China Strives for Win-win Results on Basis of WTO Membership

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Last updated at: (Beijing Time) Thursday, December 12, 2002

China Strives for Win-win Results on Basis of WTO Membership

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Since it entered the World Trade Organization (WTO) on December 11 last year, China has been creating a win-win situation for itself and the rest of the world by fulfilling its membership commitments to the WTO.

As a responsible WTO member, China has, since the end of 2001, taken a series of steps to comply with the global trade body's rules and honor its commitments.

To dismantle regulatory barriers to fair trade, nearly 30 departments of the State Council, China's cabinet, have sorted through some 2,300 legal documents related to WTO rules, of which 50 percent have been abandoned or amended. New laws and regulations have been introduced to make it easier for foreign capital to get access to some important service trade sectors.

Over the past year, China slashed import duties on 5,300-odd goods and lowered the overall tariff level from 15.3 percent to 12percent.

Another significant step forward in meeting its WTO commitments was the increasing administrative transparency nationwide, with many government departments streamlining and transforming functions.

China has also revved up reform of some industries, including telecommunications and civil aviation, which had operated under state monopoly for decades.

"China has committed itself to WTO rules, and is already ahead of many countries in terms of clearing market intervention," said Supachai Panitchpakdi, the incumbent director-general of the WTO.

Thanks to its efforts to fulfill its membership pledges, China expects to score more than 50 billion US dollars in actual foreign direct investment (FDI) for the whole of this year and surpass the United States as the world's top recipient of FDI.

Tempted by and confident of China's prospects under the WTO framework, numerous foreign companies have moved their headquarters for global or Asian-Pacific operations or for businesses in Greater China to the Chinese mainland, and some multinational corporations have established research and development centers in the country.

Analysts say that most enticing to foreign investors is China's burgeoning service industry, which has been highly responsive to the changing circumstances.

Among service industry sectors, the banking business has forgedahead on the basis of China's WTO accession in terms of foreign participation. In the first half of 2002, foreign banks launched 233 representative offices on the Chinese mainland, of which more than 40 were allowed to handle RMB (the Chinese currency) transactions.

Meanwhile, some international retail and wholesaling moguls, including the US-based Walmart, France-based Carrefour and the Sweden-based IKEA, have increased or plan to increase franchised and convenience stores across China.

Under the impact of foreign capital inflows, Chinese enterprises have grown stronger amid the ever fiercer competition.For instance, a group of domestic telecom companies, including Bird, Kejian and TCL, have become increasingly powerful and smashed the monopoly of foreign cell-phone makers on the Chinese market.

It is believed WTO membership will bring both challenges and opportunities to China. Though its advantages and disadvantages vary in different sectors and uncertainties exist in the possible shift of the advantages and disadvantages for certain sectors, the former will dwarf the latter ultimately, most Chinese economists say.

Over the past year, China's foreign trade maintained its pep, with trade surplus estimated to hit 30 billion US dollars for the whole of 2002. Since earlier this year, the agricultural sector has performed better than expected as its exports kept growing at a double-digit rate. In terms of industrial sectors, exports of textiles, clothing, machinery, electronics and telecom equipment will benefit from WTO membership in the short run.

Nonetheless, challenges and impacts from the WTO entry would exacerbate inevitably as China opened wider and wider to the outside world, said Shi Guangsheng, minister of foreign trade and economic cooperation.

Lu Zhongyuan, a senior official with the Development Research Center under the State Council, a government think tank, has urged that it is imperative for the government to take positive countermeasures to circumvent the disadvantages and make full use of the advantages under the WTO arrangements.

What has China learned primarily since its WTO entry? The answer is how to cope with non-tariff trade barriers, such as anti-dumping and extremely rigid import inspection and quarantine.

The past year saw China successfully handle the US imposition of tariffs on steel imports, an embargo of Chinese animal-based products by some European countries, unreasonable test indicators set by Japan on China's vegetable exports and disputes over DVD property rights.

Meanwhile, Chinese businesses have also learned to use WTO rules to safeguard their legitimate interests. Since late last year, they launched nine anti-dumping investigation cases, involving light industrial and chemical products and steel.

Analysts point out that the increase in trade disputes between China and a few countries over certain products in the past year is the result of the comeback of trade protectionism against the backdrop of global economic slowdown. It is not caused by China's WTO entry.

China has become the world's sixth largest economy in terms of foreign trade. With the WTO membership, Chinese products have greater access to international markets, which will put certain pressure on related products of other countries. Therefore, analysts warn that Chinese businesses should be well prepared to cope with possibly increasing trade friction in the future.

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