ABSTRACT
This chapter reviews developments in China's integration with the world economy, explores China's role in the development of trade and investment links in the Pacific Rim region, and focuses on its future development. The rapid expansion of China's external sector has benefited from the industrial restructuring of major East Asian economies. China's continued growth and opening up have in turn contributed to the economic dynamism of the Pacific Rim region. The Chinese currency was greatly overvalued at the inception of China's trade reforms—a result of low domestic prices of consumer goods because of state subsidies. China's coastal development strategy was designed to develop an outward-oriented economy in its coastal region by using foreign manufacturing investment. China's success at attracting foreign direct investment owes much to its coastal development strategy. Since the mid-1980s China has aggressively pursued an outward-oriented development strategy and has gradually reformed its foreign trade and exchange regimes.
