In a comprehensive interview with People?s Daily, Shi Guangsheng, minister of foreign trade and economic cooperation, analyzes the significance of China?s entry into the World Trade Organization. "It marks a new stage in China's opening to the outside world," said Shi who predicted that the move will make great contributions to the development of the national economy.
Q: Great success has been achieved in China's foreign economic and trade work in 2001. The event of most significance was China's formally becoming the 143rd member of the World Trade Organization (WTO) on December 11. Please say something about the significance of China's entry into the WTO
A: The relationship between the WTO and China is one of mutual need. On the one hand, without China's participation, the WTO would be incomplete and could not be called a true world trade organization; on the other hand, China needed to join the WTO for its reform and opening up and economic development. Just as President and General Secretary Jiang Zemin has pointed out: "Joining the WTO is a strategic decision made by the Chinese government under the new situation of economic globalization, it is consistent with China's aims of reform, opening up and establishing a socialist market economic mechanism." It marks a new stage in China's opening to the outside world.
First, the WTO plays an important role in the world economy and trade. The trade volume among its members accounts for 95 percent of the total amount in the world. Our entry into the WTO helps China create a good international economic and trade environment. The WTO has three basic functions: First, formulating, implementing and supervising multilateral trade rules. Second, organizing multilateral trade talks. Third, solving trade disputes among WTO members. Our accession to the WTO can help China enjoy equally with other members the benefits of multilateral negotiations: Through participating in the formulation of international rules, China can safeguard its own rights and interests; through opening its own markets, China gains the opportunity to enter the markets of other countries and can be assisted in trade disputes by a mechanism for solving multilateral problems.
Second, the WTO is an international organization based on rules and principles. Some of its principles -- such as non-discrimination, transparency, fair play and the opening of market -- are all based on the market economy. From these principles more specific rules have been derived through multilateral negotiation. Many of these general principles and specific rules are useful for us to adopt or draw on in the process of establishing and perfecting a socialist market economic mechanism. Given this, China?s entry to the WTO will help expedite the process of China's reform and opening up program and facilitate the establishment and improvement of China's socialist market economic mechanism.
Third, China?s entry into the WTO is also necessary for the nation's participation in economic globalization. One important objective of the WTO is to promote the liberalization and facilitation of world trade and investment. Therefore, the WTO plays a vital role, not found in any other international economic organization in the world. Joining the WTO marks the beginning of China?s participation in economic globalization in a more dynamic and active way. This step also will help us understand the global trends of trade, grasp the rules and practices, pursue the good while avoiding the harm, speed up the realization of China's scientific and technological progress, economic restructuring and the upgrading of industries, and take an advantageous position in international competition in the new century.
Q: In October 2001, the Ninth APEC Leaders Informal Conference was successfully held in Shanghai. What stimulating role will this conference play in China's foreign economic and trade work?
A: The Asia-Pacific region is an important foundation for China's foreign trade and economic cooperation. Among China's 10 major trading partners, except for the European Union (EU), all others are APEC members. In 2000, China's trade volume with APEC members hit US$344.5 billion, amounting to some 72.6 percent of China's total trade volume. During the same period, the investment absorbed from APEC members stood at US$30.05 billion, some 73.8 percent of the total volume of foreign capital China used. Therefore, a thriving APEC is of great significance to China's economic development. Last year, China, as the host of APEC, on the basis of giving due consideration to the interests of all parties, achieved great success in pushing forward the liberalization and facilitation of APEC trade and investment and expediting the process of economic and technological cooperation. This achievement has not only strengthened cooperation among APEC members, but has also created a wider range for China's foreign economic and trade work. This series of conferences helped give a great impetus to China's entry to the WTO.
Q: At the Fifth ASEAN and China's Leaders Conference (10+1) held in November 2001, leaders of both sides unanimously agreed on the establishment of a China-ASEAN free trade zone. What is the aim for the establishment of such a free trade zone?
A: The setting of this major goal of establishing a China-ASEAN free trade zone in 10 years is the result of the constant development of China-ASEAN relations. It reflects the actual needs for a deepening of China-ASEAN economic ties and embodies the common wishes of both sides to strengthen economic and trade cooperation. The China-ASEAN free trade zone will have 1.7 billion consumers, nearly US$2,000 billion worth of GDP [Gross Domestic Product] and a trade total of US$1,200 billion. Calculated by population, this trade zone will be the largest one in the world. From the perspective of economic scale, the China-ASEAN free trade zone will be the largest free trade zone formed among the developing countries.
The China-ASEAN free trade zone will be the first regional free trade arrangement made by China and other countries. It is an important move taken by China to strengthen its regional economic cooperation with neighboring countries. It will not only further consolidate and strengthen the existing traditional relations between China and the ASEAN countries and promote Asian peace and stability, but will also facilitate the respective economic development of China and the ASEAN. This move will also help expand the scale of bilateral trade and economic cooperation, enhance the overall competitiveness of the economies of this region and unite us in meeting the challenges posed by economic globalization and regional economic integration.
Q: The year 2001 has seen a notable slowdown in world economic growth. What impact will that exert on the world trade market?
A: An economic recession appeared simultaneously in the three major economies of the US, Japan and the EU from the beginning of this year [2001]. And this situation was worsened by the "September 11" terrorism attacks. According to an estimate made by the International Monetary Fund (IMF), EU economic growth this year is only 1.7 percent, Japan's economy has dropped by 0.9 percent, the economic growth of the US is 1.1 percent; global economic growth is only 2.4 percent, lower than the 1998 level. Economic depression has had a negative influence on the world trade market. For instance, the volume of US imports witnessed a negative growth in the first three quarters of the year of 2001. It is estimated that international trade has increased only 2 percent, much lower than last year's level of 12 percent. Under such circumstances, the foreign economic and trade situation for China is very grim. Thanks to China's implementation of a correct macro-control policy, its national economy has witnessed a healthy and steady growth. In the first 11 months of 2001, China's total volume of imports and exports reached US$462.77 billion, a 7.4 percent increase over the same period of last year, with a total trade surplus of US$20.37 billion. This brought China's foreign exchange reserves to over US$200 billion. Meanwhile, the year 2001 has seen a fairly big increase in the absorption of foreign direct investment. Between January and November of 2001, the country approved the establishment of 22,915 foreign-invested enterprises, with contractual foreign capital amounting to US$60.4 billion and the actual amount of foreign capital to US$41.9 billion. These amounts espectively increased 16.32 percent, 24.38 percent and 15.61 percent over the corresponding period of last year [2000]. Foreign capital absorbed in the whole year is expected to reach US$45 billion, a big growth compared with last year's US$40.7 billion. The business volume of contracted projects undertaken by China abroad and labor cooperation amounted to US$9.59 billion, a year-on-year increase of 7.9 percent. The total volume of newly signed contracts reached to US$13.35 billion, a year-on-year increase of 7.3 percent. By the end of September 2001, MOFTEC [Ministry of Foreign Trade and Economic Cooperation] had approved the establishment of 6,513 Chinese-funded enterprises abroad, with the contractual volume of investment reaching US$11.8 billion, of which US$7.9 billion was Chinese investment.
Q: What new moves will China take in its foreign economic and trade work in 2002, the first year after its WTO entry?
A: The Central Economic Working Conference held not long ago decided to take entry to the WTO as an opportunity to open wider to the outside world. After joining the WTO, China's foreign economic and trade work will have a wider range in which to develop. In 2002, we will continue to try by every possible means to expand exports and carry out further the strategy of market diversification. We will push forward the facilitation of trade transaction, strive to bring about export growth; give full play to China's advantage of economic development and social stability, vigorously absorb foreign capital, improve the quality of the utilization of foreign capital. The central government will take a more active part in economic globalization, actively yet steadily implement the "going out" strategy. We will more actively promote cooperation between APEC, ASEAN and China (10+1), Shanghai Cooperation Organization (SCO) and other regional economic cooperation to create a more favorable external environment for China's opening to the outside world. After joining the WTO, we should act in accordance with WTO rules. We should move faster to sort out and revise laws and regulations and finish the work of standardization and adjustment of various policies. The task of training and bringing up talents who are expert in international economy and law is a priority of the government. We should deepen reform of the foreign economic and trading management system, reduce administrative examination and intervention, carry out administration according to law and make government affairs known to the public.
I believe we will certainly be able to properly use the favorable conditions brought about by China's entry into the WTO and limit any adverse effects to the minimum so that our foreign economic and trade work will make still greater contributions to the development of the national economy.
(Zhang Liang and Shi Xiaohui of People?s Daily, December 20, 2001 translated for china.org.cn by James Liu)
