Shen & Mantzopoulos: China's “Going Out" Policy | Inception, Evolution, Implication

ABSTRACT:

China began its systemic transformation in 1979. In the external sector, the two primary engines that have helped propel China’s economy on to the world’s stage are foreign investment and foreign trade. Mao Zedong’s “close-door” policy (1949-1977) gave way to Deng Xiaoping’s controlled “open-door” policy in 1979. Controlled open-door policy invited capital and technology inflows while actively promoting export. Growing capital inflows since the early 1980s have helped transform China’s export industries. Liberalizing foreign investment and foreign trade has enabled China’s economy to grow at a rate that is historically unprecedented. By 2010, China replaced Japan as the world’s second largest economy. China’s foreign trade sector kept scoring mountain surpluses. Its foreign reserve correspondingly kept soaring. Instead of being focused primarily on inducing capital inflows, China also began looking outward for overseas foreign direct investment opportunities by the turn of the century. Its “going-out” policy was premised on four principle considerations: resource seeking, asset seeking, market seeking, and political gains. China’s systemic transformation that began three decades ago has radically transformed the “sleeping giant” into a world economic power. Its “going out” policy initiated a decade ago will likely impact world economic and political relations as well for the foreseeable decades to come.

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