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New Zealand Yearbook of New Zealand Jurisprudence |
Last Updated: 25 April 2015
China Transformed:
FTA, Socialisation and Globalisation
Yongjin Zhang*
I. IntroductIon
The Free Trade Agreement (FTA) occupies a significant place in the recent
development of New Zealand-China bilateral relations. The signing in April
2008 of the New Zealand-China FTA, ‘a high quality, comprehensive and
balanced Free Trade Agreement’, was hailed in both
Wellington and Beijing
as ‘a milestone’ in the bilateral relations for appreciably
different reasons. In concluding this
agreement, New Zealand became the first
developed economy to have successfully negotiated an FTA with China. In so
doing, it was
claimed that New Zealand completed the ‘fourth first’
in its economic and trade relations with China.1
In a broader context, an FTA involving China has much wider ramifications for
regional and global economy. It constitutes an indispensable
part of the
increasingly intensified regionalisation of East Asia (broadly conceived); and
it can be regarded as one of the culminations
of China’s participation in
and engagement with globalisation, which is indicative of China’s
integration into the global
economy. If the implications for the global
political economy of such engagement and integration leading to the rise of
China remain
contentious, China’s ‘great economic
transformation’, though very much ‘unexpected’, is
nevertheless
undeniable.2 Roderick MacFarguhar claimed, in 2006,
that the Chinese Communist Party (CCP) ‘is presiding over the most
astonishing example
of economic growth in human history. ... Never before has so
much wealth been created by so many people in so short a time.’3
Such creation of wealth has led to another economic transformation in
China. As a recent
* Professor of International Politics, Department of Politics, University of Bristol.
1 The other three firsts are respectively, 1. New Zealand was the first Western country to conclude a bilateral agreement with China on its accession to the World Trade Organization, in August 1997; 2. New Zealand was the first developed economy to recognize China’s status as a market economy in April 2004; and 3. New Zealand was the first developed country to enter into FTA negotiations with China, announced in November 2004. Available at <www.chinafta.govt.nz/3-Progressing-the-FTA/1-Why-China/Four-firsts.php>. Accessed on 18 August 2009.
2 Lauren Brandt and Thomas Rowski (eds), China’s Great Economic Transformation, p 1.
3 Roderick MacFarquhar (2006) Remarks by Roderick MacFarquhar: Debate 1
‘Is Communist Party Rule Sustainable in China?’
Reframing China
Policy: The Carnegie Debates. Available at
<www.carnegieendowment.org/files/cds_macfarquhar.pdf>.
World Bank report states, the record of poverty reduction in China over 25
years between 1981 and 2007 is ‘enviable’ and
the poverty headcount
rate fell ‘from 65 per cent of the population in 1981 to four per cent in
2007.’ As a result, ‘more
than half a billion people [were] lifted
out of poverty over this period.’4
Other more frequently cited statistics testify further to China’s great
economic transformation. China has been the fastest
growing economy in the world
in the last thirty years. China’s GDP grew at an average annual rate of
between nine and ten per
cent between 1979 and 2009. That growth has led to the
claim that China has been the second largest economy in the world according
to
the Purchase Power Parity (PPP) measurement for years. It is projected to become
the second largest economy as measured by the
official exchange rate in 2010, if
not in 2009, replacing Japan.5 China has already become the largest
trader in the world, replacing Germany. There has been a surge in recent years
of China’s
outward investment in Africa, Latin America, Middle East,
Southeast Asia, and Australasia, as well as in North America and Europe
in
resources and technology sectors, at a speed and on a scale unimaginable even a
decade ago. All things considered, China is now
regarded as ‘an economic
superpower’.6
In every conceivable way, the Chinese economy today is in stark contrast with
what it was thirty years ago. Autarky has been replaced
by China’s
unprecedented participation in the global production networks (thus the image of
China being the world’s factory)
and by its embrace of global market.
China not only claims to be the largest emerging market, but it has also become
one of the most
significant players in global finance as the recent global
financial crisis testifies. Such a transformation cannot be simplistically
attributed to the claim that China is a winner in economic globalization. Nor
can we simply look at such transformation at its own
merit, i.e. as the natural
logic underlying China’s rising power.
4 World Bank (2009) From Poor Areas to Poor People: China’s Evolving Poverty Reduction
Agenda: An Assessment of Poverty and Inequality in China.
5 According to CIA’s World Factbook, for example, in 2008, China’s GDP, calculated by PPP, is $7.973 trillion in comparison to Japan’s $4.329 trillion. Calculated on the basis of official exchange rate, however, the GDP for China in 2008 is $4.402 trillion, while that for Japan is $4.924 trillion. Available at <www.cia.gov/library/publications/the-world-factbook/geos/ ch.html> and <www.cia.gov/library/publications/the-world-factbook/geos/ja.html>.
6 This claim was made by Fred Bergsten and others at the Peterson
Institute of International Economics. For details, see Bergsten
et al,
China’s Rise: Challenges and Opportunities, pp 10-15.
In this paper, I offer a different interpretation of the great economic
transformation in China today. I argue that there is a deeper
and more
significant economic transformation in China than spectacular economic growth.
It is China’s socialization into and
its acceptance and adoption of global
norms—be they economic, political, social and humanitarian—that
underlies the real
logic of China’s transformation. The central argument
that I seek to advance is that the great economic transformation in China
and
globalization are mutually constitutive. In other words, whereas economic
globalization has transformed the Chinese economy as
well as, the Chinese state,
the great economic transformation in China in the last thirty years constitutes
also an integral part
of economic globalization. Such an interpretation not only
helps us to understand the tortuous process of this mutual engagement
and mutual
constitution between China and globalization, but also gives us a glimpse of
future challenges and prospects presented
by the rise of China.
My argument in the remainder of this paper will proceed in three parts as
follows. I will first look at the WTO and the FTA as integral
parts of external
transformative dynamics in engaging China in the regional and global economy.
This is followed by a discussion
in which I take a step back and examine the
processes of China’s recent socialization into international society, in
particular
with a set of global norms and institutional arrangements, as a
transformative process. Starting with a discussion of China’s
participation in the keystone global economic institutions such as the World
Bank and the International Monetary Fund (IMF) in the
early 1980s, I will also
investigate China’s socialization with other global norms and common
values such as arms control and
human rights. In the third part, I offer some
discussions of implications of Chinese economic transformation for global
political
economy. This will be couched in terms of the transformative dynamics
provided by China for the future of global economic transformation.
II. chInA, the Wto And FtAS
Since the beginning of the 21st century, China has been vigorously
pursuing a FTA strategy that seeks to fulfil its regional and global agenda. It
is not mere coincidence
that this strategy started around the time of
China’s accession to the World Trade Organisation (WTO) in 2001. There is
good
reason for Mike Moore, WTO’s Director-General at the time, to claim
that:
It is difficult to overstate the importance of these developments [the
admission of China and Taiwan into the WTO]. Taken together
they constitute a
defining moment for the WTO and for the international economic, political and
security arrangements that will influence
our world in this century and
beyond.7
With eight years hindsight now, few would dispute Mike Moore’s claim
today.
It is worth remembering, though, that when China initially applied in 1986 to
join the General Agreement on Tariffs and Trade (GATT),
the predecessor of the
WTO, China’s own practice of economic policies and economic principles
could not be more different from
those embodied in GATT. They were no doubt
completely incompatible, if not in total conflict, with those embodied in the
principles
and practices of FTAs advocated by China today. Looking back at
China’s fifteen years’ long march to gain WTO membership,
two
historical trajectories come to the forefront that shed light on the gradual
convergence of Chinese economic practice and good
economic behaviour defined in
the global economy by the existing powers and by global market. One is that the
economic reform agenda
since 1986 was significantly and progressively shaped by
China’s persistent pursuit of GATT/WTO membership. This pursuit included,
at the systemic level, its determined transition from the socialist planned
economy to the socialist market economy. This was only
partially successful, it
must be admitted, when China had to accept the conditions to join the WTO as a
non-market economy in 2001.
More specifically, one could look at China’s
attempts to internalize, grudgingly more often than not, the well-established
norms, principles and practices in the market economy such as abolition of price
control, economic transparency, business deregulation
and free access to market.
One could also refer to the banking reforms in China in the mid-1990s, which
realized the commercialisation
of state-owned banks and established the
People’s Bank of China as a functioning central bank concerned solely with
macro-economic
and monetary policies. There is also the example of a total
overhaul throughout the 1990s of China’s accounting system to bring
it
into line with international standards. Last, and certainly not least, one could
add to this list the example of legal reform.
Not surprisingly, in the 1990s, ‘to bring Chinese economic practice in
line with norms and standards of the world economy’
(yu shijie jingji
jegui) became the rally call in spearheading further economic reform in
China. This brings me to the second historical trajectory I have
in mind. In
this process of policy and behaviour convergence between the Chinese economy and
the global economy, one could discern
a clear sequence of instrumental and
strategic adoption leading in the direction of normative learning, acceptance
and commitment.
7 South China Morning Post, 15 November 2001.
Take the so-called ‘WTO effect’ as an example. The Chinese
government started, in the early 1990s, a comprehensive reform
of China’s
international trade regimes. This includes progressively reducing both import
and export tariffs, abolishing import
regulatory tax and export subsidies,
making and implementing a series of trade laws, and the liberalisation of
foreign exchange swap
market.8 There is a clear strategic and
instrumental reasoning behind China’s adopting such reform of trade
regimes, i.e., to fulfil
the requirements of GATT/WTO membership by making
China’s foreign trade regimes compatible with GATT/WTO standards, norms,
rules and principles.
Negotiations for China’s WTO entry in the 1990s, however, continued to compel as well as induce China to make a normative commitment to WTO laws, institutions and rules. For the WTO members, China’s conformity with WTO rules and norms based on strategic adaptive behaviour was no longer sufficient to gain its entry. The conformity had to come from China’s firm normative commitment. For China, the 1990s was a period when adaptive behaviour induced by strategic and instrumental reasons gradually, and sometimes grudgingly, led to the internalising of WTO laws, rules and norms in China’s trading practices. By the time the WTO was ready to embrace China in
2001, a normative base had been created to sustain China’s adaptive
behaviour through inducing China’s cognitive understanding
that WTO laws,
rules, norms, and institutions were not only binding but also beneficial for
China. After 2001, to make China fully
‘WTO compliant’ and to
enforce completely the compliance deal struck between China and other WTO
members may be regarded
as a process of norm diffusion to assist China in
embracing the principles, laws, institutions and norms of the WTO as the new
normative
basis for China’s trade and economic practices and
policies.
The FTA is a key institution that embodies some most important principles of the WTO. It is in the broad context of China’s quest for its WTO membership and the liberalisation of its trade regimes and practices that China started to pursue an FTA strategy in the Asia-Pacific.9 The two triggers for it were, however, outside the WTO context. One was the Asian financial crisis in 1997-
1998; and the other was China’s strategic consideration to build a
peaceful and stable international and strategic environment
conducive to its
domestic economic development, with particular emphasis on fostering good
relations with its neighbouring countries.
8 For further details of these reforms, see Zhang (1998), China in International Society since
1949, pp 229-238.
9 My discussion here excludes China’s approach to the Asia-Pacific Economic Cooperation
(APEC), which I do not regard as a discernible FTA strategy by China.
The Asian financial crisis highlighted, among other things, the importance of
collective action by all regional economies in confronting
the challenges and
risks posed by accelerated globalisation as well as harvesting opportunities it
provides. The proliferation of
bilateral and mini-multilateral FTAs since then
has been a hallmark of an emerging East Asian regionalism and regionalisation in
East Asia.10 China’s pursuit of a regional FTA strategy in the
wake of the Asian financial crisis, on the other hand, had a strong strategic
rationale. As I argued on another occasion, the surprise proposal made in 2000
by Zhu Rongji, the Chinese Premier then, to establish
China-ASEAN Free Trade
Agreement (CAFTA) was ‘primarily prompted by political expediency and
diplomatic considerations, rather
than economic calculation.’11
It was aimed partly to allay fears among ASEAN countries that competition
from China would crowd out jobs and growth in ASEAN and
would suck away
investment and trade; and partly to counter the ‘China threat’ claim
prevalent at the turn of the 21st century.
Regardless of the strategic rationale behind the initiation of CAFTA, it is worth noting that China has pursued this FTA proposal with vigour and imagination. In October 2001, China and ASEAN agreed on the goal of establishing CAFTA by 2011. It was followed, in November 2002, by the signing between China and ASEAN of a Framework Agreement on Comprehensive Economic Cooperation, with a specific and ambitious schedule for China to establish a free trade area with the original six ASEAN members, namely, Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand, by 2010; and with ASEAN’s newer members, i.e. Cambodia, Laos, Myanmar, and Vietnam by 2015. To facilitate CAFTA negotiations, China offered, unilaterally,
‘an early harvest’ program implemented since 2004, which offers
ASEAN countries party to such agreement preferential access
to China’s
domestic market, particularly the agricultural products, prior to the
establishment of CAFTA.12
Today, China’s strategic pursuit of FTAs, both in its intra-regional
and inter- regional manifestations, is firmly entrenched
in China’s
economic development strategy. In East Asia, such pursuit has been accompanied
by, and has assisted in, the formation
of such regional cooperation mechanisms
such as ASEAN Plus One, ASEAN Plus Three as well as the East Asia Summit (EAS).
If the plethora
of FTAs in the region involving China has facilitated the
process of regionalisation, regional integration of China no doubt constitutes
an integral part of such regionalisation. To the extent that the WTO and FTAs
have a
10 I use ‘East Asia’ broadly here to refer to both Northeast Asia and Southeast East Asia.
11 Yongjin Zhang, (2006), Globalization and Regionalization in East Asia: The China Factor, p 11.
12 For more details, see ibid pp 9-13.
transformative effect on the Chinese economy, it is not so much seen in the
spectacular trade expansion at both regional and global
levels since China
joined the WTO. Rather, it should be seen in the manner in which China’s
engagement with the WTO both before
and after its entry, and its embrace of the
FTA as a commonly accepted institution, have facilitated China’s accepting
laws,
institutions, norms, rules, and principles embodied in the WTO in its
trade policies and practice, and how they have helped to change
China’s
global and regional outlook of the world economy in seeking its economic
development and political engagement. If this
interpretation is accepted, then,
New Zealand’s engagement with China through its famous ‘four
firsts’ has played
a pivotal role in this transformation of China, as
discussed above.
III. SocIAlISAtIon And chAnge
China’s entry into the WTO is, however, only part of a larger story.
When in August 2008 Beijing successfully hosted the 39th Olympic
Games with spectacular opening and closing ceremonies, very few people were
conscious that it was only in 1984 that the People’s
Republic of China
(PRC) first participated in the Olympic Games.13 Reflecting in 2008
on the motto of the Beijing Olympics, ‘One World, One Dream’, how
many of us remember that, in a divided
world thirty years before, the United
States did not recognize Beijing as China’s only legitimate government
until December
1978? Looking at the prospect of Shanghai hosting the World Expo
in 2010, one can hardly believe that just over three decades ago,
China as a
revolutionary power was seen as a pariah state, largely isolated from, if not
altogether outside of, the international
system. Its economy was best
characterized as autarkic. There was virtually no foreign investment in China.
China’s foreign
debt was minimal. Foreign trade, state restricted and
controlled, remained the only tenuous link between the Chinese economy and
the
world economy. It is worth noting, though, that this was not entirely
China’s own choice.14
13 It was only in October 1979, at a meeting held in Nagoya, Japan that the International Olympic Committee Executive Board passed a resolution on the problem of China’s representation, confirming the Chinese Olympic Committee as the representative of the Olympic Movement in the whole of China using the national flag and national anthem of the People’s Republic of China, while the Olympic committee in Taiwan area, as one of China’s local organisations, could only use the name of ‘Chinese Taipei Olympic Committee’ with its flag, anthem and emblem different from the original ones pending the IOC’s approval. The resolution was passed by the IOC members with a vote of 62 for, 17 against and two abstentions. However, China did not participate in the 1980s summer Olympics in Moscow, because of the Soviet invasion of Afghanistan in 1979. Many other countries also boycotted the Moscow Olympics.
14 For a revealing account of economic containment policy mounted by the United States on
China, see Zhang, Shu Guang (2001), Economic Cold War.
This was indeed China in the international system and international economic
order thirty years ago. Who would have imagined then
such deep integration of
China into the global economy as we see today? Who would dare to predict that
China would have become the
world’s second largest economy and the
world’s largest trader thirty years on? Who could have foreseen the global
footprint
of Chinese investment in Africa, Central Asia, Latin America, the
Middle East, Southeast Asia, as well as in Australasia, Europe
and North
America?
The larger story I have in mind is China’s socialisation into the global international society, and more specifically, with global norms, in the last thirty years. The story is an ongoing one. It has led, in the first instance, to the call that China be ‘a responsible stakeholder’ in the existing international system.15 It has also led to the rise of China as a significant player in the global economy. The most recent explicit recognition of this development came from a public speech made by Tim Geithner, the US Treasury Secretary, at Peking University in June 2009. Speaking about the global financial crisis, Geithner claimed that ‘How successful we are in Washington and Beijing will be critically important to the economic fortunes of the world’; and further
‘Global problems will not be solved without US-China cooperation. That
goes for the entire range of issues that face our world
from economic recovery
and financial repair to climate change and energy
policy.’16
This is a far cry from China in 1980 when it first joined the IMF and the
World Bank, signifying the start of the PRC’s learning
about and
socialisation into the global economic institutions. It is worth recalling that
the PRC was excluded from the United Nations
until 1971. Throughout the 1970s,
even after it returned to take China’s seat in the United Nations, the PRC
had purposely
shunned away from any engagement with any international economic
organisations, even those under the UN umbrella. It was only in
1978, for
example, that the PRC formally applied, for the first time, for technical
assistance from the United Nations Development
Program (UNDP). Before 1978, the
non-recognition of the PRC by the United States was an insurmountable political
obstacle for China’s
membership of such global economic institutions such
as the IMF and the World Bank. Only after these political barriers were removed
with the full normalisation of diplomatic relations between the PRC and the
United States at the end of 1978 was it possible for
China to consider applying
for the membership of the IMF and
15 Robert Zoellick, ‘Whither China: from Membership to Responsibility?’ National Committee on United States-China Relations.
16 Timothy F Geithner, ‘The United States and China, Cooperating for
Recovery and Growth’, June 2009.
the World Bank.17 Unlike China’s WTO membership that was
obtained as a result of protracted negotiations, China’s membership of
both the
IMF and the World Bank entailed very few preconditions. Once the
political barriers were out of the way, China simply walked through
the doors of
these two global economic institutions, obtaining their full membership in
1980.
With hindsight, this is a modest but decisive step in the mutual engagement
between China and global economy. Its importance, nevertheless,
can hardly be
over-exaggerated. It was the first time that China participated in the post- war
global multilateral economic institutions.
It took place at the critical
juncture when China started its economic opening and reform. Both IMF and the
World Bank provided valuable
financial and technical assistance at the early
stages of economic reform in China.18 For example, China exercised
its right in 1981, soon after it obtained the IMF membership, to take 759
million Special Drawing Rights
(SDRs) to balance its current account deficit
incurred by its trade deficit. The first World Bank project in China, the
University
Development Project, was launched in April 1981, with a total funding
commitment of $200 million from the World Bank and the International
Development
Agency (IDA). From 1981 to 1988, the World Bank Group made commitments totalling
$7.4 billion to its China project. By
1995, the World Bank ‘became
China’s largest single source of foreign capital and China became the
Bank’s largest
borrower.’19
More importantly, perhaps, China’s membership in both IMF and the World
Bank began to open up the Chinese economy, for the first
time, to the scrutiny
of Western economists, though in a very limited fashion at the beginning. To
fulfil the requirements of member
states, China began to release more and more
statistics throughout the 1980s. It learned to compile its economic data
according to
international standards and to adopt universal standard of
measurements to evaluate its economy and to describe itself to the outside
world.
17 Who could have ever anticipated then that less than thirty years after China’s membership at the World Bank, a Chinese economist should have been appointed the Chief Economist of the World Bank as a dynamic driver for major policies of this global economic institution? Professor Justin Yifu Lin from Peking University was appointed the Chief Economist and Senior Vice-President of the World Bank in February 2008.
18 Deng Xiaoping is allegedly said to have told Robert McNamara, the World Bank President, in April 1980 that ‘We are very poor. We have lost touch with the world. We need the World Bank to catch up.’ P Bottelier, ‘China’s Economic Reform since 1978 and the Role of the World Bank’, p 10.
19 Ibid.
Whether the IMF and the World Bank had any direct influence on China’s
reform direction or the devaluation of the Chinese currency
renminbi (RMB) in
the 1980s remains unclear and is a subject of controversy. It is hardly
deniable, however, that both the IMF and
the World Bank participated in
China’s opening and developmental process in meaningful ways.
China’s engagement with
these two global economic institutions, on the
other hand, provided valuable institutional learning environment in
China’s
early engagement with the global economy. The fact that the
membership in them entailed few preconditions in terms of institutional
changes
while offering substantial benefits may have encouraged China’s early
attempts at internalising norms, rules and standards
commonly accepted by
members of the IMF and the World Bank. It may have also facilitated
China’s application for GATT membership
in 1986, sending China on its
15-year pursuit of first the GATT membership and then the WTO entry. This course
of action resulted
in a long and drawn-out process of China’s convergence
to, acceptance of, and compliance with institutions, rules, norms and
principles
of the market economy, which has dictated fundamental and structural changes of
the Chinese economy.
China’s trajectory of adopting increasingly convergent policies and practices and accepting commonly accepted norms in the international economic system in the 1980s is both indicative of and consequential to one particular facet of China’s socialisation with global norms after 1979. Indeed, throughout the
1980s and the 1990s, China’s socialisation with global norms in other
areas also led to notable, if not radical, changes of
its normative commitment
to commonly accepted international institutional arrangements and regimes. Two
such changes merit our attention
here.
The first is China’s approach to multilateral arms control treaties and
regimes. Prior to 1980, China, a declared nuclear power
after 1964, stood
largely outside major multilateral arms control treaties and regimes.
Ideological differences and China’s
own security concerns led to its
public denunciation of both the Partial Test Ban Treaty (PTBT) in 1963 and the
Comprehensive Test
Ban Treaty (CTBT) in 1968 concluded by the United States and
the former Soviet Union. Excluded from the United Nations until 1971,
China
opted to pursue its own initiatives of disarmament outside the generally
accepted multilateral framework at the time. It was
China’s membership in
the United Nations, and in particular, as one of the P5 in the UN Security
Council, that ‘entangled’
China in a series of arms control and
disarmament talks, deliberations and debates at various multilateral forums
under the UN auspices.
By 1979 China had joined the United Nations Disarmament
Commission and by 1980, the Committee on Disarmament (later called the
Conference
on Disarmament). China also became a member of the International
Atomic Energy Agency (IAEA) in 1984. Crucially, these memberships
and
participation opened up
channels of intellectual communication between China and other nuclear powers
on arms control and disarmament issues. Such entanglement
and new intellectual
communication significantly facilitated China’s learning about and
socialisation with existing global
arms control and disarmament norms and
regimes.
It took a decade after China regained its membership in the United Nations
and at the UN Security Council before it initiated its
first accession to a
major multilateral arms control agreement.20 In 1981, China signed
the so- called Inhumane Weapons Convention.21 This is followed by its
signing of the Antarctic Treaty22 and the Outer Space Treaty,23
both in 1983. By 1993, China also signed or acceded to the Biological and
Toxin Weapons Convention (1984),24 the Treaty of Rarotonga
(1989),25 the Seabed Arms Control Treaty (1991),26 the
Non-Proliferation Treaty (1992),27 and the Chemical Weapons
Convention (1993).28 When it finally signed the Comprehensive Test
Ban Treaty (CTBT) in September 1996,29 China became party to almost
all major multilateral arms control treaties and regimes.
The second is a more controversial and contentious case of China’s
socialisation with global human rights norms. Memories of
the crackdown of
student protests at the Tiananmen Square in 1989, recent ethnic riots in both
Tibet and Xinjiang and continued suppression
of political dissent are testimony
to China’s appalling human rights record in practice. It is
20 The very first multilateral arms control treaty that China signed, in 1973, was the Treaty of Tlatelolco (Treaty for the Prohibition of Nuclear Weapons in Latin America and the Caribbean) 634 UNTS 281. China ratified the treaty on 2 June 1974.
21 Convention on Prohibitions or Restrictions on the Use of Certain Conventional Weapons
Which May be Deemed to be Excessively Injurious or to Have Indiscriminate Effects, 19
ILM 1980.
22 12 UST 794; 402 UNTS 71.
23 Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer
Space, including the Moon and Other Celestial Bodies, UST 2410, TIAS 6347, 610 UNTS
205.
24 Convention on the Prohibition of the Development, Production and Stockpiling of
Bacteriological (Biological) and Toxin Weapons and on their Destruction (1972), 26 UST
583, 1015 UNTS 163, reprinted in 111 LM 309.
25 South Pacific Nuclear Free Zone Treaty 1985, 24 ILM 1442.
26 Treaty on the Prohibition of the Emplacement of Nuclear Weapons and Other Weapons of
Mass Destruction on the Seabed and the Ocean Floor and in the Subsoil Thereof, 10 ILM
1971, 145.
27 The Treaty on the Non-Proliferation of Nuclear Weapons, 21 UNTS 483, TIAS 6839, 729
UNTS 161.
28 Convention on the Prohibition of the Development, Production, Stockpiling and use of Chemical Weapons and their Destruction, Technical Secretariat of the Organization for Prohibition of Chemical Weapons, 32 ILM 800.
29 35 ILM 1439.
instructive however, to look at how much China has moved in the last thirty
years, towards accepting the universality of human rights
in principle and in
rhetoric and in instituting its normative commitment to international human
rights treaties and regimes.
It is useful here to look at China in 1979 again. Some excerpts from Notes
on Human Rights, an official commentary published in Beijing Review,
the English weekly, in November 1979 are remarkably telling. In claiming that
human rights, though advocated by the bourgeoisie
as universal, cannot be for
everyone, it goes on to assert that they are rights only for the bourgeoisie
because:
in the capitalist society, as the bourgeoisie owns the means of production,
it has the right to exploit and enslave the proletariat.
The principle of human
rights (such as liberty and equality) put forth by the bourgeoisie is, to the
proletariat, essentially hypocritical.
Human rights, on the other hand:
is also a slogan with which imperialism and bourgeoisie attach our
proletarian dictatorship and socialist system ... they attach socialist
countries as granting no human rights to its people. They slander measures under
the dictatorship of the proletariat (such as the
suppression of
counter-revolutionaries) as violations of human rights.
Noting that it was the foreign aggression and imperialism that denied basic
human rights of all Chinese people, it asked ‘How
can the imperialists
have the effrontery to prate about the so-called human rights question in
China?’30
In sharp contrast, in Human Rights in China, a White Paper issued in
1991 in defending China’s human rights record in the wake of the
international condemnation of the
military crackdown in Beijing in June 1989, we
find an entirely different rhetoric. Not only did the White Paper concede that
China
accept in principle international norms and rules on human rights. It also
explicitly stated that ‘China appreciates and supports
the efforts of the
UN in promoting universal respect for human rights and fundamental
freedom.’ More importantly, it publicly
acknowledged that China accepts
the universality of human rights in principle when it asserted that the Chinese
government considers
the Universal Declaration of Human Rights adopted and
proclaimed by the United Nations in 1948 ‘the first human rights documents
that have laid the foundation for the practice of human rights in the world
arena.’31
30 Guangming Daily Commentator, ‘Notes on Human Rights’, Beijing Review, (45) 1979, pp
17-20.
31 Information Office of the State Council, ‘Human Rights in China’, Beijing Review, (44)
1991, pp 8-45.
Such changing rhetoric, significant in itself, indicates a radical shift on
the part of China on the question of the universal respect
of human rights as a
fundamental principle in both domestic politics and international relations. It
may be accounted for, at least
partially, by China’s involvement and
participation in international human rights regimes throughout the 1980s. Prior
to 1979,
China was no party to any international human rights conventions
sponsored by the UN, nor did it participate in the work of any UN
human rights
organs. It was not until February 1979 that the Chinese delegation attended, for
the first time, sessions of the UN
Commission on Human Rights (UNHRC). Given
China’s position as reflected in the 1979 official commentary mentioned
above, this
is by no means surprising.
Prior to the 1980s, China moved steadily towards selected commitments to international human rights regimes. Altogether, China ratified or acceded to seven international human rights conventions in the decade.32 China also ratified the UN Convention on the Rights of Children in 1996.33 It was the signing by the Chinese government, respectively in October 1997 and October
1998, of the two cornerstone conventions of the UN human rights regimes,
namely the International Covenant on Economic, Social and
Cultural Rights34
and the International Covenant on Civil and Political Rights,35
that can be regarded as a milestone in China’s socialization with
global human rights norms.36 In March 2004, the State’s
responsibility for respecting human
32 These are 1. The International Convention on the Prevention and Punishment of the Crime of Genocide; 2. The International Convention on the Suppression and Punishment of the Crimes of Apartheid; 3. The Convention on the Elimination of All Forms of Discrimination against Women; 4. The International Convention on the Elimination of All Forms of Racial Discrimination; 5. The Convention Related to the Status of Refugees; 6. The Protocol Related to Refugees; and 7. The Convention against Torture and Other Cruel, Inhumane or Degrading Treatment or Punishment.
33 United Nations Convention on the Rights of the Child, UN Doc. A/44/736, (1989), UNGA Doc. A/Res/44/25 of 5 December, (1989) 28 ILM, 1448, (1989).
34 International Covenant on Economic, Social and Cultural Rights, GA Res. (XXI), UN GAOR 21st SESS, (Supp. No 16), at 49 UN Doc A/6316 (1966).
35 International Covenant on Civil and Political Rights, UN GA Res. 2200 (XXI), 21 UN GAOR, Supp. (No. 16) 52, UN Doc. A16316 (1966).
36 China ratified the International Covenant of Social and Economic Rights
in 2001. At the time of writing, China has not ratified
the International
Covenant of Political and Civil Rights.
rights was written into the Constitution of the People’s Republic of China. An amendment was made to the Constitution, stipulating, in particular, that
‘The State respects and preserves human
rights’.37
This brief discussion does not obscure, of course, the substantial gap
between China’s normative commitment to global human
rights norms in
principle and in rhetoric and its state policies and practices that often
deviate from these norms. These three stories
of China’s socialisation
with the existing global institutional arrangements, regimes and norms, taken
together, do illustrate
an important point. That is, prior to China’s
economic rise as we see today, there was radical transformation of China, i.e.
China’s transformation from a revolutionary power to a reformist state.
The changing normative commitment on the part of China
induced and compelled
throughout China’s socialisation in the global international society is
constitutive of such important
transformation. Normative convergence also
significantly enhanced the legitimacy of China’s status as an emerging
great power
in the early reform years.
China’s socialisation as discussed and the transformation thus induced,
one could argue, prepared and positioned China well
in taking full advantage of
opportunities and challenges presented by economic globalisation. Without such
socialisation, China’s
all-out engagement with globalisation in the last
decade or so would not have been successful or even possible. Just look at the
following important changes. Clearly, China has put strong emphasis on its
willingness to pursue China’s developmental goals
and national ambitions
under the conditions of globalization and within the existing global economic
order and political system,
though it is not entirely happy about either of
them. Accordingly, China is no longer seen as a wilful disruptive force seeking
to
forge a different international economic order. Rather, it is seen as an
increasingly open market opportunity integral to global
development and
prosperity. William Overholt from Rand described in 2005 such transformation in
the following words:
China has transformed itself from the world’s greatest opponent of
globalization, and greatest disrupter of the global institutions
we created,
into a committed member of those institutions and advocate of globalization. It
is
37 This is the new paragraph that was added to Article 33 in Chapter II, The Fundamental Rights and Duties of Citizens of the Constitution of the People’s Republic of China. It is part of the fourth amendment to the PRC’s Constitution (1982) approved at the second session of the 10th National People’s Congress on 14 March 2004. Another significant constitutional change embodied in the same amendment is the guarantee of private property rights. Part of the revised Article 13 reads ‘Citizen’s lawful private property is inviolable’. See
‘Amendment to the Constitution of the People’s Republic of
China’, available at <www.
npc.gov.cn/englishnpc/Constitution/node_2826.htm>
accessed on 7 January
2010.
now a far more open economy than Japan and it is globalizing its institutions
to a degree not seen in a big country since Meiji Japan.
Adoption of the rule of
law, of commitment to competition, of widespread use of English, of foreign
education, and of many foreign
laws and institutions are not just updating
Chinese institutions but transforming Chinese civilization.38
One does not have to share Overholt’s excitement in order to agree with
his overall assessment about China’s changing
position on globalisation.
Clearly now a mutual endorsement between China and the global market has
happened, which continues to
reinforce the market-oriented reforms in China and
to impose a convergent policy agenda on matters related to Chinese and global
economic governance.
IV. globAlISIng chInA: IMPlIcAtIonS For globAl PolItIcAl econoMy
China’s embrace of global market and globalization has also
necessitated a series of institutional changes, institutional capacity
building
attempts and even institutional innovations of the state to accommodate its
transition to a full market economy. The Chinese
state, one could argue, has
been rebuilt, or reinvented, in China’s engagement with globalization. The
important point to note
here is not the limits of such state
transformation.39 Nor is it to debate the role that the state,
re-invented or rebuilt as it may be, has played in China’s successful
economic
transformation. Rather it is to acknowledge that globalization has not
only regulated the internal as well as the external political
and economic
behavior of the Chinese state. It also has constitutional effect on the Chinese
state. When the Chinese Communist Party
(CCP) officially embraced the market
economy as the legitimate aspiration for Chinese reforms in 1997, the political
legitimacy of
the regime became increasingly contingent on its successful
engagement with global market. If the CCP continues to rely on mobilizing
popular nationalism to address its ‘legitimacy deficit’, it is the
political logic of growth-based legitimacy that dictates
the Chinese
state’s external policies in regard to economic globalization. In this
fashion, globalization effectively relocates
the main source of state legitimacy
of China to external actors and institutions.
This is one particular dynamic that we must keep in mind when looking at
China’s outstandingly successful embrace of and integration
with the
global market and the arrival of China as the largest emerging market. The great
economic transformation of China, as argued
earlier, has made China
a
38 William Overholt, ‘Statement of William H Overholt before the US-China Economic and
Security Review Commission’, p 1.
39 For one such argument, see Yongnian Zheng, (2004), Globalization and
State Transformation in China.
significant global economic power with unquestionably global outlook in its
economic development strategy. The image of China as ‘the
world’s
factory’ is graphically indicative of China’s organic participation
in the global production networks.
By the same token, it is likely to have a
crucial role to play in any future global economic restructuring. As the largest
global
trader, the dramatic expansion of China’s exports has had
significant impact on the growth of global export share of the world
output.40 China has been for years the largest recipient of foreign
direct investment of all developing economies, and has now become, most
probably, the largest global investor from the developing world as well. China
certainly holds the largest foreign currency reserve
by a single country in the
world today.
The China story so far seems to be too good to be true. Did China ride
globalization to perfection? How much is the Chinese experience
reproducing
globalization in its own fashion? Whither the Chinese state in such
reproduction? In which way does the Chinese experience
challenge our
conventional wisdom about the global development? And ultimately, what are the
implications of an increasingly globalizing
China for the global political
economy?
These questions are likely to be debated for years to come. While providing
full answers to all the above questions is beyond this
paper, suffice it here to
suggest that the search for answers to them is best started with a full
appreciation of three special characteristics
of China as ‘a historically
unique economic superpower’ which is second only to the United States in
terms of its importance
in future global economic governance, according to Fred
Bergsten and others at the Peterson Institute for International Economics
in
Washington D.C. These three special characteristics are first, China ‘is
still a poor country with per capita income of
around $3,000, less than ten per
cent that of the European Union and the United States’; second, ‘it
is still a non-market
economy—one in which the government makes major
decisions on prices and allocating goods and resource—to an important
extent despite the dramatic marketisation of the past three decades’; and
third, it is ‘not yet a democracy’. For
all these reasons, the
‘systemic challenge’ that China—an economic
superpower—poses to the existing global
economic order, Bergsten and
others argue, is ‘vastly
complicated’.41
40 For example, according to one estimate, from 2001-2007 the export share of China’s output rose from 20% to 36%, a surge that coincided with a rise in the global export share of world output from 24% to 31%. See David Pilling, ‘The Next Asia’, Financial Times, 11 October
2009.
41 Bergsten et al (2008), China’s Rise: Challenges and
Opportunities, p 10-11.
Such challenges presented by a globalizing China have indeed already begun to
encourage us to rethink the new dynamics in the global
political economy and ask
big questions about the future global economic governance. This is particularly
seen, I suggest, in the
following three areas. First, quietly, China has been
taking a leading role in stimulating global economic growth, thus global
prosperity.
Already in 2004, for example, the Chinese economy contributed more
than the US economy to the global GDP growth.42 As Bergsten and
others also note, during the record expansion of the global economy between 2004
and 2007, China ‘shared global
growth leadership with the much larger
United States’ and ‘has become the undisputed chief driver of world
growth’
after the US economic downturn in 2008.43 With slow and
precarious global economic recovery in the wake of the global financial crisis,
expectations from the Chinese economy
are very high. Although no one believes
that China alone could get the world out of its economic and financial doldrums
now, China’s
leading role in global economic growth is expected to
continue.
Second, the ongoing global financial crisis has added new imperatives in
considering China’s role in the global economic governance.
It has long
been recognized that as China has rapidly grown into an economic powerhouse for
the global economy, it has become too
important not to be included in the global
economic decision-making and rule-making.44 Yet, precisely because of
the three special characteristics of China as an economic superpower mentioned
above, it has been excluded,
by design, from such important bodies as G8. The
inclusion of China into the G8 fringes, such as its Finance Ministers meetings,
and most recently, informal summit with G8 leaders still ‘illustrates both
the glaring gap in global governance and the increasing
economic and policy
interdependence between industrial countries and major emerging
markets.’45
Nevertheless, challenges and difficulties of incorporating China into the
existing global economic governance structure and institutional
arrangements are
obvious and should not be underestimated. This is not only because
the
42 Yasheng Huang, (2008), Capitalism with Chinese Characteristics, p 1.
43 Bergsten et al, pp 9-10. It is further noted that China alone counts (based on PPP) about one quarter of global economic growth in 2008. Bergsten et al, p 31.
44 In a different context, Harry Harding also argues for the inclusion of China in important global norms formulating. In his words, ‘as new norms are written, or as outmoded ones are revised, if Beijing is to be regarded as a ‘responsible stakeholder’ in the international system, it should be invited to participate in the norm drafting process ... [and] should be treated as a rule-maker and not simply as a rule-taker.’ Harry Harding, ‘Testimony of Harry Harding’, p 6.
45 Colin Bradford Jr and Johannes Linn, Global Economic Governance at a Crossroads, p
1.
willingness and the capacity of China to play a responsible role in global
economic governance is questionable. China’s unusual
identity—as a
developing economic superpower, a non-democratic state, a non-market economy and
the largest emerging market
all combined—makes the inclusion of China a
compelling and complex challenge to the existing institutions, structures and
mechanisms
of global economic governance.
Such challenges and complexities are clearly present behind the proposed G2 (Group of Two, i.e. the United States and China). The idea was first publicly floated in an article published in Foreign Affairs in July 2008. In A Partnership of Equals, Fred Bergsten argued that because China is a ‘poor, significantly nonmarketized, and authoritarian’ yet rapidly expanding economic (super) power, it poses serious systemic challenges to the existing global economic order. Yet, ‘Beijing is shirking its responsibilities to the global economy’. He further argued that ‘Inducing China to become a responsible pillar of the global economic system [in addition to the United States and the EU] will be one of the great challenges of coming decades.’ Washington should, he believed, offer to share global economic leadership with China in order to
‘co-opt China by integrating it into the regime that they [the US and the EU]
have built and defended over the last several
decades.’46
This idea is revolutionary as much as it is controversial. It has since stimulated
a lot of debates, particularly with the deepening of the global financial crisis in
2008-2009. This is an idea, however, that the Chinese leadership has publicly rejected. While attending the Eleventh China-EU Summit in Prague in May
2009, Chinese Premier Wen Jiabao dismissed the idea embodied in the G2 is
‘baseless and wrong’, insisting that ‘multipolarisation
and
multilateralism represent the larger trend and the will of the
people.’47 During Obama’s visit to Beijing in November
2009, Wen again went out of his way to make it clear that China disagreed with
the
idea of G2.48
Nevertheless, the challenges of incorporating China into the existing
institutional arrangements and structures for global economic
governance remain
imperative and uncompromising. As Geithner elegantly put in
Beijing:
46 Fred Bergsten, ‘A Partnership of Equals: How Washington Should Respond to China’s Economic Challenge’, Foreign Affairs, July/August 2008. The idea is further elaborated in Fred Bergsten, et al, China’s Rise.
47 Cong Mu, Wen Rules out G2 Proposal, Global Times, 22 May 2009. Available at <http://
china.globaltimes.cn/politics/2009-05/431991.html> Accessed on 10 September 2009.
48 See ‘China Disagrees with the G2 Suggestion’, available at <www.bjreview.com.cn/
special/2009-11/19/content_230467.htm>. Accessed on 8 January
2010.
I believe that a greater role for China is necessary for China, for the
effectiveness of the international financial institutions
themselves, and for
the world economy.
China is already too important to the global economy not to have a full seat
at the international table, helping to define the policies
that are critical to
the effective functioning of the international financial
system.49
Third and finally, to a considerable extent, the Chinese economy now holds
the key to the stability of the global market. On the primary
metal market, for
example, China is often regarded as ‘the 800lb gorilla’ at least in
terms of demand. As the world’s
largest producer and consumer of steel,
China’s demand seems to be largely responsible for the volatility of the
prices of
iron ore, iron and steel products on the global market. The same is
true of aluminum. As one of the two largest consumers of energy
in the world
today, China is often blamed for the oil prices hike in recent years.
China’s stabilizing role, however, goes
well beyond the commodities and
energy markets, as the most recent global financial crisis testifies.
This is best illustrated by what role both the European Union and the United
States expect China to play as a key stakeholder in the
global political
economy. A most recently released policy report sponsored by the European
Council on Foreign Relations is highly
critical that the EU ‘continues to
treat China as the emerging power it used to be, rather than the global force it
has become.’
It claims emphatically that ‘China is now a global
power. Decisions made in Beijing are central to virtually all the EU’s
pressing global concerns, whether climate change, nuclear proliferation or
rebuilding economic stability’. Even trenchant criticisms
of China’s
behaviour at the G20 summit in London in April 2009 articulated in the same
report convey a strong sense of the
EU’s expectations. It contends
that:
Efforts to get Beijing to live up to its responsibility as a key stakeholder
in the global economy by agreeing to more international
coordination have been
largely unsuccessful. The G20 summit in London in early April 2009 demonstrated
Beijing’s ability to
avoid shouldering any real responsibility; its
relatively modest contribution of $40 billion to the IMF was effectively payment
of
a ‘tax’ to avoid being perceived as a global
deal-breaker.50
In the same speech at Peking University, cited above, Tim Geithner was more
positive. In ‘the most challenging economic and
financial stress in
generations’, he stated, ‘China and the United States are working
together to help shape
49 Timothy F Geithner, ‘The United States and China, Cooperating for Recovery and Growth’, June 2009.
50 John Fox and Francois Godement (2009), A Power Audit of EU-China Relations: A Policy
Report, pp 1-2.
a strong global strategy to contain the crisis and to lay the foundation for
recovery.’ ‘A successful transition to a
more balanced and stable
global economy’, he believed, requires significant changes of economic and
financial policies, most
importantly from both the United States and China.
Further, in his words, ‘The effectiveness of US policies will depends in
part on China’s, and the effectiveness of yours on ours.’51
Echoing Geithner’s sentiment and highlighting the importance of the
US-China cooperation in energy security and climate change,
President Obama
emphasized at the US-China Strategic and Economic Dialogue in July 2009 that
neither the United States and China—the
two largest energy consumers and
greenhouse emitters of the world—‘profits from a growing dependence
on foreign oil,
nor can we spare our people from the ravages of climate change
unless we cooperate. Common sense calls upon us to act in
concert.’52
It has become patently clear that China’s own successes of great
economic transformation have brought with them rising expectations
that China
should take up more responsibility in managing the global economic system, as it
now claims an increasingly bigger stake
in the global political economy. The
recent global financial crisis and the urgency to deal with such global concerns
as climate
change and global warming have added new imperatives for China to
play new roles in a turbulent world ahead.
V. concluSIon
In his book The Next Asia: Opportunities and Challenges for a New
Globalization, Stephen Roach makes two important assertions. Not only is
Asia the greatest beneficiary of globalization in the past, but Asia is
also
critical in producing a new globalization in the future. As one leading player
among all Asian beneficiaries, China has ridden
globalization to perfection,
merrily capitalising on the consumers’ demand of the American market and
successfully pursuing
an export-dependent growth strategy. Roach is firm,
however, that such a merry time for Asia and for China is now over in the world
after the financial crisis. He calls on China in particular to rebalance its
economy towards greater domestic consumption as the
driver for its economic
growth and development in the post-crisis era. The enormous promise
of
51 Ibid.
52 ‘Obama at U.S.-China Strategic and Economic Dialogue’, 27 July 2009. Available at
<www.america.gov/st/texttrans-english/2009/July/20090727111325bpuh0.2506067.
html&distid=ucs> accessed 7 January 2010.
the Asian century, Roach argues, can only be fulfilled with a new economic
growth dynamic in Asia based on the expanded domestic consumption
of 3.5 billion
Asian consumers.53
If the prognosis offered by Stephen Roach on the next Asia is largely
correct, what are the opportunities and challenges for New Zealand
in such a
scenario in regard to the future transformation of China? New Zealand has played
an important, perhaps also modest, role,
through its pioneering efforts as a
developed economy, in facilitating the mutual engagement between China and the
WTO and in promoting
China’s regional and global economic integration
through liberalisation in the last fifteen years, with the crowning achievement
of the signing of the New Zealand-China FTA in April 2008. In this sense, New
Zealand has become part of the story of China’s
riding of globalization.
The signing, however, coincides with the next stage of China’s great
economic transformation. China’s
rebalancing of its economic growth model
and its boosting of domestic consumption provide huge opportunities for New
Zealand producers
and corporate sectors to explore in realising the full
potential of trade expansion on the China market, taking advantage provided
by
the FTA.
A particular challenge, nevertheless, looms large on the horizon, the
possibility of trade wars between China and the United States.54 In
the regional context, the China-US trade war would not only derail the economic
recovery in East Asia, wherein New Zealand economic
future lies. It would also
pose a serious threat to the transformation that is to usher in the Next Asia.
New Zealand has an important
stake in stopping this from happening, and must
play its part to prevent such a total mockery of the collective commitment to
free
trade norms and principles as embodied in the WTO. Finally, given the great
transformation of China as discussed above and the mounting
expectations of the
role that rising China is to play in the global political economy, the
engagement with China should have a new
strategic purpose in the next decade or
two. That is to encourage China to take up greater responsibility for global
economic prosperity
and global economic governance and to endorse China’s
responsible role in this direction. New Zealand is well-placed to play
an
innovative part in such a transformation of a globalised China in the
future.
53 See Stephen Roach, Stephen Roach on The Next Asia: Opportunities and Challenges for a
New Globalization, (2009).
54 See for example, Heather Stuart, ‘China and US Head for Trade War’, Guardian, 23
June 2009, available at <www.guardian.co.uk/world/2009/jun/23/china-us-trade-row>. Accessed on 7 January 2010; and Michael Shuman, ‘Why the China-US Trade Dispute is Heating Up’, Time, 14 September 2009, available at <www.time.com/time/business/ article/0,8599,1922155,00.html> Accessed on 7 January 2010.
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