Official warns challenges ahead for China in Post- WTO transitional period

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Last updated at: (Beijing Time) Wednesday, December 03, 2003

Official warns challenges ahead for China in Post- WTO transitional period

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China hasn't met with severe challenges since its entry into the WTO two year ago, said Mr. Zhang Xiangchen, deputy director of WTO office with China Ministry of Commerce Nov. 29. However, with China's entering into the late transitional period and towards the terminal for fully opening up, China is going to face with a serious ordeal.

At the annual fortune conference for IT on the same day Zhang said, there are three reasons luckily for China to have got away from being hit hard over the last two years since its WTO accession. First, there is sometime left for China to fulfill its commitments for fully opening up. For example, there are still auto quotas and fully free competition for distribution services will not be introduced till 2005. Secondly, the Chinese government has taken some measures during the WTO transitional period to cope with the possible challenges. And finally, some fields, such as the retailing trade have been opened ahead of the schedule and thus been less affected.

The late transitional period as mentioned in Zhang's speech actually refers to the last span of the time in which China must go to meet its major commitments according to the promises made before its entry into the WTO. Specifically, this period spanning from the present to the year of 2007.

"In the transitional period, barriers are permitted to set up, for example, the limits for portable PIN set by the telecommunication industry and for commercial network in the banking business. But research has found out that multinationals can tactically go over the hurdles. For example, foreign-funded banks compete with their Chinese counterparts by choosing upper-end services such as intermediary business instead of conventional ones." Said Zhang.

He also thinks that foreign-funded bigwigs still hold considerable advantages when the time reaches its terminal for opening-up. Take the telecommunication for instance, although foreign capital hasn't got into this industry so far, some consultancy and investment enterprises have put out feelers in China's market. Moreover, as tariffs and other trade barriers are being gradually released, Chinese enterprises will have to face severe ordeals.

As Zhang pointed out there are four bottlenecks handicapping China's participation into the world competition. The first and foremost is that China possesses no core know-how. China is a goods- processing center, not a manufacturing one so far. The second is the shortage in energy and resources. The third is the existing investment and financing system that makes enterprises difficult to access for investment. The fourth is the lagging behind the needs in government administration and services.

(An article from China News Service and translated by PD Online staff member Lijia)

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