AMERICAN SCHOLAR Nicholas Lardy takes a reassuring and often contrarian view of the impact of China's entry into the World Trade Organisation in a new study produced for the Brookings Institution in Washington.
'China already is more integrated into the world economy than is commonly understood,' he writes in Integrating China into the Global Economy, one of the most detailed investigations so far available.
Lardy, whose 1998 work China's Unfinished Economic Revolution raised a red flag over the mainland's dangerously unreformed banking system, argues that doomsayers are wrong. They have misunderstood the present and the future perils.
'The large role of transnational companies in generating exports reflects China's deep rather than shallow integration into the world economy,' he writes. WTO does not spell either domestic or international problems, or at least not bigger social or economic crises than already have emerged along the road to reform.
Earlier projections of the cost of WTO membership said eight million wheat farmers would lose their jobs along with many other workers in sectors such as rapeseed oil, natural rubber, plastics and rolled steel. 'These almost certainly overstate the challenges because the projections, based on conditions in the mid-1990s, fail to take account of the huge economic restructuring before WTO entry,' he writes.
Lardy believes those who fear China will be swamped by imports have ignored the aggressive restructuring of many industries, such as textiles, that already has taken place. And they should see that a large convergence of Chinese domestic prices and those on international markets already has taken place.