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China's Shipping Market, Where to Go After China Entry into WTO?
As China is soon to enter into the WTO, the expressions always on the lips of the master for Chinese shipping industry are "Joining the WTO: Opportunity and Challenge."
China, a big country in world shipping industry, has 230,000 cargo ships with carrying capacity of over 50 million tons and a total of 84 percent of the exported goods from China are shipped abroad.
According to Zhang Chunxian, Vice Minister of the Ministry of Communications, after China's entry into the WTO, the Ministry would fulfill unconditionally all the obligations as promised by the State and expand the business scope and open further the market.
Analysis by officials of the Ministry of Communications indicates that China's shipping market will see the following changes after China's joining the WTO:
1. The opening of Chinese shipping market will be deepened and accelerated while more foreign capital will be allowed to enter into this market. Parts of the field inaccessible for foreign investment in the past like distribution service, international shipping agency and setting-up branches of foreign shipping companies in China will be gradually opened in future;
2. The institutionalization process of shipping market will be expedited. In case that the combination of Chinese shipping market with the world market will be promoted by the joining of foreign capital, China must step up the market institutionalization to impose supervision on the market entry and market behavior of foreign companies in accordance with the Chinese laws and regulations;
3. Chinese shipping companies will enjoy a better environment in the competition of world market. In face of the increasingly fierce competition, some of the Chinese shipping companies will have to tap for new market, such as to ship goods for a third party in order to optimize China's international shipping structure. Furthermore, China will be able to enjoy more initiative rights in international talks for shipping business as foreign companies will get more benefit from the Chinese market after getting their entry permission.
4. Demand for shipping will be increased along with the growth of international trade volume. After China's entry into the WTO, the domestic market will be further opened with the international environment for foreign trade improved. China will by then have more to do in the work division of the world economy with the Chinese economy to depend more on the world market at the same time. All these changes will by and large promote the development of the Chinese industries with comparative advantages and help raise greatly the transport volume in international trade, thereby boosting the development of the Chinese shipping industry.
5. The market competition will be more severe. While some of the protective measures for domestic market gradually lose their functions after China's accession into the WTO, foreign capital will take more shares in the market distribution, ship agency and other fields. By then, those Chinese enterprises low in management level and service quality and weak in competition might be kicked out of the market.
6. Unfair competition may become more serious. Many foreign shipping enterprises enjoy preferential policies at home on the one hand and on the other the treatment of a national in China in the fields of shipbuilding and investment in wharf. But the Chinese shipping companies will have to suffer since they have been deprived of quite a few of favorable policies such as the preferential loans for shipbuilding, duty cut or exemption on imported ships, lower charge at ports, etc. And in this way they will be landed in an unfavorable position in competition with their foreign counterparts.
7. Brain drain of domestic shipping companies might become serious. This would usually mean the loss of clients and goods supply, thus doing damage to enterprise's interest as a result.
By PD Online staff member Deng Gang
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