In September 2008, China filed a claim to the Dispute Settlement Body of the World Trade Organization (WTO), requesting consultations on four of the six products on which the United States had imposed definitive anti-dumping and countervailing duties. Why did Beijing complain about the treatment of its exports in steel pipes, tires and plastic woven sacks, but not magnets and sodium nitrate? Similarly, in bilateral negotiations with the US during its entry into the WTO, China secured far more favorable tariff schedules for some products than others, sometimes even within the same industry. Why did China offer more protection for certain industries and sectors but not others?

This project addresses these questions by focusing on the domestic politics of China's foreign economic policies in the reform era. The overarching question is: given the weakness of formal institutions and the lack of electoral accountability in authoritarian states such as China, how do societal interests and preferences affect trade policy outcomes? A general framework of interest group politics is developed in which the political survival of authoritarian leaders depends on maintaining a winning coalition from a "selectorate" (a set of people with a say in the selection of leaders and a prospect of belonging to leaders' winning coalition) that is composed of members whose interests diverge and compete against each other due to the distributional effects of trade policies. The extent to which societal interests can successfully influence policy outcomes thus depends on their access to and interaction with these members of the selectorate.

This theory is examined using a multi-method approach combining case studies and quantitative analysis. The project examines firm and industry influence on import tariff, nontariff barriers and outcome of antidumping cases in China. In prior field work, the researcher uncovered various channels and mechanisms through which Chinese domestic groups lobby for their preferred policy and identified a number of factors associated with the effectiveness of their lobbying efforts. In particular, such factors as state ownership and ties to the local economy increased the strength of societal demands for protection and hence the likelihood and degree of trade policy concessions granted by the government. The current project involves collecting and using original data on over 450 Chinese industries from 1999 to 2009 and on antidumping cases initiated by China from 1997-2008.

This project makes several contributions to scientific understanding. With few exceptions, extant studies of China's foreign economic policies are generally divorced from broader theories of economic policies derived from open and democratic societies. That gap reflects a relative lack of understanding of authoritarian regimes more generally. This research helps fill the gap by proposing a theoretical framework that links the study of authoritarian trade policy- making to more general theories in scholarly work in international political economy and comparative politics. Second, extant scholarship on China's foreign economic policies does not employ the mixed methods approach used here. This project also fills that gap at the same time that it creates a dataset with improved measures and data at a much lower level of disaggregation. The richness of the data will allow other scholars to engage in novel studies of China's political economy and state-society relations.

This project also has broader implications. On the one hand, as the US and other major trading partners of China find it increasingly common to face both resistance and support from domestic-level actors in their economic relations with Beijing, it becomes ever more important to comprehend the processes by which these different Chinese actors influence policy making. On the other hand, the pluralization of China's foreign policy making may well extend beyond trade issues. Thus this project can shed light on how China might engage in bilateral and multilateral relations on issues in security, energy and environment.

Project Report

This project examines the domestic politics of China’s trade policies in the post-reform era. It makes two contributions to the existing scholarship on the political economy of trade protection in China by (1) proposing a theory of endogenous protection under authoritarianism which provides the micro-foundations of how interest groups lobby and influence trade policy outcomes in an authoritarian regime, and (2) creating a number of new datasets to empirically evaluate the observable implications of the theory. Empirically, this project tests the effect of an industry’s access to policymakers (i.e. effectiveness at lobbying) on the level of protection that industry receives and finds that the percentage of state ownership and the geographical distribution of firms, two measures of access to trade policymakers, are significant predictors of industry-level protection in China. In addition, the domestic sources of protection change as institutional arrangements change: the 1998 administrative reform significantly reduced the influence of the state firms on China’s negotiated tariffs in the WTO, while geographical distribution did not become important until after the party delegated its trade policy decision-making power to an increased number of bureaucractic agencies at both the cental and local leve upon joining the WTO. Findings of this project suggest that domestic groups in nondemocratic regimes have a greater impact on trade policies than is often recognized by conventional wisdom. In addition to enriching our understanding of trade policy making in authoritarian states, this project also has important policy implications. First, as China’s role in the global trading system continues to expand, understanding the incentives facing domestic-level actors and the processes by which these actors influence trade policy making in China can better inform policymakers of China’s trading partners in their economic relations with Beijing. Moreover, the pluralization of China's trade policy making process may well extend to other areas. Thus this project can shed light on the role of domestic actors on China’s foreign policies in other areas such as energy security, human rights and environmental protection.

Agency
National Science Foundation (NSF)
Institute
Division of Social and Economic Sciences (SES)
Type
Standard Grant (Standard)
Application #
1122647
Program Officer
Brian D. Humes
Project Start
Project End
Budget Start
2011-08-01
Budget End
2012-07-31
Support Year
Fiscal Year
2011
Total Cost
$12,000
Indirect Cost
Name
Stanford University
Department
Type
DUNS #
City
Palo Alto
State
CA
Country
United States
Zip Code
94304