China in the World Market: Chinese Industry and International Sources of Reform in the Post-Mao Era (Cambridge Modern China Series)

Thomas G. Moore examines the role of the outside world as a source of change in post-Mao China. Based on extensive documentary and interview material, the book adds the Chinese case to a long tradition of country-based studies by political economists, historians, and area specialists that have chronicled the experiences of developing countries as they enter specific industrial markets in the world economy. This book will be timely and provocative reading for anyone concerned with the nature of China's deepening participation in the world economy and its consequences for the country's development prospects, internal reforms, and foreign policy. ISBN-13: 9780521664424 Half-title 3 Series-title 5 Title 7 Copyright 8 Contents 9 Figures 11 Abbreviations 13 Preface 17 1 China as a Latecomer in World Industrial Markets 21 REFORM CHINA: THE SLEEPING GIANT AWAKENS 21 THE PROBLEM FOR ANALYSIS 25 THE CASES 32 INDUSTRY-SPECIFIC ANALYSIS AND THE STUDY OF CHINA’S REFORM AND OPENING 37 THE PLAN OF THE BOOK 39 THE ARGUMENT IN BRIEF 43 Moderate Economic Closure and the Emergence of a Buyers’ Market in Textiles and Shipbuilding 44 Why Moderate Economic Closure Was More Conducive to Industrial Restructuring and Rationalization than Economic Openness 45 Why China Responded to Moderate Economic Closure with Market-Oriented Reform 49 2 The Outside World as an Impetus for Change in China 54 THE (UNDERESTIMATED) ROLE OF THE OUTSIDE WORLD IN EXPLANATIONS FOR CHANGE IN POST-MAO CHINA 56 BETWEEN CHOICE AND CONSTRAINT: CHINA CHARTS ITS COURSE IN THE WORLD ECONOMY 61 INTERNATIONAL-CENTERED PERSPECTIVES ON CHINA’S REFORM AND OPENING: TOWARD A “SECOND IMAGE REVERSED” CONCEPTUALIZATION 63 CONCEPTUALIZING THE “OUTSIDE WORLD” 66 THE EFFECTS OF EXTERNAL FORCES: TOWARD A CONCEPTUAL FRAMEWORK 69 LIMITS TO INTERNATIONAL-CENTERED PERSPECTIVES ON CHINA’S REFORM AND OPENING 70 FUTURE RESEARCH: BROADENING AND DEEPENING THE STUDY OF CHINA’S REFORM AND OPENING 72 CONCLUSION 77 3 Tailor to the World: China’s Emergence as a Global Power in Textiles 79 CHINESE TEXTILES: AN INDUSTRY WITH A DISTINGUISHED PAST AND A BRIGHT FUTURE 79 SINO-AMERICAN RELATIONS, THE MULTIFIBER ARRANGEMENT, AND CHINA’S TEXTILE INDUSTRY 83 SPRINGBOARD TO SUCCESS: A REVISIONIST ACCOUNT OF THE MFA’S IMPACT ON CHINESE DEVELOPMENT 91 Industrial Restructuring 92 Economic Reform 93 Industrial Rationalization 94 THE MULTIFIBER ARRANGEMENT, FOREIGN DIRECT INVESTMENT, AND THE DEVELOPMENT OF CHINA’S TEXTILE INDUSTRY 95 4 Beating the System with Industrial Restructuring: China’s Response to the Multifiber Arrangement (MFA) 100 DEVELOPING COUNTRY STRATEGIES FOR COPING WITH THE MFA 100 Made to Order: China Goes Upmarket in Response to the MFA 101 Dressed for Success: Chinese Factories Work Their Way into Saks Fifth Avenue and Macy’s 106 Living within the Rules: China Diversifies to Cope with the MFA 111 Flouting the Rules: China Transships to Circumvent the MFA 117 SILK EXPORTS: A CONVENIENT “FREE TRADE” COUNTEREXAMPLE TO “MANAGED TRADE” UNDER THE MFA 118 Problems in China’s Silk Industry 121 Silken Sorrows: Unrestrained Exports and China’s Failure to Trade Up in the World Market 122 Smooth as Silk: The Dangers of “Easy” Exports to the World Market 125 Quotas to the Rescue?: Advances in China’s Silk Industry in the Wake of Restricted Exports 128 CONCLUSION 130 5 China Looms Large: Reform and Rationalization in the Textile Industry 131 HANGING BY A THREAD: CHINA COPES WITH THE MFA 131 THE ROAD TO REFORM 134 Business as Usual: Administrative Measures in Response to the MFA 134 Between a Rock and a Hard Place: The Perils of Partial Reform 137 Efforts to Link Industry and Trade: The Case of the Export Agency System 140 The Decentralization of Foreign Trade Authority 143 Import Liberalization and Reform in Raw Materials Allocation 145 TRIMMING THE COLOSSUS: RATIONALIZATION EFFORTS IN CHINA’S TEXTILE INDUSTRY 146 Struggling with Overcapacity 146 The Textile Industry and Zhu Rongji’s Three-Year Plan for SOE Reform 150 TO GET RICH IS GLORIOUS: THE ALLOCATION OF TEXTILE QUOTA IN CHINA 151 Textile Quota as a Political Commodity 151 The Evolving System of Quota Allocation in China: From Political-Bureaucratic Administration to Corrupted Market 153 Continuing Change in Quota Allocation: Toward a Formal Auction System 157 CONCLUSION 162 6 Industrial Change in the Shadow of the MFA: The Role of Top-Level Strategy, Mid-Level Intervention, and Low-Level Demand... 164 RESHAPING THE ORGANIZATIONAL LANDSCAPE OF THE CHINESE TEXTILE INDUSTRY 164 WHO DID WHAT TO WHOM?: AGENTS OF CHANGE IN CHINA’S TEXTILE INDUSTRY 168 Weakening the Ties That Bind: Bureaucrats and Market Coordination in China’s Textile Industry 168 Reform from Above: The Role of China’s Central Leadership 169 Reform from the Middle: Overcoming Bureaucratic Resistance in China’s Textile Industry 172 Reform from Below: Enterprise Initiative in the Textile Industry 178 REFORM BY ATTRITION: THE ROLE OF THE NONSTATE SECTOR IN RESHAPING CHINA’S TEXTILE INDUSTRY 180 7 Chinese Shipbuilding: The Modest Origins of an Emerging Industrial Giant 183 BEHEMOTHS IN THE MAKING?: CHINA’S SHIPYARDS ON THE RISE 183 A BRIEF HISTORY OF CHINA’S MARITIME DEVELOPMENT 189 REORGANIZING PRODUCTION FOR THE FUTURE: THE CREATION OF THE CHINA STATE SHIPBUILDING CORPORATION 195 CSSC: A MODEL FOR INSTITUTIONAL REFORM IN CHINESE INDUSTRY? 198 CSSC AND CHINA’S EXPORT SUCCESS: FARSIGHTED ARCHITECT OR UNWITTING BENEFICIARY? 202 CSSC’S STRATEGY FOR THE SHIPBUILDING INDUSTRY: A CREDIBLE PLAN? 206 CONCLUSION 210 8 Dangerous Currents: Navigating Boom and Bust Cycles in International Shipbuilding 212 STORMY SEAS IN WORLD SHIP MARKETS 214 The First Crash 214 The Second Crash 217 COSCO IN A BUYERS’ MARKET: EXPANDING CHINA’S MERCHANT FLEET DURING THE INTERNATIONAL CRISIS IN SHIPBUILDING 222 BETWEEN A ROCK AND A HARD PLACE: CSSC AND THE CRISIS IN INTERNATIONAL SHIPBUILDING 226 Global Surplus Capacity: The Impact on Development Strategy and Industrial Adjustment in Chinese Shipbuilding 229 CONCLUSION 235 9 Chinese Shipbuilding and Global Surplus Capacity: Making a Virtue out of Necessity 237 DIVERSIFYING THE PRODUCT MIX: THE MOVE UPMARKET IN SHIPS 237 SPECIALIZATION AMONG CHINA’S LEADING SHIPYARDS 242 KEEPING A LID ON CAPACITY: RATIONALIZATION IN CHINESE SHIPBUILDING 243 GETTING IN TUNE: SHORTENING THE CONSTRUCTION PERIOD FOR NEWBUILDINGS 244 CSSC BECOMES A DIVERSIFIED MANUFACTURER: THE EXPANSION OF NONMARINE PRODUCTION 245 SHIPREPAIR: THE SHIFT TOWARD FOREIGN WORK 248 CSSC’S GROWING EXPORTS OF MARINE EQUIPMENT 251 “MAKING IMPORTS FOSTER EXPORTS”: THE ROLE OF TECHNOLOGY ACQUISITION 252 STEADY PROGRESS IN PERENNIALLY CHOPPY WATERS: CHINESE SHIPBUILDING SINCE THE EARLY 1990s 255 10 Market-Oriented Solutions for Industrial Adjustment: The Changing Pattern of State Intervention in Chinese Shipbuilding 258 THE FIRST WAVE OF REFORM: THE EROSION OF CENTRAL PLANNING 258 THE SECOND WAVE OF REFORM: DILEMMAS OF PARTIAL REFORM AND LIMITED FINANCIAL DECENTRALIZATION 264 REFORM IN THE CHINESE SHIPBUILDING INDUSTRY: AN EVALUATION 269 RATIONALIZATION IN THE CHINESE SHIPBUILDING INDUSTRY: AN EVALUATION 272 SHIPBUILDING: THE SUCCESS STORY OF A REFORM PIONEER 275 11 Who Did What to Whom?: Making Sense of the Reform Process in China’s Shipbuilding Industry 278 EXPLAINING CHANGE IN THE SHIPBUILDING INDUSTRY: A CASE OF FOLLOWERS AND LEADERS? 278 Reform from Above: The Role of China’s Central Leadership 279 CSSC Beijing in the Reform Process 287 Reform from Below: The Role of China’s Shipyards 289 INTERNATIONAL AND DOMESTIC SOURCES OF CHANGE IN THE CHINESE SHIPBUILDING INDUSTRY 293 12 External Shocks, State Capacity, and National Responses for Economic Adjustment: Explaining Industrial Change in China 296 DOMESTIC STRUCTURE AS A SOURCE OF CHINESE POLICY MAKING 296 CHINESE POLICY MAKING AND THE ORGANIZATIONAL STRUCTURE OF THE STATE 299 GOVERNMENT-INDUSTRY RELATIONS IN CHINA: IMPLICATIONS FOR THE CONDUCT OF INDUSTRIAL POLICY 302 THE TRANSITIONAL NATURE OF CHINA’S ECONOMY 309 STATE CAPACITY, INDUSTRIAL ADJUSTMENT, AND POLICY “FIT”: CHINA’S RESPONSE TO EXTERNAL CHALLENGES IN THE TEXTILE AND... 310 THE ROLE OF INTERNATIONAL FORCES IN CHANGING THE PATTERN OF STATE INTERVENTION IN THE CHINESE TEXTILE AND SHIPBUILDING... 312 CHINA IN COMPARATIVE PERSPECTIVE: THE VALUE OF A “STATE CAPACITY” APPROACH 313 13 China in the Contemporary International Political Economy 315 THE “PROBLEM FOR ANALYSIS” REVISITED 315 A Tale of Two Models? 316 Standing the Test of Time 318 Issues for Future Research 320 ANOTHER CASE OF “EAST ASIAN MERCANTILISM”?: CHINESE ECONOMIC SUCCESS IN THE ABSENCE OF A DEVELOPMENTAL STATE 322 BRINGING EXTERNAL FORCES (BACK) IN 332 Appendix: Contours of the Research Effort 336 A NOTE ON METHODOLOGY 336 DATA COLLECTION 339 Bibliography 342 BOOKS, JOURNAL ARTICLES, AND UNPUBLISHED MANUSCRIPTS 342 NEWSPAPERS, PERIODICALS, AND ANNUAL PUBLICATIONS 351 Index 353 Half-title......Page 3 Series-title......Page 5 Title......Page 7 Copyright......Page 8 Contents......Page 9 Figures......Page 11 Abbreviations......Page 13 Preface......Page 17 REFORM CHINA: THE SLEEPING GIANT AWAKENS......Page 21 THE PROBLEM FOR ANALYSIS......Page 25 THE CASES......Page 32 INDUSTRY-SPECIFIC ANALYSIS AND THE STUDY OF CHINA’S REFORM AND OPENING......Page 37 THE PLAN OF THE BOOK......Page 39 THE ARGUMENT IN BRIEF......Page 43 Moderate Economic Closure and the Emergence of a Buyers’ Market in Textiles and Shipbuilding......Page 44 Why Moderate Economic Closure Was More Conducive to Industrial Restructuring and Rationalization than Economic Openness......Page 45 Why China Responded to Moderate Economic Closure with Market-Oriented Reform......Page 49 2 The Outside World as an Impetus for Change in China......Page 54 THE (UNDERESTIMATED) ROLE OF THE OUTSIDE WORLD IN EXPLANATIONS FOR CHANGE IN POST-MAO CHINA......Page 56 BETWEEN CHOICE AND CONSTRAINT: CHINA CHARTS ITS COURSE IN THE WORLD ECONOMY......Page 61 INTERNATIONAL-CENTERED PERSPECTIVES ON CHINA’S REFORM AND OPENING: TOWARD A “SECOND IMAGE REVERSED” CONCEPTUALIZATION......Page 63 CONCEPTUALIZING THE “OUTSIDE WORLD”......Page 66 THE EFFECTS OF EXTERNAL FORCES: TOWARD A CONCEPTUAL FRAMEWORK......Page 69 LIMITS TO INTERNATIONAL-CENTERED PERSPECTIVES ON CHINA’S REFORM AND OPENING......Page 70 FUTURE RESEARCH: BROADENING AND DEEPENING THE STUDY OF CHINA’S REFORM AND OPENING......Page 72 CONCLUSION......Page 77 CHINESE TEXTILES: AN INDUSTRY WITH A DISTINGUISHED PAST AND A BRIGHT FUTURE......Page 79 SINO-AMERICAN RELATIONS, THE MULTIFIBER ARRANGEMENT, AND CHINA’S TEXTILE INDUSTRY......Page 83 SPRINGBOARD TO SUCCESS: A REVISIONIST ACCOUNT OF THE MFA’S IMPACT ON CHINESE DEVELOPMENT......Page 91 Industrial Restructuring......Page 92 Economic Reform......Page 93 Industrial Rationalization......Page 94 THE MULTIFIBER ARRANGEMENT, FOREIGN DIRECT INVESTMENT, AND THE DEVELOPMENT OF CHINA’S TEXTILE INDUSTRY......Page 95 DEVELOPING COUNTRY STRATEGIES FOR COPING WITH THE MFA......Page 100 Made to Order: China Goes Upmarket in Response to the MFA......Page 101 Dressed for Success: Chinese Factories Work Their Way into Saks Fifth Avenue and Macy’s......Page 106 Living within the Rules: China Diversifies to Cope with the MFA......Page 111 Flouting the Rules: China Transships to Circumvent the MFA......Page 117 SILK EXPORTS: A CONVENIENT “FREE TRADE” COUNTEREXAMPLE TO “MANAGED TRADE” UNDER THE MFA......Page 118 Problems in China’s Silk Industry......Page 121 Silken Sorrows: Unrestrained Exports and China’s Failure to Trade Up in the World Market......Page 122 Smooth as Silk: The Dangers of “Easy” Exports to the World Market......Page 125 Quotas to the Rescue?: Advances in China’s Silk Industry in the Wake of Restricted Exports......Page 128 CONCLUSION......Page 130 HANGING BY A THREAD: CHINA COPES WITH THE MFA......Page 131 Business as Usual: Administrative Measures in Response to the MFA......Page 134 Between a Rock and a Hard Place: The Perils of Partial Reform......Page 137 Efforts to Link Industry and Trade: The Case of the Export Agency System......Page 140 The Decentralization of Foreign Trade Authority......Page 143 Import Liberalization and Reform in Raw Materials Allocation......Page 145 Struggling with Overcapacity......Page 146 The Textile Industry and Zhu Rongji’s Three-Year Plan for SOE Reform......Page 150 Textile Quota as a Political Commodity......Page 151 The Evolving System of Quota Allocation in China: From Political-Bureaucratic Administration to Corrupted Market......Page 153 Continuing Change in Quota Allocation: Toward a Formal Auction System......Page 157 CONCLUSION......Page 162 RESHAPING THE ORGANIZATIONAL LANDSCAPE OF THE CHINESE TEXTILE INDUSTRY......Page 164 Weakening the Ties That Bind: Bureaucrats and Market Coordination in China’s Textile Industry......Page 168 Reform from Above: The Role of China’s Central Leadership......Page 169 Reform from the Middle: Overcoming Bureaucratic Resistance in China’s Textile Industry......Page 172 Reform from Below: Enterprise Initiative in the Textile Industry......Page 178 REFORM BY ATTRITION: THE ROLE OF THE NONSTATE SECTOR IN RESHAPING CHINA’S TEXTILE INDUSTRY......Page 180 BEHEMOTHS IN THE MAKING?: CHINA’S SHIPYARDS ON THE RISE......Page 183 A BRIEF HISTORY OF CHINA’S MARITIME DEVELOPMENT......Page 189 REORGANIZING PRODUCTION FOR THE FUTURE: THE CREATION OF THE CHINA STATE SHIPBUILDING CORPORATION......Page 195 CSSC: A MODEL FOR INSTITUTIONAL REFORM IN CHINESE INDUSTRY?......Page 198 CSSC AND CHINA’S EXPORT SUCCESS: FARSIGHTED ARCHITECT OR UNWITTING BENEFICIARY?......Page 202 CSSC’S STRATEGY FOR THE SHIPBUILDING INDUSTRY: A CREDIBLE PLAN?......Page 206 CONCLUSION......Page 210 8 Dangerous Currents: Navigating Boom and Bust Cycles in International Shipbuilding......Page 212 The First Crash......Page 214 The Second Crash......Page 217 COSCO IN A BUYERS’ MARKET: EXPANDING CHINA’S MERCHANT FLEET DURING THE INTERNATIONAL CRISIS IN SHIPBUILDING......Page 222 BETWEEN A ROCK AND A HARD PLACE: CSSC AND THE CRISIS IN INTERNATIONAL SHIPBUILDING......Page 226 Global Surplus Capacity: The Impact on Development Strategy and Industrial Adjustment in Chinese Shipbuilding......Page 229 CONCLUSION......Page 235 DIVERSIFYING THE PRODUCT MIX: THE MOVE UPMARKET IN SHIPS......Page 237 SPECIALIZATION AMONG CHINA’S LEADING SHIPYARDS......Page 242 KEEPING A LID ON CAPACITY: RATIONALIZATION IN CHINESE SHIPBUILDING......Page 243 GETTING IN TUNE: SHORTENING THE CONSTRUCTION PERIOD FOR NEWBUILDINGS......Page 244 CSSC BECOMES A DIVERSIFIED MANUFACTURER: THE EXPANSION OF NONMARINE PRODUCTION......Page 245 SHIPREPAIR: THE SHIFT TOWARD FOREIGN WORK......Page 248 CSSC’S GROWING EXPORTS OF MARINE EQUIPMENT......Page 251 “MAKING IMPORTS FOSTER EXPORTS”: THE ROLE OF TECHNOLOGY ACQUISITION......Page 252 STEADY PROGRESS IN PERENNIALLY CHOPPY WATERS: CHINESE SHIPBUILDING SINCE THE EARLY 1990s......Page 255 THE FIRST WAVE OF REFORM: THE EROSION OF CENTRAL PLANNING......Page 258 THE SECOND WAVE OF REFORM: DILEMMAS OF PARTIAL REFORM AND LIMITED FINANCIAL DECENTRALIZATION......Page 264 REFORM IN THE CHINESE SHIPBUILDING INDUSTRY: AN EVALUATION......Page 269 RATIONALIZATION IN THE CHINESE SHIPBUILDING INDUSTRY: AN EVALUATION......Page 272 SHIPBUILDING: THE SUCCESS STORY OF A REFORM PIONEER......Page 275 EXPLAINING CHANGE IN THE SHIPBUILDING INDUSTRY: A CASE OF FOLLOWERS AND LEADERS?......Page 278 Reform from Above: The Role of China’s Central Leadership......Page 279 CSSC Beijing in the Reform Process......Page 287 Reform from Below: The Role of China’s Shipyards......Page 289 INTERNATIONAL AND DOMESTIC SOURCES OF CHANGE IN THE CHINESE SHIPBUILDING INDUSTRY......Page 293 DOMESTIC STRUCTURE AS A SOURCE OF CHINESE POLICY MAKING......Page 296 CHINESE POLICY MAKING AND THE ORGANIZATIONAL STRUCTURE OF THE STATE......Page 299 GOVERNMENT-INDUSTRY RELATIONS IN CHINA: IMPLICATIONS FOR THE CONDUCT OF INDUSTRIAL POLICY......Page 302 THE TRANSITIONAL NATURE OF CHINA’S ECONOMY......Page 309 STATE CAPACITY, INDUSTRIAL ADJUSTMENT, AND POLICY “FIT”: CHINA’S RESPONSE TO EXTERNAL CHALLENGES IN THE TEXTILE AND.........Page 310 THE ROLE OF INTERNATIONAL FORCES IN CHANGING THE PATTERN OF STATE INTERVENTION IN THE CHINESE TEXTILE AND SHIPBUILDING.........Page 312 CHINA IN COMPARATIVE PERSPECTIVE: THE VALUE OF A “STATE CAPACITY” APPROACH......Page 313 THE “PROBLEM FOR ANALYSIS” REVISITED......Page 315 A Tale of Two Models?......Page 316 Standing the Test of Time......Page 318 Issues for Future Research......Page 320 ANOTHER CASE OF “EAST ASIAN MERCANTILISM”?: CHINESE ECONOMIC SUCCESS IN THE ABSENCE OF A DEVELOPMENTAL STATE......Page 322 BRINGING EXTERNAL FORCES (BACK) IN......Page 332 A NOTE ON METHODOLOGY......Page 336 DATA COLLECTION......Page 339 BOOKS, JOURNAL ARTICLES, AND UNPUBLISHED MANUSCRIPTS......Page 342 NEWSPAPERS, PERIODICALS, AND ANNUAL PUBLICATIONS......Page 351 Index......Page 353 Publisher's description: In a book that reframes our thinking about the nature of China's reform and opening, Thomas Moore argues that the structuring impact of the international political economy represents one of the most theoretically important yet inadequately studied issues concerning change in post-Mao China. After carefully defining his conceptual framework, Moore presents detailed case studies of textiles and shipbuilding to examine the impact of varying degrees of economic openness in the world trading system on the reform, restructuring, and rationalization of Chinese industries. As the book amply demonstrates, the international environment most propitious for change in China's textile and shipbuilding industries during the 1980s and 1990s was one marked by moderate economic closure rather then the ideal-typic economic openness assumed by most observers. Moore also challenges popular notions of China's recent economic success by arguing that Beijing's ability to pursue strategic industrial policy is actually quite limited This book reframes our thinking about the nature of China's reform and opening. Thomas Moore argues that the structuring impact of the international political economy represents one of the most theoretically important yet inadequately studied issues concerning change in post-Mao China. After carefully defining his conceptual framework, Moore presents detailed case studies of textiles and shipbuilding to examine the impact of varying degrees of economic openness in the world trading system on the reform, restructuring, and rationalization of Chinese industries. As the book amply demonstrates, the international environment most propitious for change in China's textile and shipbuilding industries during the 1980s and 1990s was one marked by moderate economic closure rather then the ideal-typic economic openness assumed by most observers. Moore also challenges popular notions of China's recent economic success by arguing that Beijing's ability to pursue strategic industrial policy is actually quite limited.