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progressively sought to play, and to be accepted as playing, a role in the international economy and its institutions. UK policy is to encourage China's "open door" policy and the domestic changes which have accompanied it. Chinese membership of the GATT would be part of this process.
4.
Such considerations are not, however, decisive. For China's commitment to the GATT cannot imply the same acceptance of liberal trading disciplines as does the GATT membership of a capitalist economy. For the foreseeable future, China will remain a state-trading country, and this has commercial as well as political implications. Chinese imports will not depend on the choice of her own citizens, subject only to formal tariff barriers to which the GATT rules apply. They will, in or out of GATT,
be
decided by the Chinese Government. This means that for China to
undertake GATT obligations is of no value to other GATT members. Yet for them to undertake such obligations towards China means a lot. While the principle of State Trading Countries joing the GATT has been accepted in the cases of Poland, Hungary, Romania and Czechoslovakia, China's case is very different.
Trends in Chinese Trading Performance
5.
In some fields China is already beginning to realise her economic potential. China is a huge economy, whose exports are growing rapidly in sensitive sectors. The presence in GATT of very small State Trading economies (Czechoslovakia, Poland, Hungary and Romania) has in practice not been very disruptive. China is different: her exports have grown at twice the world average rate since 1976, and compete with UK manufacturers in the UK market in more than one sector, most notably textiles and clothing, even though Japan and the US at present take over 60% of China's imports against the UK's 2%. Recent independent studies suggest that, as South Korea and Taiwan follow Japan up-
market, China will take over as the next low-cost Asian NIC. (See Annex for more detailed analysis). This makes it particularly important to assess any possible change in the framework of
Chinese trade with the UK.
Consequences of GATT Membership for UK China Trade:
6.
The following paragraphs describe the present rules applying
The rules are less far-reaching than
to UK trade with China.
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