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Roundup: China's WTO Entry Generates Enormous Opportunities for Service Sector
China's pending entry into the World Trade Organization (WTO) will generate enormous opportunities for service sector and give impetus to the country's already robust economy growth, industry experts attending World Services Congress 2001 said Thursday in Hong Kong.
The agreement on China's WTO entry "paves the way for China to join the world trade body and opens up China's economy to more foreign trade and investment in sectors ranging from banking and automobiles to telecommunications," said David Cunningham, President of FedEx Asia Pacific.
WTO accession will "continue to create dramatic increase in foreign director investment (FDI), which will in turn sharpen China's competitive edge in manufacturing for both domestic and export markets," he said.
China is currently the second destination for FDI after the U.S. According to the Economist Intelligence Unit, China's actual FDI will increase from 30 billion U.S. dollars to 70 billion dollars over a five-year period from its WTO accession.
Cunningham predicted there would be tremendous potential for the financial services industry and telecommunications services industry after China joins the WTO.
In the distribution sector, Cunningham said China would "be the new frontier" for airfreight in the Asia Pacific region, and its entry into the WTO would "trigger an ever stronger surge in east and west-bound trade."
In a study by Credit Lyonnais Securities, Chinese airfreight traffic grew by over 20 percent in the first four months of 2000 alone. Studies show that China's airfreight demand is expected to increase 60 percent by 2004 from 1999.
Foreign firms will play a greater role as China is to open its market more and lift all restrictions on distribution services within three years of its WTO accession, said Cunningham.
David Eldon, Chairman of the Hong Kong and Shanghai Banking Cooperation Ltd., drew a rosy picture for the banking sector after China enters the WTO. The country growing wealth would lead to the rise of demand for quality financial services.
Foreign bankers will have a more important role to play since the country will grant foreign banks national treatment after its WTO entry, he said.
Contrary to prediction that China's domestic banks would have a short life span after China's WTO entry, Eldon believed domestic banks would also survive and prove to be "formidable competitors," since they have strong nationwide banking networks and other competitive edges which foreign banks cannot have.
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