China's Foreign Economic Relations

Abstract

China's foreign economic relations dipped sharply after Tiananmen. International agencies and governments suspended loan negotiations while foreign investors lessened new commitments. Tourism plunged. The net effect cut foreign exchange earnings. But retrenchment measures to cool the overheated economy reduced imports, as did the lessened availability of credit, while exports increased. The balance of trade markedly improved. By mid-1990 foreign economic sanctions had been eased or lifted altogether. Various measures favored special economic zones and coastal enclaves for foreign investment, especially from Taiwan and Japan. Conservative attacks on policy, the recentralization of foreign exchange control, and stagnation in economic reform cause concern abroad, however. The differential development of interior versus coastal areas affects marketing and competitiveness. A likely succession struggle and the possible emergence of popular unrest continue to cloud foreign views.