Five years into its membership of the World Trade Organization
(WTO), China is fully justified to take pride in its stellar
performance as an increasingly important growth engine for the
global economy.
However, on the fifth anniversary of the country's entry to the
global trade body, we have more sources of optimism than simply the
remarkable economic achievements the country has made.
Of note, China's growing confidence in, and strong commitment
to, opening up indicates that it will only assume a better and more
responsible role during its continuous rise as a global economic
power.
The past five years have seen changes in the Chinese economy
that both domestic policy-makers and overseas observers could
hardly have expected.
The most obvious is a skyrocketing trade volume that more than
tripled in five years.
Statistics show that China's trade volume stood at US$509.8
billion in 2001 with a surplus of US$22.5 billion. In the first 11
months of this year, the country's trade volume had already
exceeded that for the whole of 2005 to reach US$1,593 billion, with
a record trade surplus of US$157 billion.
Admittedly, WTO membership generally boosts a country's foreign
trade.
Nonetheless, the explosive trade growth in a large economy like
China's and at such speed is unprecedented. And the significance of
such trade growth is huge.
Domestically, it creates numerous jobs for China to make best
use of its comparative advantage of cheap labour. Globally,
competitive Chinese exports have kept at bay inflationary pressure
to the benefit of all consumers.
China's entry into the world trade body has helped accelerated
the inflow of foreign direct investment.
As a magnet for overseas investors, China has absorbed more FDI
than any other developing country for the past 15 years. In 2001,
it attracted US$46.6 billion in FDI. Last year, the figure was
US$72.4 billion.
Clearly, mounting FDI represents not only foreign enterprises'
recognition of China's huge potential as a low-cost manufacturing
base and a growing consumption market, but also their endorsement
of the improving business climate in the country.
In line with its WTO commitment, China has slashed its average
tariff from 15 percent in 2001 to less than 10 percent now, a
fairly low level for developing economies.
Besides, the Chinese Government has resolved to dismantle
barriers for foreign investors to enter domestic industries.
The latest is the expiry of the longest grace period for certain
domestic sectors, which was a condition of China's entry to the
WTO. From now on, foreign banks will enjoy the same national
treatment as Chinese banks do.
Five years ago, the country entered the WTO with mixed feelings.
Hopes were high, and so were worries about the possible negative
impacts foreign competition might cause.
Yet, the success of some domestic industries has cemented the
confidence of policy-makers and domestic firms to embrace foreign
competition.
The pent-up growth of China's car industry following its opening
up to new competitors from home and abroad speaks louder than any
protectionist voices.
Five years ago, cars were a luxury few Chinese had dreamed of.
Now, as the number of car sales soar by several hundred thousand
annually, all global auto giants firmly believe that China is the
market that they cannot afford to lose.
Chinese consumers are more than likely to throw their weight
behind opening-up policies given the immense benefits they reap
from the fierce price war between various carmakers.
A booming auto industry will directly promote the development of
a number of related industries. More important, it will facilitate
underlying changes in the Chinese lifestyle and thus be of
far-reaching significance in upgrading the economic structure of
the country.
Along with the early fruits of opening up, Chinese enterprises
have also learnt some bitter lessons from their trade partners'
anti-dumping charges.
Nevertheless, as a whole, the country has become more confident
in the face of foreign competition.
In fact there is a general consensus that the combination of
external pressure, a domestic sense of urgency for reform and
people's aspirations for prosperity will sustain China's long-term
growth story.
(China Daily December 11, 2006)