China and its Reactions to Globalization

Xuewu Gu

The accession of China to the World Trade Organization (WTO) in November 2001 marked one of the most
important steps of the Chinese government towards deepening the integration of the Chinese economy into the
world economy and therewith going more deeply into the globalization. This development, however, does not
mean that the issue of globalization is not controversial in China. Indeed, the fifteen years since 1986 in which
China actually underwent a tremendous negotiation process with the WTO, as well as with its members, have
been accompanied by an intense domestic debate about the sense and the meaning of globalization. Even through
today, the Chinese membership in the WTO is certainly not inevitable; the globalization debate in China
continues, reflecting the fact that the Chinese feel strongly challenged by globalization and are trying to search
for ways to deal effectively with it.
This paper regards it as its main task to examine systematically the Chinese reactions to globalization. To
achieve this goal, the analysis will focus on three questions. Firstly, it will find out the general understanding of
globalization by the Chinese elite. The term “general understanding” means in this sense the understanding
which most Chinese scholars and politicians seem to share regardless of whether he or she is “pro-globalization”
or “anti-globalization”. Secondly, it will try to identify the main strains of the Chinese debate on globalization.
In doing so, the substantial arguments of the different groups will be reported briefly.1 Finally, the paper
attempts to outline the policies used by the Chinese government to meet the challenges of globalization.

The Chinese Understanding of Globalization

It is certainly disputable to say that there is a general understanding with which all Chinese taking part in the
globalization debate agree. But on the other side, there are at least three assumptions less controversial amongst
most people.
Firstly, the majority of the Chinese elite seems to believe that the trends of globalization are inevitable. They
believe strongly there is no alternative to globalization. This attitude is basically in accord with the
understanding of the globalization by the International Monetary Fund. As Eduardo Aninat, IMF Deputy
Managing Director, noted, “China must make decisions that will determine how well it integrates further into the
global system. There is no longer a question of whether to integrate, but only of how best to do so.” (Aninat
2001)
Indeed, the feeling you cannot stop globalization, and that globalization will continue to go on regardless of
whether you are willing to go with it or not exists strongly in the minds of many people. Pang Zhongying, a
senior diplomat of the Chinese Foreign Ministry, called globalization, for instance, a “new issue” in history, and
warned the Chinese “you can’t refuse any new issues, much less move against the trends of history.” (An Wei
and Li Dongyan 2000)
For Wang Xuan, a professor of information science at Beijing University, the Internet is a global trend, and any
product and technology must take it into account. He underscored that it is excusable for China to miss a short
period, but it would be terrible and therefore unforgivable to miss a whole age.” By doing so, he seemed to want

1
This analysis is based on numerous informal interviews the author carried out with Chinese scholars
and officials in Chengdu, Urumqi, Beijing, and Shanghai in July 2001, and on the examination of new
Chinese publications on globalization listed at the end of this paper, as well as on the evaluation of the
seven protocols about the WTO dialogue on November 6, 2001, attended by more than hundred of
to send the message to the Chinese that globalization in terms of the Internet is an irresistible force to which
everyone must adapt.
Secondly, most Chinese scholars believe that globalization is not only an economic, but also a political and
social process. For Wang Yizhou, a senior research fellow at the Chinese Academy of Social Sciences in
Beijing, for example, globalization is a process in which the pressure of the free flows of international capital are
forcing changes in the domestic structures, creating new strata relations, and waking new individual
consciousness.
He believes it is a process taking place in all countries and therefore globally. According to him, globalization is
also of a political nature because the political tasks of the nation-states are being increasingly globalized. The
states are all facing the same problem: to identify chances and challenges caused by the increasing interaction
among diverse human societies in all important dimensions of the activities. As a result, political reforms and
adjustments of foreign strategies are engulfing the whole world. He noted, from the less developed, developing,
and developed countries, no state seems to be able to escape from the grasp of this global reform movement.
Thirdly, most Chinese scholars agree that globalization definitively confirmed the failure of Stalin’s assumption
on “two parallel world markets.” For them, globalization is a complete triumph of the free market economy over
other economic models including those of the former Soviet Union and those of the so-called Third World
countries. The market with its power allocating the resources effectively is seen as the key factor leading to this
historical triumph.
However, most Chinese scholars do not entirely agree with the assumption that the globalization was only
generated by synergies of market economy. As we know, it is quite popular in America and Europe to trace
globalization to a powerful combination of market economy and technology. For the International Monetary
Fund, for instance, the driving forces of globalization are threefold: first, improvements in technology, especially
in transportation and communication; second, a desire by people to take advantage of the opportunities provided
by interactions with other societies; and third, the lowering of barriers to international trade and capital flows
resulting from the liberalization of policies (Aninat 2001).
It is true that these Chinese scholars did not dispute this assumption seriously, but they do seem to believe in a
leading role of America in promoting the market economy globally. Indeed, a lot of Chinese scholars and
officials seem deeply concerned about what they call “Americanized Globalization.” For most of them,
globalization is actually a triumph of the American pattern over the European and the Japanese models.
Although they are not disposed to equate globalization with Americanization, many Chinese do believe that the
American pattern of economy is dominating the main trends of globalization. In their opinions, European and
Japanese development pattern can hardly change these trends, much less the Asian models.

The Chinese Attitudes Towards Globalization

Charles Andrews has once analyzed that there are three basic attitudes towards globalization in the world. One is
the frank pro-globalization stand. The second is the reformist approach, which sooner or later comes to accept
globalization. The third view fights globalization because it is the current world phase of capitalism (Andrews
2001).

leading Chinese scholars, high officials and top entrepreneurs. These bulky records were published in
http://finance.sina.com.cn/.
This assessment, however, seems only valid in a limited sense if applied to China. The reason is that there is only
a few Chinese who are really prepared to fight globalization although they are deeply concerned about the
negative impacts of globalization on China.
The analysis of the materials shows a picture of the Chinese attitudes towards globalization, some of which are
different from those described by Charles Andrews. Although we can hardly find an attitude in pure form, it is
possible to classify the Chinese standpoints towards globalization in three basic attitudes: The optimistic, the
pessimistic, and the realistic attitude.
The optimistic attitude
Those who hold an optimistic standpoint towards globalization find it a good thing for China. This optimistic
view traces the rapid pace of China’s development in the last two decades to the increasing integration of the
Chinese economy into the global economy. They support a more active participation of China in globalization,
arguing that the benefits of integration into the global economy far outweigh the costs. Lin Yifu, a professor of
economics at the University of Beijing (Beijing Daxue), for example, expects no imminent storm for China after
its accession to the WTO. Rather, China could benefit tremendously from a large number of international
concerns, which according to his expectations will go actively into the Chinese markets in the first years of the
Chinese WTO membership (Protocol I 2001).
The Chinese optimism is not only based on the assessment of the economic benefits China can gain from
globalization. But it is also a theoretically-based view on the general impact of globalization. According to them,
by deepening the integration of economic interests of the great powers, globalization can help reduce the dangers
of a world war, weaken the contradictions between the South and the North, narrow the gap between the West
and East left by the ideological Cold War, and create a “New World Culture”.
In this last regard, the Chinese optimism seems to outdo all the groups of supporters of globalization in defining
its positive impact on the world. Yan Xuetong, a professor of international relations at the Qinghua University,
for example, actually surpassed the most popular globalization supporter Francis Fukuyama by outlining the
prospects of creating a “real world culture” leading to a homogenization of the different cultures in the world
(An 2000).2
The pessimistic attitude
Those who are pessimistically attuned to globalization believe that a unreserved opening up to the
world economy would generate a disaster for the Chinese people. For them the globalization is
nothing but a trap. Jumping into this trap would crush the whole domestic industry, agriculture, and
service sectors, arguing that China is simply not prepared for further integration into the world
economy.

Han Deqiang, one of the strongest opponents of the globalization, pointed out, for example, that
neither the medicine industry nor the beer industry, neither the equipment industry, nor the paper
industry in China can bear up the pressure caused by a Chinese WTO membership, much less the
Chinese automobile industry.

2
Indeed, it is true that Fukuyama recognized the fact that in terms of a global economy, “cultures are
becoming more homogeneous”, but he insisted on the assessment that “it is not clear that
homogenization is proceeding nearly as rapidly. To a certain extent, according to him, there is a real
resistance to cultural homogenization” in the time of globalization, see Fukuyama, Francis, Economic
Globalization and Culture, (http://www.ml.com/woml/forum/global/html, 21/06/2001).
According to analysis, when China enters the WTO, all current Chinese automobile factories would
become a local workshop of Audi, BMW, Daimler-Benz, or Toyota, if not totally destroyed. Hundreds of
millions Chinese countrymen would cry out for help when cheaper American wheat, bean, beef,
oranges, chicken, grapes come to the dinner table of the Chinese families. Once American agricultural
products have gotten accession to China’s market, according to him, it would not take long time until
the Chinese farmer could not afford the basic things for life such as oil, salt, soy, and vinegar. Being
convinced that globalization would place China into a extremely dangerous situation, the pessimist
advised the Chinese government to slow down China’s integration into the world economy (Han 2000).

One of the most popular arguments of the pessimistic attitude is that even the government is not well
enough prepared to join the WTO. The Central Government in Beijing is being increasingly accused of
encouraging firms to enhance their competition ability without abolishing the curbs on them as players
on the markets which are to be open to their foreign competitors. The authorities of the state,
according to the criticism, are preventing the Chinese firms from winning the challenges by refusing to
provide them with information about what China has agreed with the foreign countries. For the
pessimists, this behavior is an obvious indication that the authorities do not know how to prepare
institutionally for the negative impacts of globalization on China, and how to reconstruct the institutions
of the state to adopt to the new circumstances created by the integration into the world economy
(Protocol 5 2001).

The realistic attitude

The realistic attitude is characterized by a balanced assessment of the benefits and costs of
globalization for China. Their key concept is the theory of a so called “double-edged sword.” According
to this theory, there is a coexistence of advantages and disadvantages for China if it continues to
enhance the degree of integration of China’s economy and society into the current world order
dominated by the West. For those who hold a realistic attitude, the advantages of globalization to
China are predominately a long-term nature while the disadvantages are principally of short-term
character. Their considerations focus on the question whether it is worth it to forgo short-term gains for
long-term interests or vice-versa.

The following points summarize the realists’ view of the substantial long-term benefits of globalization
for China:

- make domestic industry more efficient and hence more competitive towards foreign industries;

- accelerate the establishment of a sound market economy by accepting the legal and
regulatory frameworks of the modern management;

- increase foreign direct investment.

- enforce the government to reconstruct the political, economical, and legal systems to enhance
the compatibility of the Chinese institutions and society with the international community.

The following points summarize the realists’ view of the most critical short-term disadvantages of the
globalization for China:
 - exacerbate the problem of unemployment;

- enlarge the income disparities, and as a result, aggravate the existing social contradictions
between the different strata;

- increase competitive pressures on firms in the sectors of agriculture, automobiles, and certain
capital intensive producers.

It is quite interesting to observe that the realistic attitude was largely accepted by the Chinese Central
Government. President Jiang Zemin, for example, has repeatedly used the term “double-edge sword”,
outlining the benefits and costs of globalization for China. Based on this theory, the Chinese leaders
have formulated three sets of relationships which they consider most important for China in dealing
with globalization: firstly, the relationship between participation in the globalization process and
independent development; secondly, the relationship between participation in the process and
maintenance of national interests, and thirdly, the relationship between participation in the process
and safeguarding China’s economic security (Tang 2001).

This formulation suggested Beijing’s attempt to go deeply into the globalization without losing what they called
the “economic security” of China. Indeed, the Chinese leader are largely influenced by the current research
works of the Chinese scholars about the connection between globalization and the economic security of the
nation. The concept of the “economic security” is growing more and more popular in Chinese literature and
news media after the Asia Financial Crisis (AFC) of 1997.

According to the examination of Zha Daojiong, a professor of International Relations at the International
University of Japan, the Chinese are particularly interested in opportunities and constraints/threats originating
from external aspects of the Chinese economy. In terms of the unit of analysis, the term national economic
security has become the standard vocabulary. According to Zha, the popularity of the concept of economic
security can have significant policy implications on the Chinese government's pursuit of it. For, unlike military
security considerations (such as nuclear deterrence), it is difficult, if at all possible, to determine how much
economic security is sufficient. After all, Japan's pursuit of its economic security in the 1930s led to the creation
of the so-called Greater East Asian Co–prosperity Sphere. How the Chinese government finds a balance between
the pursuit of military security and military actions in the name of protecting China's economic security among
other challenges, will have a significant impact on the future of Chinese foreign policies, particularly in the
Asia-Pacific region (Zha 2001).

It is obvious that the Chinese leaders have clearly recognized the fact that China has no choice but to integrate
into the global economy. A consensus seems to have been reached amongst the realists and the Chinese
leadership regarding an active, but prudent participation in the global integration process. Indeed, to maximize
the benefits of globalization, while minimizing the negative impact on Chinese economy and society, is
becoming a policy which will fundamentally influence the speed and the scope of China’s participation in the
globalization process in the coming decades. This raises the question: What does this policy look like at the
beginning of the 21st century?
China’s Policy to Meet the Challenges of Globalization
It is certainly difficult to find a policy which is already sophisticatedly developed by the Chinese
government to meet the challenges of globalization. Many political instruments introduced by different
authorities in Beijing seem to be uncoordinated and therefore not mutually supporting. But it is also
true that Beijing’s globalization policy is taking on outlines even though some contours of this policy
still remain vague and unclear.

Generally speaking, China’s globalization policy is stamped by an active adjustment of internal

structure. Especially to match the pressure exerted by the WTO membership, Beijing has made
vigorous efforts to make the state institutions and the society structures capable of enduring the
foreseeable upheavals caused by the deepening of China’s integration into the world economy. So far,
the Chinese government seems to have tried to adjust the internal structures in the following areas:

- Tear down the administrative interventions by party organizations and government agencies
into the enterprises. In the framework of this movement thousand of large and medium-size
manufacturing enterprises were converted into joint stock companies. However, the
conversion of public service sector companies in the telecommunications, railway, civil
aviation, and electricity sectors into joint stock companies are lagging slowly.

- Introduce social security system. Health insurance system, insurance against unemployment,
and pension scheme have been experimentally established in urban areas. However, the
state still remains too much involved in the social security issues. It seems to be time for the
government to make policies encouraging private capital to invest in social security funds.

- Develop human capital and attract human resources. Diverse programs at national and
provincial level have been carried out to attract well-educated human resources, particularly
skilled Chinese in oversee and foreign countries to return to China. Due to this new policy, but
also because of the enhanced living standard in China, the number of Chinese students and
scholars returning to China for work is constantly increasing. However, the human capital
development within China is still facing huge problems because of a serious lack of public
funds.

- Streamline the state institutions. At the national and the provincial level the government
agencies were quite radically shorted to enhance the effectiveness of the administrative work.
The fact that the government officials are making more and more a professional impression
confirms the positive impact of this reform. However, fundamental changes seem to be
brought about to reduce arbitrary governance and strengthen cooperation between the
authorities in establishing new rules responding challenges of globalization (Chi 2001).

- Reconstructing the legal system. Ordered by the leadership, 25 Ministries of the Central
Government are sorting out various laws, bills, prescriptions, regulations issued by the regime
during the five decades after the establishment of the People’s Republic of China. It seems to
be the goal of this campaign to identify regulations which are not compatible with the WTO
provisions, and then to abandon them from the Chinese legal system or replace them with
new regulations. However, this looks through as if it is going to be a lasting task given the
 serious lack of people who possess enough knowledge about how the WTO regulations
exactly work. As Tu Yonglong, chief negotiator of the Chinese government to WTO, has
noted, “not knowing about the rule of games is the biggest risk for China’s accession to the
3
WTO.”

Conclusion
The topic of globalization has split the Chinese elite. However, the realistic view is increasingly
prevailing in the debate, marginalizing both the absolute optimism and the blind pessimism. The
balanced assessment of benefits and costs of globalization is becoming the theoretical basis for a
government policy to meet the challenges of globalization.

While adjusting its internal structures, China still keeps the final purpose of its active participation in
the globalization in mind. Indeed, with the integration into the world economy, Beijing pursuits the goal
to play an active role in setting rules of world economy. As Chinese Vice-Premier Wen Jiabao said,
“the Chinese government has always dedicated to the establishment of a just and rational international
economic order and will strive for this goal with unremitting efforts… All countries, big or small, strong
or week, rich or poor, should have equal rights to participate in the formulation of the `rule of games´ in
international affairs.” (Wen 2001) In this sense, it can be said that the Chinese policy towards
globalization is also a power policy aiming at increasing China’s influence on the world affairs.
However, this kind of power policy is not based on the military power rather on the leverage created by
an active participation in the world economy. Though entering the world economy that is dominated by
the West and initially accepting its “rule of games”, which China had had no part in shaping, the
Chinese leadership is apparently attempting to win initiatives in creating a new world order. Because
of this reason, a more active China is to be expected. Beijing will be no longer prepared to let the West
alone determine the “rule of games” for international affairs, and it will try to influence the direction of
globalization in a more intensive manner.

Prof. Dr. Xuewu Gu ist Inhaber des Lehrstuhls für Politik Ostasiens und Leiter der Sektion Politik
Ostasiens an der Ruhr-Universität Bochum.
Kontakt: xuewu.gu@ruhr-uni-bochum.de

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3
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