American lawyer Gordon Chang, whose book the Coming
Collapse of China was released five months ahead of China's
entry into the World Trade Organization (WTO) on Dec. 11, 2001, may
have a credibility issue.
Instead of experiencing what he called a "rapid fall", China has
emerged as the world's fourth largest economy, contributing a
yearly average of 13 percent to the world's economic growth over
the past five years.
Even the auto sector, which some Chinese feared would be crushed
by the intrusion of foreign imports after China agreed to lower
tariff thresholds as required by the WTO, remains dynamic and
vigorous.
Many of the doom and gloom scenarios proffered by Chinese and
foreign experts on post-WTO China have faltered. WTO
Director-General Pascal Lamy said that the country's membership in
the global trade body is a "big plus for everyone."
Catastrophe illusion
Chairman Li Shufu of Geely, a private auto firm based in
Zhejiang, says the worries and concerns served to up the pressure
under which some would wither and some thrive.
China, probably spurred by a mixture of anxiety and excitement,
moved quickly after its accession to the WTO to cushion the landing
of its vulnerable sectors.
An industry injury alert mechanism was immediately established,
targeting auto manufactures first and now extending to ten sectors
including petrochemical, steel, machinery, textile and agriculture,
ship building and construction.
The then fledgling auto industry has grown strong enough?to
compete with Chinese-foreign joint ventures. For the first time
Chinese-made models outsold foreign designed modeles for a two
month period earlier this year.
"Some Chinese feared China's WTO entry and cried, 'the wolves
are coming', but I saw opportunities," said Li Shufu. His vision
for Geely sees the automaker evolving into a world famous brand by
2015 with an annual output of two million cars, including 1.3
million sold overseas.
China's farmers who grew land-intensive bulk commodities with
paper-thin profits such as soybean, corn and oilseed have borne the
brunt of cheaper imports.
Experts have suggested farmers turn to higher-value, more
labor-intensive horticultural and animal products while the
government encouraged farmers to migrate to cities.
The per capita disposable annual income of Chinese farmers has
surged 29.2 percent since 2000 to 3,255 yuan (US$405) last year and
the impact on the farming sector has been "substantially less than
expected." ????
Transformation benefits
"A lot of?Chinese appear more confident now than ever
before when it comes to dealing with WTO rules," said Mei Xinyu, a
researcher with the Ministry of Commerce. "The WTO is no longer
enshrined as something too profound or sophisticated to be dealt
with."
He said that the new found confidence is a result of hard
lessons learned and victories won over the five-year transition
period.
Embracing WTO rules has allowed China to import cheaper BMWs,
enjoy better bank services and access a wider variety of products
from supermarket giants like Carrefour and Wal-Mart.
The country's economy on the whole has reported an annual
average growth of 9.5 percent, surging from almost 11 trillion yuan
in 2001 to 18.2 trillion last year.
Foreign companies have poured US$275 billion in aggregate
investment and wired back US$57.9 billion in combined profits,
official data reveals.
While China goes full steam ahead to open banking, securities,
insurance, railway, telecommunications, film, press and tourism,
the reverberations from its WTO entry have grown unexpectedly
strong.
The rules requiring non-discriminatory practices, which were
designed to secure even-playing-field conditions for trade, have
been widely borrowed to defend the legitimate interests of rural
migrant workers and private firms.
The concepts of transparency and trade liberalization were used
by the general public to request the first national hearing on
train fare hikes in 2002 and to demand their legitimate right to be
informed by governments during the 2003 SARS
epidemic.????
Lingering worries
What did catch China off guard, however, was the explosion of
trade disputes which it had hoped would diminish with the WTO
membership.
Antidumping moves against China affect exports worth between 40
billion to US$50 billion a year. Now about one in seven antidumping
complaints are lodged against China.
"China cannot afford to underestimate the negative impact of its
ballooning trade," warned professor Zhang Hanlin of the University
of International Business and Economics.
While the year's foreign trade surged 24.3 percent to US$1.593
trillion through November, China's customs indicated the full-year
trade surplus is likely to hit a new high of US$168 billion.
Excessively rapid growth in international trade growth could
also aggravate the economy's over dependence on imports and exports
and sour China's trade relations with other partners, Zhang
noted.
Other ambushes might come from improper economic management by
governments, warned director Zhang Xiangchen of the WTO Affairs
Department of the Ministry of Commerce.
With the five-year transition period coming to an end, Zhang
says the government must continue to reform its management methods
and abandon once and for all the practices of the old controlled
economy which contravene WTO rules.
As competition in banking, agriculture and other sectors are
likely to intensify, it would be wishful thinking for China to
expect smooth sailing in the years to come.
To defuse risks, China must "learn to strike a proper balance
between WTO compliance and an active effort to evolve the existing
WTO rules for the good of the vast number of developing countries,"
Mei said.????
China's moves in 2006 to open up
economy
Agriculture -- The tariffs quota on vegetable oil was
removed on Jan. 1, 2006 while the average tariffs for agricultural
produce is expected to decline to 15.2 percent.
Automobiles -- China chopped the tariffs for whole-car
imports of sedans, cross-country vehicles and mini-buses to 25
percent in line with its WTO commitments on July 1.
Petrochemicals -- Under two new regulations issued on
Dec. 7, China will open the wholesale market for crude oil and
refined oil products as of January 1, 2007. The move will break the
longstanding monopoly of state-owed enterprises China National
Petroleum Corporation and China Petroleum and Chemical
Corporation.
Banking -- Regulations on Administration of
Foreign-funded Banks will take effect on Dec. 11, a landmark
document marking the open-up of China's banking industry.
Foreign exchange rates -- China revalued the yuan by 2.1
percent against the dollar in July 2005 and has since allowed the
currency to appreciate another 3.6 percent.
Continuing pledge -- Chinese Premier Wen Jiabao
reiterated that China won't hesitate in sticking to the opening up
policy and fulfill its WTO commitments at the third China-ASEAN
Expo in November.
?
(Xinhua News Agency December 11, 2006)