Breaking Barriers: China's "Nationalization" Drive

It is a hard nut to crack before China can embrace globalization it must first achieve " nationalization".

This means that China must first eliminate the numerous trade barriers erected between provinces and cities. "Eliminating local protectionism" has become one of the more popular slogans for this year.

Chinese premier Zhu Rongji has urged that the elimination of local protectionism and unfair competition should be on the government's agenda, so as to build a united national market.

To do business in this vast land, a businessman must be patient and deal with numerous local standards, regulations, and customs -- some are just nonsense, and varies from city to city, county to county, and village to village.

"In a country without a united market, the biggest headache is to sell our products from one city to another," said an executive with a foreign-invested automobile company in Shanghai, who was reluctant to give his name.

He said that their cars sold well in the south, but they are blocked from entry into some northern markets.

Envious of the company's big investment in the south, and fears that it would threaten local automobile makers, officials refused to grant license plates to cars the company was trying to sell in the north, said the executive.

Blocked goods include everything, ranging from cars to construction materials, fertilizer to instant noodle, and beer.

Even satellite television programs are blocked. Many people call it "vassal separatism" which has been common throughout Chinese history with warlords and princes setting up regimes of own, and issuing their own orders.

Some people believe that China's economic "nationalization" began in the Qin Dynasty 2,000 years ago, when Emperor Qinshihuang united the country, and united currencies and units of measurement.

However, because of the lack of market game rules, the drive to build a united national market has yet to be concluded.

Economists say that China's internal trade barriers could bury the achievements brought by its entry into the WTO.

"If we cannot unite internal standards, how can we adhere to international norms?" asked Wang Tongsan, an economist with the Chinese Academy of Social Sciences.

"If local protectionism remains, foreign investors will get scared, and market competition, which is the basis for the economic development, will disappear," said Huang Qifan, director of the Shanghai Economic Commission.

As China progresses toward entry into the WTO, how to eliminate these barriers became a hotly debated issue at the annual session of the National People's Congress in March.

Deputies from Shanghai proposed a motion to enact China's first anti-monopoly law. The motion denounced regional protectionism and trade barriers, and asked that the prohibition of administrative monopoly be defined in the first article of the proposed law.

Wang Zhongfu, the director of the State Administration for Industry and Commerce, pointed out that administrative monopolies, forced deals, and market blockades have become a cancer in China's domestic market.

He said that his administration started a nationwide campaign this year to fight local protectionism and maintain fair competition.

China this year has approved the legislation law, or the law on law-making, which many people believed will help solve confusion arising from conflicting laws and regulations made by local governments, and help build a united market.

Some key cities, especially those in the coastal region, have taken measures to remove this tumor.

At the recent China Mayor Forum held in Fujian, Fuzhou city announced a bold policy that it will help foreign invested companies sell goods in the city, despite which place the company locate its headquarters in.

"Opening a wider door will benefit us in a long run," said Liu Yongzhao, vice mayor of Fuzhou. "More people will come to see our city and find out a good business environment."

Chongqing, the largest industrial city in the west, has decided early this year to abolish a time-honored policy which demanded that cars made by other provinces would be levied upon additional fees before they were sold in the city.

The decision will make Chongqing lose tens of millions of yuan, however, it will force local auto makers to learn how to dance with stronger competitors, said Wang Hongju, Chongqing's vice mayor.

"It is a live-or-die question. The mission is not easy, but we have no choice," said Wang.



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