CAMBRIDGE, England -- China is on a steep learning curve. There is a tendency to forget that only 20 years ago, China had none of the institutions of a market economy -- nor the trained personnel to operate them.
Nowhere is this more true than in the arena of international trade. Prior to the reform program initiated in 1978 by Deng Xiaoping, all of China's trade was carried out by state trading companies acting on behalf of state-owned enterprises. Prices charged for exports were whatever it took to sell as much as was expected under the state plan. No one knew much about the General Agreement on Tariffs and Trade, the predecessor to the World Trade Organization, which embodied the rules governing trade among most of the world's nations.
When China opened up its economy and decided to apply for GATT membership, it needed to rebuild the market-based institutions for conducting trade and to train people to manage it. China took advantage of the training program offered by the GATT secretariat and sent many students abroad to take courses in international economics. What they studied was not just the rules of GATT, but also the way in which they were interpreted to suit members' interests.