China

Paper Summary:

This paper discusses Lawrence Kaplan's article, "Trade Barrier" that addresses the popularly held theory that economic liberalization must eventually bring about political reform in China. The American position on the issue of Clinton's and Bush's open trade foreign policy is examined. The paper describes how Kaplan addresses the politicians' three main justifications for open trade with China and disproves each one in turn.

From the Paper:

"The first argument Kaplan addresses is the argument that capitalism "foster[s] democracy by diminishing the power of the state." China, Kaplan suggests, has built very particular market model that is immune from the liberalizing effects of capitalism. He points out that China's leaders in the 1970s "set China on a course toward 'market socialism.' [It] contains ingredients that hinder ... political reform."
Kaplan points out that China "even today has no effective system of property rights." Without such a system, democracy cannot hope to thrive: the state retains control over the entire foundation of the market, whether it is free or not. In lieu of a system of property rights, China has what has been termed a "relation-based capitalism." That is, relationships with government officials, rather than laws, are what determine the doling-out of licenses and government contracts. The people who get these are the people closest to the friends of the government and, as such, have a stake in maintaining the status quo. The government officials, in turn, benefit from their take of the kickbacks that are involved in every aspect of Chinese business - Kaplan quotes a World Bank statistic that states that "China's nominal tariff rate was 32 percent, only 6 percent [of which] was officially collected." "

More papers on China:

• Book Review # 67572 : "Doing Business with China"
• Research Paper # 116858 : "U.S.-China Trade Relations"
• Essay # 137311 : "The Significance of the Greater China Trading Region and Its Relationship to Mainland China’s FDI Reform"
• Essay # 67592 : "Understanding China"

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