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Economic Globalization and China

By Shi Min

Economic globalization can be compared to a two-blade sword or a coin with two sides. Advantages and disadvantages exist side by side. It can also be likened to swimming in the sea in summer. One can enjoy the cooling feel of the water and swimming can improve the physique; but one also runs the risk of catching cold or even drowning.

The developed countries are good swimmers, while the developing countries are less strong in physical strength and poorer in swimming technique of swimming, or even just beginners. It is only natural that they feel very differently about swimming in the sea.

Globalization offers China opportunities as well as challenges. How should it strive to profit from the advantages and avoid the harm brought about by the disadvantages? Attention is demanded to the following aspects.

First, making better use of foreign investment to promote the industrial uplifting. China welcomes medium and small overseas entrepreneurs to invest and also sets great store by investment from foreign transnational corporations and big foreign enterprises. Capital is encouraged to exploit underdeveloped regions in western China, and further develop labor-intensive industries using China's rich resource of relatively cheap labor.

An even greater amount should be used to speed up the development of high and new technological industries, so that China's industrial standing can be raised and its international competitiveness strengthened.

Second, speeding up the reform of the financial system and improving the risk-prevention system. The setting up and improvement of the central bank, organized to carry out specific polices, the commercial banks and non-banking financial institutions, should be continued. The state-owned banks should be commercialized and genuinely run in accordance with the demands of a market economy.

In financial macro-control, the principle of sectoral operation and management should be implemented, a centralized and unified supervision system promoted, and the mechanism of supervision over foreign banks in China should be worked out and improved as soon as possible, so that an effective financial safeguard and security mechanism can genuinely function.

Third, in order to optimize the export structure and fully participate in international trade, China must seize the opportunity presented by admission to the WTO to actively optimize its export structure and increase the export of famous-brand and good-quality products. It must not rest content with the fact that manufactured goods make up 87 percent of its total exports, for most of these goods are products with low added value and low technological content. Readjusting and optimizing China's export structure remain an arduous task.

Fourth, Deepening the reform of enterprises and improving their competitive edge. Instituting and improving the modern enterprise system, optimizing the enterprise grouping structure so that it reaches a certain scale and acquires the abilities of independent creation, and strengthening their competitive muscles in the domestic and international markets----these are still severe tasks confronting most of China's state enterprises.

Fifth, taking an active part in regional economic cooperation. China has always attached great importance to the activities of APEC, the Asia-Pacific official economic cooperation forum, and put forward many positive proposals to promote trade and investment liberalization, and economic and technological cooperation. China has also actively supported the consultation and cooperation of the "Three (China, Japan and ROK) plus 10 (the 10 Asean countries)" mechanism in East Asia.

Sixth, China must actively take part in the revision of the international financial system and global trading rules. After entering the WTO, China must first of all revise its own rules in accordance with the organization's requirements. However, as a developing country, it should be also take an active part in the revision of the existing rules of the WTO and other international economic organizations, so that it can reflect the demand of all the developing countries, reduce the negative effects of economic globalization to the minimum and make its own contribution in setting up a new international economic order.

(The author is a member of The Chinese Center for Third World)


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