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7 - China’s Journey in Embracing Economic Openness

Four Perspectives

Published online by Cambridge University Press:  30 October 2025

Hanming Fang
Affiliation:
University of Pennsylvania
Marshall W. Meyer
Affiliation:
Wharton School, University of Pennsylvania
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Summary

This chapter examines China’s transformation from economic isolation to deep global integration. The authors identify three distinct phases in China’s trade openness: a corrective phase (1980–1992) that raised openness from below-norm levels; an expansion phase (1992–2006) where trade openness and a growing trade surplus exceeded international norms; and a normalization phase (2006–2021) with a gradual reduction toward a typical openness level. The analysis extends beyond traditional measures by evaluating export sophistication – revealing a significant post-2006 surge in the technological complexity of China’s export bundle – and by proposing a broader openness index that integrates FDI-related value-added activities. The chapter also discusses structural factors behind persistent trade imbalances, including financial system imperfections and competitive savings motives, and contextualizes these trends within the framework of China’s “dual circulation” strategy. Overall, the study provides insights into the evolving quality and quantity of China’s economic openness and its implications for future global integration amid rising geopolitical tensions and domestic policy shifts.

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References

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