China's Export Strategy: What Can We Learn From It?
(Finance and Development, June 1995) The paper reviews the export strategy of China and suggests that the country for which the Chinese experience is most relevant is India. Both are highly populous and, by developing-country standards, large economies. They began their development process approximately at the same time and stressed self-reliance. Both relied increasingly heavily on import substitution policies and ended up with a highly capital intensive production structure. China changed course in 1979 while India continued (with modest liberalization) on the old course. In 1991, in many ways, India stood where China stood in 1979. The trade-to-GDP ratio was the same as China's in 1979. Import and investment controls were rampant and the domestic currency was overvalued.