One Year after WTO Entry: Not Much Impact Felt, Challenge in Future

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Last updated at: (Beijing Time) Tuesday, December 10, 2002

One Year after WTO Entry: Not Much Impact Felt, Challenge in Future

A year has gone by after China's entry into the WTO. China's custom tariff was reduced from 15.3 to 12 percent and a series of non-tariff measures were taken, the import trend in the year indicates what people imagined before has seemly not happened...

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A year has nearly gone by after China's entry into the WTO. The whole society bothered a lot about the importation problem at the time of China's accession into the WTO. As time went on and with China's commitments for the WTO being gradually honored, whether the import would be increased? Would it effect more impacts on domestic industry and market?

Notwithstanding China's custom tariff was reduced from 15.3 to 12 percent and a series of non-tariff measures were taken, the import trend in the year indicates that nothing has happened as people imagined that would have to happen a year before.

One saw decrease in importation of agricultural produce instead of increase and no headlong influx of foreign auto-manufacturing industry and accessory parts into China. And no serious importation impact was found in the sensitive field that people were most concerned for.

Agriculture was taken as the most quickly affected field after China's entry into the WTO. Starting from Jan 1, 2002, the tariff for agricultural produce was reduced from an average 18.8 percent to 15.8 percent and cancelled the permit for allocated quota of grain, cotton, edible oil and sugar and wool as well. What was out of people's anticipation is that the passing year witnessed a bigger increase in the exportation of agricultural produce instead of importation and an even development in China's agriculture. The grain, an agricultural produce of mass production and superiority in foreign lands has not only failed to increase in importation into China but on the contrary a slight decrease, showing a better result than as expected.

Nor did we see any "on-rushing-in of foreign goods" in manufacturing industry, the most obvious trade being the automobile industry. Judging from the maturity of the industry, the openness of the market and its production and management the auto-industry should be one of the seriously affected industries. However, the result of actual operation went contrary to people's anticipation.

From this we can come to a conclusion that the sensitive fields in which people felt most unsure did not receive heavy impact after China's entry into the WTO. This indicates what determines the increase of importation is still the demands in the market though China's door has been flung wide open. Besides, the transitional factor must not be ignored for it's only a short span of one year after China's entry into the WTO, in which the influence still hasn't made itself obviously felt upon China's relevant industries. According to the statistics from the customs, China saw a surplus of 24.7 billion of US dollars in its export and import trade from last January to October and the yearly favorable balance is going to be of 30 billion US dollars as expected. The import is smaller than the export in general.

The import increase told a heavy pressure in iron and steel and chemical fertilizer industries, making these industries of no worry within a short period to land in a potential worry for a long time to come. In the years to come, the import may possibly turn out a completely contrary trend in some of the fields.

At the beginning of the year, the average tariff rate for China's industrial goods was reduced from 14.7 to 11.3 percent and cancelled the control on allocated quota permit in iron and steel, acrylic fibers, polyester fibers and fillets, chemical fertilizer and part of tires. With the result there witnessed a big reduction in custom tariff and the import increase of non-tariff products. In the last three-quarters of the year, we saw an import increase of the eight tariff-cut goods to reach 25.93 billion US dollars, accounting for 83 percent of the total import volume. Due to the weakened protective role of the allocated quota there appeared an obviously abnormal move in iron and steel and chemical fertilizer industries, hence the abrupt rise in importation.

Since last year, the US, European countries and Japan have taken some special or provisional measures for the protection of their iron and steel products, restricting its importation. On the contrary, China after its entry into the WTO reduced to a great extent its custom tariff and released non-tariff barriers. This incurred the influx into China a great batch of low-priced iron and steel products. From January to October, we saw iron and steel import to reach 20.57 million tons, an increase of 45.5 percent while the export of it told a drastic downturn.

Take the agricultural produce for example, some people, judging from the present situation say that the influence of the WTO entry on the Chinese agriculture is not up to something at all and others holds that it plays a bigger positive role than negative. About this, Dr. Cheng Guoqiang, the R & D Center of the State Council points out, the pressure entailed from the import of agricultural produce will exist for a long time to come and not to be too sanguine with. Next year and a long time afterwards will see China's agricultural produce face a more critical situation than that encountered in the first year and this must not be neglected.

The domestic auto-industry is also faced with a potential import threat. China has to call off all allocated quota permit for automobiles before Jan.1, 2005 and by the time of Jul.1, 2006 the custom tariff for a car as a whole and for all accessory parts will be lowered to a respective 25 and 10 percent. By that time how the market sponge cake will be severed by the imported cars nobody can foretell for the moment.

The impact is unavoidable and the difficulty in import management is increasing. However, the most important is to strengthen the mechanism for coping with it and the first thing is to raise the competitiveness of the domestic products. The situation in the initial year of China's entry into the WTO reminds us of the unevenness of advantages and disadvantages in different industries and the uncertainty of their changes. Since the impact is unavoidable what we should do is to get to known, master and use the WTO rules and regulations as soon as possible so as to grasp the advantages while avoiding the disadvantages and trying our utmost to turn the challenge into opportunities.

By People's Daily Online

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