Although China has been opening up its economy for more than twenty years, it is generally considered that its future accession to WTO will imply far-reaching consequences for its economy. In order to better understand what is at stake as China enters the WTO, this study is intended to investigate the degree of openness of China's economy at the end of the nineties. The rapid expansion of its international trade and large capital inflows provide evidence of the increasing integration of China in the world economy. Since 1980, China's share in international trade has trebled, rising from less than 1% to more than 3% in 1999. China has become the second largest recipient of foreign direct investment (FDI), after the US, with cumulated inflows amounting to more than US$ 300 billion at the end of 1999. These two trends appear to be closely interrelated. The study offers evidence of the positive impact of foreign direct investment (FDI) on China's manufacturing industry. The analysis also provides support for the argument that the opening up policy followed up to now has had adverse effects. Turning to foreign trade, the analysis amply shows that China's specialisation pattern during the nineties was largely determined by the strategy of foreign affiliates.
China; Opening up; WTO; FDI; Trade regime; International division of labour; Specialization; Manufacturing industry
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