China's Frictions And Solutions In International Trade During Its Economic System Transition

Frictions in the foreign trade of our country are the problems that we must settle seriously. Our country now is still in the term of economic system transition and suffers from large amounts of loss every year in the frequent trade frictions when protectionism rises. This dissertation researched the trade policies and trade conflicts according to the argumentation that the essence of economic system is interest distribution rather than efficiency. As a system agreement, trade policy reflected complicated interest relations and was constituted jointly by domestic interest groups and politicians—interest groups for their benefits canvass politicians and politicians constitute the trade policy in order to realize their political and economic objects such as winning out in elections. Establishment and adjustment may cause trade frictions by changing the interest distribution among different countries. This dissertation researched the approach in which the interest groups affected the trade policies in China and the deep-seated causes that China suffered frequently from trade frictions, and put forward some effective measures to settle trade frictions in the term of China's economic system transition.Chapter 1 is introduction.Chapter 2 analyzes firstly the reasons that countries in the world widely adopte the policy of trade protection. The country may maximize its interest when it takes the policy of trade protection while other countries take the policy of free trade, and consequently it is a rational choice to take the policy of trade protection because every country is afraid of being at a disadvantage situation and therefore the choice of trade policy inevitably runs into"prisoner puzzle". Chapter 2, by defining the concept of system, argues secondly that the essence of system is interest distribution rather than efficiency and the system is a measure for interest groups to maintain or adjust or realize some kind of interest relation. The trade policies of every country reflect different interest relations and they can redistribute the economic and political interest. Disaccord of structure and extent of protection policy changes the international interest distribution, which may cause trade frictions.Chapter 3 analyzes the relationship between domestic interest distribution and trade policy, and introduces the Marxian arguments about the relationship between trade policy and nation interest and that between different classes and interest groups, from which new political economics make further arguments about trade policy. By analyzing the relationship between the formation of trade policy and interest of domestic interest groups and politicians with models, Chapter 3 also discusses the mechanism of formation of trade policy and how to perfect the institution surroundings of trade policy in China.Chapter 4 analyzes the relationship between nation interest and trade friction. Trade policy may cause trade frictions when the interest adjustment of the policy can not be accepted by relative countries, and accordingly international interest adjustment directly causes trade frictions.Chapter 5 introduces the forms and development of trade frictions, and looks back the historical trade frictions and their solutions, and analyzes the framework and function of trade frictions in WTO system. This chapter also argues the development of the forms of trade frictions and the limitation of the settlement of trade frictions by WTO since WTO has been established, and explains the main characteristics of the trade frictions which China has ever suffered from during its economic system transition.Chapter 6 argues the effects of economic system transition on its foreign trade in China. China's economic system reform included several transitions: the reform of proprietorship and the development of multi- proprietorship; the transition from planned economy to market economy; the transition of government functions; and so on. China has adjusted its trade policies and strategies along with the transition of economic system and acceding to WTO.Chapter 7 brings forward the solutions to the trade frictions during the economic system transition in China: slowing down the growth of export by expanding domestic demands; improving the development level of foreign trade by the measures such as perfecting the production and market structures of exports, practicing the stratagem of developing trade by science and technology, transforming the forms of foreign trade growth, expediting the development of service trade, and so on; seeking the political solutions of trade frictions respectively with the developing and developed countries by distinguishing the different political, economic and diplomatic influence from these different countries. We should actively settle the trade frictions by making full use of the Dispute Settlement Mechanism of WTO, perfecting the replying mechanism and exerting the functions of the agency such as chamber of commerce and industry consortium in China.