Interest Groups And Trade Policy

With China’s reform deepening, the changes of various policies produce impact on vital interests of all kinds of interest groups. When meeting Chinese or foreign journalists who interview with first conference of 12 thNational People’s Congress, Premier Li KeQiang says explicitly that “ Our reform has enter into deep water zone, and crucial stage because it indeed changes the inherent pattern of interests. Changing inherent interests is more difficult than changing the soul. Exactly, in this special period, there are conflict, exploiting, compromises,among existing interest groups, emerging interest groups, foreign interest groups and so on. It is said that reform and opening up is the major background under which Chinese interest groups emerge and develop. It changes the situation that state-owned economy is the only interest body.It provides the right to pursue interest for different interest bodies. The power and responsibility of ruling party and government is featured by mixture, which enhances the complicity of Chinese interest groups’ problem. The fact that mechanism and process of policy determination under influence of interest groups is also a “new normal” stage, which will be faced and experiencedby China.For Chinese trade policy, major policy is decided by central communist party. Normal policy is decided and implemented by central government. If the policy becomes rule, it will be reviewed and decided by NPC. If an interest group wants to influence policy-making, it should find a way to express its points in order to let policy makers pay attention. Then, interest groups can get the satisfied policies. In western world, the link between interest groups and political events is close. They maximize their interests by any kinds, such as lobbying and political contribution. Thus, when facing unique policy making process, what kinds of interest groups are in the Chinese trade field? Do these interest groups bring real influence on policy making?What’s difference on thewaystoimpact between domesticinterestgroupsand foreignones?In order to answer above questions, from theoretical and empirical perspective, the dissertation aims to describe properties, composition and mechanism of influence of domestic and foreign interest groups in China completely and precisely, based on a wealth of data and cases. Moreover, the dissertation also aims to provide reasons and clues for understanding the competitive relationship between interest groups and government as well as among various interest groups. In theory, a sea of data and cases from domestic and foreign government departments, corporations and rating agencies are used to show political foundation and economic background of Chinese trade policy making, and to describe composition and mechanism of interest groups in China. In empirical aspects, the dissertation not only analyzes the steel industry, but also constructs a trade-policy-oriented two-stage and non-cooperative game model and then empirically tests the propositions and hypothesis proposed from the model,based ontheoretical analysis.The paper is divided in seven chapters. The first one is introduction, which illustrates background, purpose, method, structure and summarizes the important concepts and innovations.The second chapter is review of literature, which shows the ideological origin of political economics, which shows theoretical foundation, development process of political economics and the parts needed to improve, deriving from ideological origin of political economics. In this chapter, the basic points, research model, method and key conclusions of different braches are compared and reviewed. Which research lay foundation on the paper and where we can make improvement isdescribed clearlyinthischapter.The third chapter depicts the emergence, development, type and mechanism o Chinese interest groups. It firstly describes how interest groups in Chinese trade area emerge and develop.Then through large amount of data and cases, it tries to describe the influential body, process and result under process of Chinese trade policies’ formulation and implementation from a unique and deep perspective, which provide theoretical support for empirical analysis. The fourth chapter emphasizes on the two cases in steel industry——import protection of steel products and anti-dumping cases of cold rolled coil. The problems of interest groups in both cases are just the iceberg of ones in China. But through different influential mechanism of different groups in the two cases, the type, property and mechanism of interest groups can be seen clearly. The fifth and sixth ones construct theoretical and econometrical model on basis of the third chapter to study further and empirically, which takes the background and environment mentioned in the part of introduction seriously. The final chapter summarizes each chapter’s conclusion, provides advices and suggestions for Chinese determination on trade protection policies and put forward on future research.Through the theoretical and empirical analysis on interest groups in Chinese trade area, the followingconclusions canbeobtained:First, in the trade field, there are indeed domestic and foreign interest groups in various Chinese industries. The way of domestic ones to lobby is political connection rather than political contribution, where the delegate-style political connection gets support in the empirical test. The ways of foreign ones to lobby is political pressure, which depends on native government of them to stress. In the empirical test, this kind of ways to lobby gets support.Comparedtogeneralpopulation, themembers ofinterestgroupsare minor.Second, in an industry, the presence of interest groups which are powerful enough brings about stronger trade protection. The presence of powerful foreign ones leads to free trade. If there are powerful interest groups in the downstream industries, the trade protection of the upstream counterpart will be reduced. What’s worth mentioning is that for whatever delegate-style political connection or native government’s pressure, if political influence is powerful enough,policymakingofgovernment will beaffected moreobviously.Third, compare to social welfare, government pays close attention to interests of interest groups, which reflects pressing issue of income distribution. In addition, although the impact of domesticinterestgroupsis stronger, the influenceofforeignones cannotbeignored.Fourth, compare to tariff protection, the competition between interest groups and government is more intensive in anti-dumping protection maybe because the range of anti-dumping protectionis moreconcentrated, and intensity ofitis relativelylarge.All in words, interest groups are indeed an important element behind Chinese policy-making. But the presence of interest groups not only exists in the trade area but also exists in various fields in China. With China’s reform deepening, even if it is difficult to overcome obstacles set by inherent interests groups when we continue to reform, the presence of interest groups sometimes is also beneficial for reform and development. Therefore, in the process of reform, we need to resolve negative influence of interest groups. But if we take advantage of competitionofthem,bonus ofreform willbetwicemorethan before.