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Chief WTO negotiator anticipates next decade of China (6)

(Global Times)

08:13, September 16, 2011

Equal treatment

China can still improve in terms of the spirit of the WTO, said Long.

There are two cornerstones of the WTO: absence of discrimination, and most-favored-nation treatment. In many ways, small private companies in China don’t get the same treatment as large State-owned enterprises (SOEs), said Long.

SMEs account for 90 percent of all Chinese enterprises, offering about 75 percent of the total number of jobs and playing a key role in maintaining social stability.

Yet preferential policies are often given to large SOEs, as they create wealth and contribute more tax revenue.
“In China, fair distribution of wealth and social stability is more important than wealth creation,” said Long. “It is time to give SMEs national treatment,” he noted.

Banks are willing to make easy money with large SOE customers and avoid dealing with SMEs at high costs, as most SMEs are also private companies.

This unequal treatment has existed for a long time. Long suggested that policymakers should even consider giving SMEs preferential treatment such as tax cuts as they create most of the jobs.

“We promote the concept of equal treatment externally, but we adopt discriminative policies against smaller domestic enterprises,” he said.

“If China fails to treat domestic companies equally, some foreign SMEs interested in entering China will hesitate to do so, for fear of discriminative treatment. China’s enterprises investing abroad also wish to get fair treatment. How could we ask foreign counterparts to grant our companies equal treatment without treating our own enterprises the same way?”

“WTO principles emphasize transparency, but some policymaking processes are not transparent enough. The win-win principle is also important, and irrational regional competition should be avoided, as it’s against the fair competition principle of the WTO,” he said.

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