Sustainable China Trade: A Conceptual Framework

By Aaron Cosbey on June 25, 2010
Over the last 20 years, Chinese policy makers have been burdened with the proverbial curse: to live in interesting times. As described in the Chinese overview paper that is part of this series, unprecedented growth in trade and investment has been responsible for historic gains in income and infrastructure for hundreds of millions of people. However, as that paper also makes clear, China faces monumental challenges in maintaining its course and in successfully managing its powerful economic growth to deliver prosperity and security in the long run. From a trade policy perspective, the key question is how trade can best contribute to China's sustainable development.

To answer this question, we need a guiding framework that can help us assess trade's current impacts and assess the policy options that might be considered. This paper sets out one such framework. It begins by defining what we mean by sustainable development in general. It then uses that definition to make the case for change in China's trade policy, briefly surveying the relevant domestic and international trends and drivers and arguing that many of them seem to be taking us in the wrong direction, or at least not moving us quickly enough in the right direction.

The paper then sets up a framework that defines sustainable development in the specific context of China's trade policy, drawing on the definition of sustainable development and the characteristics of China's trade-related economic development. For each element of the framework, it briefly surveys the current conditions in China, noting how progress might be made. More in-depth analysis of this type, though, is beyond the scope of this paper and can be found in the other papers completed as part of this project.

Finally, the paper considers the nature of the types of change that might be suggested in the other analytical papers. Three basic strategies for China are described in an effort to help frame the recommendations that come out of the in-depth work and to help policy makers consider how best to guide China toward sustainable development through its trade policy. In closing, the paper puts forward a research agenda that flows from the analytical framework, identifying several lines of inquiry that will help clarify what constitutes good policy for China in pursuing a sustainable trade strategy.

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SECO, 2010