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What Should Be China’s Strategic Position in the Establishment of New International Economic Order? With Comments on Neoliberalistic Economic Order, Constitutional Order of the WTO, and Economic Nationalism’s Disturbance of Globalization

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Abstract

The establishment of the New International Economic Order is the common goal and program of action of billions of people who are striving for equal international economic status, while the core of the theories of “neoliberalistic economic order” or “Constitutional Order of the WTO” originated from and advocated by the Western power countries has been, to some extent, a kind of mental opium. As for the “Economic Nationalism’s Disorder (Disturbance) of Globalization,” its conspiracy to obstruct the weak states from establishing the NIEO makes it a kind of mental shackles. It would be better for disadvantaged groups of the whole world to make comprehensive and in-depth analysis of these theories, instead of taking them over uncritically. The fact that China is one member within the disadvantaged groups as well as one of biggest developing countries in the world makes China duty bound to play an active part in promoting the establishing the NIEO. In the course of establishing the NIEO, China should be an active promoter who takes a clear-cut stand and a reformer of the existing international economic order but not just an ameliorator of the existing order or an intermediary of the South–North Contradiction. In a word, China should carry forward the traditional and unique Chinese patriotism and become one of the driving forces and mainstays of establishing the NIEO in joint effort with the South–South Coalition, such as the BRICSM.

This article was first published in the Journal of Word Investment & Trade, Vol.10, No.3, June 2009. Parts of the materials in this article were collected by doctoral candidates Zhang Zezhong, Yang Xiaoqiang, and Ji Ye. We would like to express our gratitude to all of them.

An CHEN (1929~), Professor of the International Economic Law Institute of Xiamen University. Supervisor for Doctoral Candidates. Chairman of the Chinese Society of International Economic Law. The author can be contacted at chenan@xmu.edu.cn.

Dong Chen (1971~), Co-author of this Article, is now Associate Professor & Dean Assistant, School of Law, Sun Yat-sen University; Ph.D. in International Economic Law, Xiamen University.

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Notes

  1. 1.

    NIEO is abbreviated from “New International Economic Order.” And OIEO is for “Old International Economic Order.”

  2. 2.

    See for details, An CHEN, ‘On the Historical Development of the International Economic Relations and the South–north Contradiction’, ‘On the Emergence and Development of International Economic Law’, compiled in An CHEN [1].

  3. 3.

    See for details, An CHEN [2]; See also, An CHEN [3].

  4. 4.

    See Alastair Iain Johnson [4].

  5. 5.

    See G. J. Ikenberry [5].

  6. 6.

    See An CHEN, ‘On the Time-honoured Chinese Foreign Economic Exchanges and Jurisprudential Principles Therein’, in An CHEN [7].

  7. 7.

    See Confucius, The Analects, Yan Yuan, No. 12. (Zi Xia said).

  8. 8.

    See Confucius, The Analects, Zi Lu, No. 13. Confucius said, “The gentlemen are different but in harmony with each other, while the inferior men are the same but not in harmony with each other.” “和而不同” is one of the good virtues advocated by the Confucianists. “和” means harmony, while “同” means to agree without giving a serious thought. And “和而不同” means to live in harmony with each other, but do not agree with others without giving a serious thought. See The Contemporary Chinese Dictionary of Idioms, Commercial Press, 2004, p. 418.

  9. 9.

    See An CHEN [8]. “BRICSM” ended with “sm” also spells a new current of thought, new doctrine, assertion, and a new strategy of South–South Self-reliance.

  10. 10.

    China has always demonstrated the spirit of “fighting on the just ground, to its benefit and with some abstention” in handling foreign issues, such as the Hainan Island Incident, NATO’s “mistaken” bombing of the Chinese Embassy in Belgrade, war in Iraq, Iran nuclear crisis, Korean nuclear crisis, China–Japan Dispute over East China Sea, territorial disputes over South China Sea Islands and accompanied natural resources, etc. It is worthy of summing up experiences in dealing with such issues.

  11. 11.

    It is widely known that Deng Xiaoping had been the “general designer” of China’s Socialist Regime (“Socialist Market Economy” included) with Chinese Characteristics as well as the basic national policy of opening up to the outside world. He enjoys high prestige from all over the world, especially from China herself. Chinese people have long since been accustomed to regarding Deng’s systematic theory and policy suggestions as a chief standard of judging politically right or wrong. In Chinese academic circle, scholars always attach due importance to following and not to deviating Deng’s theory, just as American scholars do with the constitutional thought of Thomas Jefferson.

  12. 12.

    Deng Xiaoping’s 28-word (numbered in Chinese characters) Foreign Policy goes as follows: “Observe calmly; Secure our position; Cope with affairs cool-headedly; Be good at maintaining a low profile; Never claim leadership of the world; Act but stay low profile while biding our time.” (“冷静观察,稳住阵脚,沉着应付,善于守拙,决不当头,韬光养晦,有所作为。”) As a matter of fact, the content of the policy is a summary of talks of Deng in various circumstances. See Selections from Deng Xiaoping, Vol. 3, The People’s Press, 1993, p. 321, p. 326 and p. 363. See also, Li Qizhen [9]; Chen Xiangyang [10]; Xu Shaoming [11]. Commentary notes specifically concerned with Deng’s theory in the US report on the military power of the People’s Republic of China (Office of the Secretary of Defense, 2002) are as such: One of Deng Xiaoping’s key directives to China’s security and development establishment was the so-called 24-character strategy: “keep cool-headed to observe, be composed to make reactions, stand firmly, hide our capabilities and bide our time, never try to take the lead, and be able to accomplish something.” This often-quoted maxim not only suggests a desire to downplay China’s ambitions; it also affirms a long-term strategy to build up China’s GNP with a view to maximizing China’s options in the future. From Beijing’s perspective, strategic ambiguity, including strategic denial and deception, is a mechanism to influence the policies of foreign governments and the options of the general public and elites in other countries. See Xu Shaoming, supra, note 17 and accompanying texts.

  13. 13.

    See Selections from Deng Xiaoping, Vol. 3, The People’s Press, 1993, p. 363.

  14. 14.

    See Deng Xiaoping [12].

  15. 15.

    See Selections from Deng Xiaoping, Vol. 3, The People’s Press, 1993, p. 363.

  16. 16.

    See Deng Xiaoping [13].

  17. 17.

    See An CHEN [8].

  18. 18.

    See ‘Hu Jintao’s Report at the 17th National Congress of Chinese Communist Party’, at http://news.xinhuanet.com/politics/2007-10/24/content_6939223_2.htm; See also, ‘Hu Jintao emphasized on the importance of further implementing the Scientific Outlook on Development’, at http://cpc.people.com.cn/GB/104019/104098/6378312.html

  19. 19.

    See ‘Hu Jintao’s Remarks in the Meeting of Leaders of Five Developing Countries’ at http://news.xinhuanet.com/newscenter/2008-07/08/content_8512384.htm. All the emphasis on quoted words of this article were added by the authors.

  20. 20.

    During the South–North Negotiation in June and July 2008, Director-General of the WTO Lamy held a mini meeting attended by representatives of seven members (including the United States, European Union, Canada, Japan, India, Brazil, and China) to negotiate in advance relevant important and hot topics. The mini meeting is called “the G7 meeting of the Doha Round.” This form of meeting has brought about heated debate around the globe. Lamy gave his opinions on Doha Negotiations when interviewed by Financial Express in New Delhi, India. One piece of dialogue is worthy of note. Reporter: The G7 meeting is widely criticized as lack of transparency and inclusiveness. Will this form of meeting continue? Lamy: We need consensus. And the consensus of G7 is where to start. G7 account for 80 % of global trade volume and has represented other developed and developing countries. If there is a consensus reached among them, then it will be easier for the ministers from 30 members to agree and finally reach a consensus of all 153 WTO members. We have no choice other than this one. There were only four core members 15 years ago, including the United States, EU, Canada and Japan. Now there are three more, i.e., India, Brazil and China. The world has changed a lot, and this is nothing mysterious. See ‘Lamy interviewed on Doha Round in New Delhi’, News Flash of WTO, Shanghai WTO Affairs Consultation Center, No. 160, p. 11.

  21. 21.

    See ‘Hu Jintao’s Remarks in the Summit on Financial Markets and the World Economy: Unity in Adversity’, at http://news.xinhuanet.com/newscenter/2008-11/16/content_10364070.htm

  22. 22.

    See ‘The Japanese Media Has Given a Relatively Objective and Positive Comment on the Financial Summit’, at http://news.xinhuanet.com/world/2008-11/17/content_10371913.htm

  23. 23.

    See ‘Wen Jiabao’s Five Opinions on the Establishment of New World Economic Order’, at http://news.enorth.com.cn/system/2009/01/29/003878737.shtml, visited on Feb. 4, 2009.

  24. 24.

    See ‘Many Countries Support G20 Taking Over G-8’,Yomiuri Shimbun (Japan), Feb. 2, 2009. Quoted from Reference News (China), first page, Feb. 3, 2009, at http://blog.oemlife.com/user1/cs520china/archives/2009/73082.html#. As one of the mainstays of South–South Cooperation, China should keep cool and make an “all coins have two sides” analysis on these foreign media reports. The expanded international standing and influence resulting from enhanced comprehensive national strength of China would not be neglected; but the other side of the coin is that China nevertheless is still among the weak-states group and is still facing a long road to shake off weakness and poverty for the past 200 years. China’s should-be strategic positioning in contemporary international community could thus be based. See Song Guoyou [14].

  25. 25.

    See Hu Jintao [15].

  26. 26.

    See Zhou Xiaochuan [16]. He stressed that it is necessary to introduce a new currency which abandons its peg to sovereign countries, a new currency which is able to keep stability and to play the role of international reserve. In doing so, intrinsic flaws brought about by treating the sovereign currency as the reserve currency could thus be avoided. It is the ideal goal of reforming the international monetary system, which has received support from many governments as well as experts in international finance. They believe that it could serve as a kind of great healer which could cure as well as prevent the serious illness originated from the US dollars’ long-time dominant and privileged status.

  27. 27.

    See ‘China’s Performance Attracts Attention, U.S. Media Suggests Meeting of G20 Be Held in Beijing’, available at http://news.xinhuanet.com/world/2009-03/30/content_11099256.htm, visited on 30 March 2009; ‘G20: Stimulation for the Birth of the New International Order’, http://news.xinhuanet.com/world/2009-04/04/content_11129541.htm, visited on 4 April 2009; ‘Foreign News Media: London Summit Yield More than Expected, China Is the Star’, http://news.xinhuanet.com/world/2009-04/04/content_11130624.htm, visited on 4 April 2009.

  28. 28.

    See ‘G20: Stimulation for the Birth of the New International Order’, http://news.xinhuanet.com/world/2009-04/04/content_11129541.htm, visited on 4 April 2009.

  29. 29.

    See ‘China’s Influence Is under the Spotlight, U.S. Media suggests meeting of G20 Be Held in Beijing’, available at http://news.xinhuanet.com/world/2009-03/30/content_11099256.htm, visited on 30 March 2009.

  30. 30.

    See Yves Thréard, ‘Washington, Pékin et les autres’, Le Figaro April 13, 2009, quoted from ‘Chinamerica’ Has Become World’s Economic Center’, Reference News (China), p. 8, April 13, 2009.

  31. 31.

    See ‘Foreign News Media: London Summit Yield More than Expected, China Is the Star’, at http://news.xinhuanet.com/world/2009-04/04/content_11130624.htm, visited on 4 April 2009.

  32. 32.

    See ‘London Summit Has Opened a New Chapter of the New World Economic Order’, Lianhe Zaobao, at http://news.xinhuanet.com/world/2009-04/03/content_11125270.htm, visited on 3 April 2009.

  33. 33.

    See ‘China Has Displayed Due Influence on World Affairs in Accordance with its National Power’, at http://news.xinhuanet.com/newscenter/2009-04/03/content_11127105.htm, visited on 3 April 2009.

  34. 34.

    See ‘China Has Become a de facto Leader of the Developing Countries’, Reference News (China), p. 8, April 7, 2009.

  35. 35.

    Actually it is a pun in Chinese. Literally, “英雄救美” means “Hero saves beauty,” referring to romantic stories. “美” generally means beauty or beautiful in Chinese; here it implies China saves the developed countries such as the United States. In Chinese, character “美”and the first character for United States are written in the same way and share the same pronunciation.

  36. 36.

    See ‘China Should Be Aware of Being Intoxicated by Flattering and Compliment’, Reference News (China), p. 8, April 8, 2009.

  37. 37.

    See An CHEN [17], respectively, VI and XIV, Part I, Vol. 1.

  38. 38.

    Comprehensive media reports: The G20 Summit has started the reform of international finance, and it is also a turning point for the establishment of the NIEO. AP reports that in the Summit, countries have vowed to impose enhanced supervision on the world market and carry out the reform of financial institutions established in the 1940s which have already been out of pace with the time, such as the IMF. The equilibrium of countries’ strength has changed. Some important emerging economies are asking for the right to speak in a louder voice in international affairs. British Prime Minister Brown expressed after the summit, “We are heading to the new Bretton System.” “Obviously, we are trying to establish a new regime for the future.” He also pointed out that the IMF and World Bank are all in need of a radical reform, since “the system established in 1945 is not necessarily the cure for problems of the global economy, global competition and global capital flow in 2008.” AFP believes that “China, Brazil, India and Indonesia have not only won important seats in round tables which used to reserve its seats only for a few industrialized countries, but also succeeded in forcing the developed countries to compromise in handling the financial crisis.” It quoted words of Brazilian President Lula, who said after the meeting, “I’m leaving Washington D.C. in delight, since because there is a new structure of the global geopolitics.” “It is unreasonable to make any decisions of economy or politics without participation of members of the G20. The global financial crisis must be handled in joint effort with the developing countries.” Indonesian President Susilo said, “I hope that the G20 Summit is the first step towards the reform of international finance, which aims to make it a reflection of the 21st century’s reality.” US abdicated President Bush said, “Obviously, it is necessary to have all the members of G20, not only members from G-8 or G-13, attend the Summit,” Yonhap News Agency reports that South Korean Prime Minister Han Seung-soo believes that “This meeting is of great historical importance. It is extremely rare for the emerging economies to take part in the discussion of world issues which has always been monopolized by the developed countries for a hundred years. ‘From now on, these world issues should be discussed by developed countries together with emerging economies.” AFP further reported that under the great pressure of the developing countries, which are demanding the reform of existing international financial system, the IMF President Dominik had to welcome the final results of the G20 Summit, “Participants in this Summit have made it significant. A NIEO which is unprecedentedly energetic and inclusive is forming.”

    The Kyoto News Agency is also keeping its eyes on the performance of China on the stage of International diplomacy. It reports that in this Summit, “Chinese leader Chairman Hu, as the representative of the emerging market economies, has delivered a speech with confidence.” It also emphasizes that “from now on, the world has stepped from the era of G-7 to the era of G20. The summit put the financial crisis on top of its agenda, and it is also a turning point of China’s official participation in international rule-making.” “China took preemptive actions by holding a meeting of ministers of finance from China, Brazil, India and Russia, making sure that these four nations take concerted actions in the Summit.” See for details, ‘G20: the Prologue to the Reform of International Finance’, ‘China Succeeded in Avoiding the Reoccurrence of Plaza Accord’, Reference News (China), p. 1, November 16, 2008; p. 16, November 19, 2008. Or visit the website at http://ckxx.org.cn/ckxx/ckxx20081117/ and http://world.people.com.cn/GB/57507/8358770.html

  39. 39.

    Some Chinese scholars believe that “stay low profile while biding one’s time” does not mean acting passively or no action at all. In order to have an accurate understanding of the strategies of “act but stay low profile while biding one’s time,” it is necessary to put emphasis on the following ideas: First, we must not separate the former from the latter. Instead, we should see these two as an integral unity indispensible with each other. The latter is a useful supplement to the former. To put it in another way, “take action and achieve something” is the ultimate goal of “stay low profile while biding one’s time.”

    Second, “stay low profile while biding one’s time” is not only a means but also a relatively independent, integral, and self-contained thought of foreign strategy. It should make corresponding adjustment to itself in pace with the changes of situation, environment, and conditions. It has in itself the annotation of being active, being unyielding and tenacious, and not being passive or doing nothing at all.

    Third, “stay low profile while biding one’s time” in no way means conspiracy or intrigue against each other. Instead, it stands for self-discipline, self-control, and conducting oneself honorably. US report on Military Power of China 2002 is stubborn in describing this policy as “international strategic deceiving.” This report is a deliberate distortion of facts. China’s policy is to make allowance for unfavorable occurrences, to know when and where to stop on one hand, and to stand up for justice and legitimate right and interest on the other. See Chen Xiangyang [18]. Chen Xiangyang is vice director of the research center on strategy, Chinese Institute of Contemporary International Relations.

  40. 40.

    The term Washington Consensus was coined by John Williamson in 1989. In 1989 a conference was convened by the Institute of International Economics in order to examine the actual effects of economic policies of Latin America, which were regarded by OECD as appropriate. John Williamson, former head of the institute, listed in background paper ten policy instruments to which Washington can muster a reasonable degree of consensus and which would be needed by Latin America. He named it as the “Washington Consensus”: (1) Fiscal discipline. This was in the context of a region where almost all countries had run large deficits that led to balance of payments crises and high inflation that hit mainly the poor because the rich could park their money abroad. (2) Reordering Public Expenditure Priorities. This suggested switching expenditure in a pro-growth and pro-poor way, from things like non-merit subsidies to basic health and education and infrastructure. (3) Tax Reform. The aim was a tax system that would combine a broad tax base with moderate marginal tax rates. (4) Liberalizing Interest Rates. This must be accompanied by prudent supervision. (5) A Competitive Exchange Rate. (6) Trade Liberalization. (7) Liberalization of Inward Foreign Direct Investment. (8) Privatization of State-owned Enterprises. (9) Deregulation. (10) Enhance the Protection of Property Rights. See John Williamson [19]. See also, John Williamson [20].

  41. 41.

    See Noam Chomsky [21].

  42. 42.

    See An CHEN [22], Part I–XIV.

  43. 43.

    See UNCTAD, World Investment Report 2006-FDI from Developing and Transition Economies: Implications for Development, p. 226. See also, An CHEN [23]. The China National Offshore Oil Corporation’s attempt to take over the US Unocal Corporation was failed. Reasons for the failure are all non-economic factors, such as “national security.” See ‘Economic Nationalism’, at http://www.chinavalue.net/wiki/showcontent.aspx?titleid=223238

  44. 44.

    See Cheng Enfu and Wang Zhongbao [24].

  45. 45.

    See UNCTAD [25].

  46. 46.

    See He Bingmeng [26].

  47. 47.

    See ‘Neo-liberalism Is the Chief Culprit of the Global Financial Crisis’, Reference News(China), p. 3, Feb. 20, 2009, at http://chinaps.cass.cn/readcontent.asp?id=9078

  48. 48.

    Some examples: S. D. Krasner [27]; Stephen D. Crasner [28], Chap. 1 ‘Introduction: arguments’; Z. Elkins et al. [29]; K. J. Vandevelde [30]; Robert O. Keohane and. Joseph S. Nye [31]; A. Chayes and A. H. Chayes [32]; K. Raustiala [33]. See especially Alastair Iain Johnson [34]. This article has summarized the process of transition of China’s role demonstrated and advocated by the United States scholars from a “revolutionist of the international system,” then to an “ameliorator of the system,” and finally to a “protector and builder of the system.” See Jeremy T. Patil [35]; Edgar Bodenheimer [36], revised version, Part II ‘the Nature and Function of Law’; Hedley Bull [37]; G. J. Ikenberry [5]. Ikenberry advocates that “The existing western-centered and U.S.-led order is open, integrated, with wide and deep political foundations, legitimate and durable, an order which is hard to overturn and easy to join… A liberal other than imperial nature of the existing order will shape a rising state’s choice between challenging that order and integrating into it…Such an order is in place already. The task now is to make it so expansive and so institutionalized that China has no choice but to become a full-fledged member of it. China has already discovered the massive economic returns that are possible by operating within this open-market system.” These Western scholars have thus come to a conclusion that it may be possible that China’s rising up will change the international power structure, but it will not affect the longevity of the order of the Western’s world, as long as it is managed appropriately.

  49. 49.

    Premier Wen Jiabao emphasized lately that “Four fifths of the world’s population are from the developing countries, while that of the developed countries accounts for only one fifth. Every person has an equal right to subsistence. If vast developing countries are still poverty-stricken, this world is still unfair, unharmonious, and destined to be unstable.” See ‘Chinese Premier Wen Jiabao delivered a keynote speech at the U. N. High-Level Meeting on the Millennium Development Goals’, at http://news.xinhuanet.com/world/2008-09/26/content_10112612.html.

    Premier Wen Jiabao has added the crowning touch to the fundamental reasons for unfair distribution of global wealth and an unharmonious, unpeaceful, and unstable world and pointed out that establishment of the NIEO and redistribution of global wealth on a fair basis are fundamental approaches to a harmonious, peaceful, stable, and prosperous world.

  50. 50.

    See Selections from Deng Xiaoping, Vol. 3, The People’s Press, 1993, p. 363.

  51. 51.

    From a popular Chinese lyrics (Tao Sheng Yi Jiu, “涛声依旧”) , which is hereby metaphorically used to mean that the painful cry of the billions of impoverished people in the Third World for reforming the existing unfair international economic order will be unceasingly reminding us of the importance of keeping faith in this just end.

  52. 52.

    See An CHEN [22], Part I–XIV.

  53. 53.

    See Jeffrey L. Dunoff [38]; ‘Illusions of Constitutionalism: Constitution of the WTO and the Discipline of International Law’, translated by Chen Xifeng, in An CHEN (Ed.). Journal of International Economic Law, 14(2), 34–36.

  54. 54.

    See Ernst-Ulrich Petersmann [40].

  55. 55.

    See Ernst-Ulrich Petersmann [41].

  56. 56.

    See An CHEN [22], Part I–XIV.

  57. 57.

    See Seung Wha Chang (Korean) [43]; See also, An CHEN [44].

  58. 58.

    See James A. Dorn [45]; Mark Williams [46]; Raymond J. Ahearn [47]; Review by Latha Varadarajan, ‘The Life and Times of Economic Nationalism’, International Studies Review, Vol. 8, 2006, pp. 90–92; Dr. Michael A. Weinstein [48]; Tom Switzer [49]; Patrick J. Buchanan [50]; Lyndon Rowe [51].

  59. 59.

    The latest example is the following: In 9 September 2008, Mr. Joerg Wuttke, Chief Representative of European Union Chamber of Commerce in China, when attending the conference of issuance of European Business in China Position Paper 2008/2009, has expressed on behalf of the European enterprises the demurral on “Chinese economic nationalism” and said he was concerned about the emergence of the economic nationalism in China. According to relevant news report, this newly issued position paper has as many as 400 pages, 1/4 larger in volume than previous years, sharply listing the “Chinese economic nationalism” as one of its major topics. Chinese scholars have made rebuttals by pointing out that the European Union has also practiced the economic nationalism, even to a greater extent. See ‘EU Businesses Worried by ‘Economic Nationalism’ in China’, at http://www.dw-world.de/dw/article/0,2144,3633627,00.html, visited on Sep. 21, 2008; Mei Xinyu [52].

  60. 60.

    Such a definition can be seen at http://www.chinavalue.net/wiki/showcontent.aspx?titleid=223238

  61. 61.

    See Mei Xinyu [52]. The authors would like to add a few points to these assertions. There are two types of “economic nationalism.” One is an “economic nationalism” practiced during time of massive economic invasion of the hegemonies into the weak states, which could be regarded as self-defense, and is based on just ground. The other one is nationalism practiced by the hegemonies on the basis of double standards. It advocates for external liberalism in order to facilitate its entrance into the markets of the weak states without much obstruction and internal nationalism aiming to hinder the products and capital of the weak states from entering the domestic market, by resorting to such excuses as “national security” or “environmental protection.” The latter is in essence a genuine and absolute form of national egoism, chauvinism, a sort of mixed economic liberalism of half-truths, which is full of double-dealing and hypocrisy.

  62. 62.

    See Japanese Society of International Law, Dictionary of International Law (Chinese version), World Affairs Press, 1985, pp. 239–240, dictionary entry ‘the right to national self-determination’.

  63. 63.

    See An CHEN [53], Part I–VI.

  64. 64.

    See An CHEN [54], respectively VII, First Part.

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CHEN, A. (2013). What Should Be China’s Strategic Position in the Establishment of New International Economic Order? With Comments on Neoliberalistic Economic Order, Constitutional Order of the WTO, and Economic Nationalism’s Disturbance of Globalization. In: The Voice from China. Understanding China. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-40817-5_6

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