’s diplomatic relations.
After the Korean War, the official Korea-China tie commenced by educating both countries in 1975, two years after China’s declaration of its opening in 1973. In particular, economic interactions between the two countries gradually increased since the 1988 Seoul Olympics, marking an increase in non-political interaction. This means that both countries had received a great influence from political issues until 1983, but received positive impacts after the increased non-political and personal interactions since the Seoul World Cup. This is evident in Korea’s investment towards China, which was only $130 billion before 1988. However, Korea greatly increased its investment after 1989, intensifying it throughout the 90s. The 1986 Seoul Asian Games, the 1988 Seoul Olympic, and the 1990 Beijing Asian Games are some of the events that spurred an increase in human exchange and developed positive perceptions between each other. Such increase brought about a synergy to the economy as well. Meanwhile, it is predicted that China will be pursuing a less active role in strengthening its relationship with Korea as it will maintaining its old relationship with North Korea, while emphasizing to its neighboring countries the need for an improved relations in the Korean peninsula, peace and stability. From a practical perspective, as China seems to be aware of the need to maintain its ties with Korea while considering its old relationship with the North, no change is expected in the current way of maintaining relationships–visits of high officials. In this regard, there is a need for an increase in economic interaction in terms of trade and investment based on the two countries’ economic growth, including the West Coast Development Scheme, to improve and expand its relationship with China.
중국의 대외경제정책 변화와 한, 중 경제교류(Changes in Chinese international economic policies and the Korean-Chinese economic exchange)
|Subject Country||China(Asia and Pacific)
South Korea(Asia and Pacific)
|Subject||Economy < Trade|
|Holding||산업연구원; KDI 국제정책대학원|