August 1, 2005｜China
Assistant Director, Business Planning Department, Japan-China Economic Association
Market-oriented economic reforms are progressing in China, with such developments as the country’s accession to the WTO in December 2001. The commitment it made at the time of its accession, that it would deregulate trade within three years of joining the WTO, was achieved ahead of schedule, with the July 2004 entry into force of amendments to the External Trade Law. However, key products anticipated to have a major effect on the national economy, such as some agricultural produce and mineral products, have been excluded from this legislation and the government still regulates them strictly as national trade products by means of import licenses and a system of designated management.
Take the example of exports of coal, which is one state trade product. Only four companies – China Coal Energy Sources Group, Shenhua Group, Shanxi Coking Coal Group and China Minmetals Corporation – have been granted export rights as export contact points, with other companies not permitted to enter this field. Moreover, annual export quantities are announced by the State Development Improvement Committee and, based on past results and other matters, the export allocation is distributed among the four companies with export rights. Incidentally, the export allocation for 2005 is 80 million tons. Hitherto, Chinese exports of coal have made use of its advantages with regard to resources and the country was heading towards an expansion in coal exports, with the aim of obtaining foreign currency. However, due to the serious energy shortages that have occurred as a result of economic growth over the last few years, exports are likely to be curbed in the governmentfs policies.
Although the liberalization of trade has progressed due to China’s accession to the WTO, there are still areas in which the government is heavily involved in economic activities in this way, so many problems that cannot be resolved in the dimension of trading between companies on a purely commercial basis have emerged. The special characteristics of China, in which the government has controlled the economy, remain strongly rooted. These characteristics are not limited to the coal trade, but have also come to be seen in the recent revaluation of the yuan. There must be an awareness that Chinese business entails some difficulty, as it must be conducted on the basis of such facts.
Because of such special characteristics, specialist Chinese industrial groups supported in some way by the Chinese government have, until now, been the point of contact for economic exchange and various economic activities in China. However, market-oriented economic reforms have recently been progressing within China and the country has entered an era in which companies can expand their business via their own routes, so the role of such groups is gradually diminishing and changes are emerging in corporate needs.
If we look at the trends of the times, we can see that we are on the verge of an age in which specialized Chinese industrial groups themselves will be unable to survive if they do not change. They must keep their antennae alert to constantly changing trends in Japan and China and grasp relevant information, such as what the worlds of business and industry and relevant industrial circles are hoping for or seeking, and what sort of approach China should adopt in order to resolve these problems. Moreover, they must themselves decide on the action that they will take and implement it. It cannot be denied that if business expansion is conducted solely on the basis of the special characteristics that existed hitherto, the value of their existence will fade.
However, as I initially mentioned, the fact is that China’s special characteristics still exist. With the progressive globalization of the economy and the development of the ubiquitous society, China is keeping a close eye on worldwide trends and is actively trying to change from a strategic perspective. However, it is not the case that China’s special characteristics will change overnight, just because the economy has been liberalized. The Chinese ways of thinking and methods that have been cultivated over thousands of years of history will not change over a short period of time. Furthermore, it is “China experts”, who have experienced China in practice though direct contact with Chinese people, and have firsthand knowledge of China through their work or everyday life, who have the best understanding of China’s special characteristics.
Recently, there seems to have been a tendency to think that one has understood China, just on the basis of superficial data or information, but China is not a country that can be understood that easily, and one cannot believe that the techniques that have hitherto been used for analyzing the West can be applied as they are to China. Popular new research fields, such as international relations and area studies, are academic fields that have inevitably emerged in Western countries, in an attempt to conduct research from an interdisciplinary academic perspective into problems with regard to which it is difficult to arrive at an answer using conventional methodologies. However, this phenomenon can also be taken as a warning about data-focused scientific analysis techniques.
The difficulty of Sinology is that it cannot be understood using data-focused concepts. Rather than looking at Chin’s economy, politics and society from the perspective of separate fields, it is precisely when they are perceived from an integrated perspective that a small part of China’s true nature becomes visible. This is a research methodology that can be cultivated by means of practical experiences, as well as fundamental knowledge and data analysis. I hope that techniques in Sinology will aid in eliciting a methodology for area studies, which is still not clearly visible at present.