External Economic Reforms without Liberalisation Program

Balance of Results and Problems of Foreign Economic Policy after Introducing the Open-Door Policy

Abstract

The essay analyses the progress and the setbacks in China's external economic reforms to facilitate the implementation of an export-led development strategy.
A distinction is made between reforms of the international trade system and of the foreign exchange allocation system. Notwithstanding the interdependencies in both reform processes, separate analysis of each shows different ways and different degrees of implanting market forces into an otherwise centrally controlled socialist system. Thus, it is documented that open-door policy and reforms were not intended to restructure the socialist system itself, but were introduced as means of acquiring foreign capital and technology needed to speed up China's export growth, overall growth and industrialization. The trade reform, by abolishing the state monopoly of foreign trade, was governed by the principle of administrative decentralization. Foreign exchange reforms were mainly considered to be experiments with limited regional foreign exchange markets under persisting currency inconvertibility. This subordination of market forces under the principle of state control raises doubts about the effectiveness of these reform policies.