China's Engagement in Multilateral Institutions: Understanding the Trade Creation Impact of the ASEAN-China Free Trade Area
Abstract
Over the past two decades, the rise of China has caused profound changes in the traditional
underpinnings of international relations in Asia. China’s speedy economic development
and military modernization led to heightened competition and conflicts with fellow
East Asian countries in the late 1980s and early 1990s that caused many scholars and
policy experts to become concerned with the nature of its rise to power. These concerns
evolved into the great “engagement” versus “containment” debate in the 1990s regarding
whether to engage or isolate the fledgling power during its ascension. Whether the
international community is able to find a proper incentive that leads to the incorporation
of China in the regional and international multilateral framework seemed to be the
central question of the debate.
Since the early 2000s, however, the Chinese government has implemented a series of
liberal policy reforms regarding international relations which significantly improved
its diplomatic relations with its neighbors and reassured the rest of the world of
the benign nature of its rise to power. In particular, China’s increasing engagement
in regional multilateral institutions surprised many western policy makers who have
traditionally considered China’s hostile and suspicious attitude toward such institutions
one of the major destabilizing factors in its rise to power.
One prominent example of China’s increasing influence in regional multilateral institutions
is its role behind the creation and implementation of the ASEAN-China Free Trade Area
(ACFTA). Conceived in 2002, ACFTA seeks to promote regional economic cooperation through
the gradual removal of trade barriers and unification of rules and economic practices
in East Asia. With the 2010 deadline for the FTA’s implementation process fast approaching,
the paper seeks determine the economic value of ACFTA through the application of the
gravity model of trade. In particular, it hopes to answer the question whether ACFTA
functions as an effective instrument promoting regional trade or merely serves to
reinforce preexisting economic norms. Through the finding, the paper also hopes to
offer some insights onto the question of whether China’s newfound enthusiasm in partaking
in regional economic cooperation is paralleled by actual effective economic reforms.
The empirical results from the gravity model are inconclusive on the trade creation
aspect of ACFTA. However, analysis of other empirical data, including a closer inspection
of specific ACFTA policies, do suggest that the FTA accomplished more than simply
reinforcing preexisting economic norms. Moreover, the study of China’s leadership
role behind the creation of ACFTA serve to reflect the new sophistication and confidence
behind Beijing’s foreign policy and its altered attitude toward multilateral institutions.
At the same time, it is important to note that China’s avid engagement in regional
multilateral institutions and willingness to compromise in certain negotiations do
not imply a full acceptance of regional cooperation and integration. There remains
a great amount of uncertainty around the question of whether the recent patterns of
economic cooperation are indicative of a permanent shift in the basic preferences
of the Chinese government that can have long-term impact.
Type
Honors thesisDepartment
Public Policy StudiesPermalink
https://hdl.handle.net/10161/2249Citation
Yuan, Langtian (2010). China's Engagement in Multilateral Institutions: Understanding the Trade Creation
Impact of the ASEAN-China Free Trade Area. Honors thesis, Duke University. Retrieved from https://hdl.handle.net/10161/2249.Collections
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