Three decades have passed since China dramatically opened up to the global market and began to catch up rapidly with leading economies. In this paper we discuss the effects of China's opening-up and rapid growth on the welfare of both China and the rest of the world (ROW). We find that the opening-up per se is welfare improving for China but has had little impact on the ROW given a balanced trade constraint. The opening-up of China is beneficial to the ROW if it leads to significant productivity growth in China. Also, China's balanced trade policy after the opening-up has helped the ROW rather than China.
Keywords: Productivity; Terms of Trade; Growth; Open Economy
Views expressed in the paper are those of the authors and do not necessarily reflect those of the Bank of Japan or Institute for Monetary and Economic Studies.