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China’s
Accession to the World Trade Organisation: Impacts on China and East Asia By Andrew
Straus Posted to Web Site: 28 October 2003 |
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When asked why he
decided to come to Sydney, and what interested him most about China, he
replied: I wanted to study abroad to gain increased perspective on the
political, economic, and technological issues, which I focus on at Penn, as
well as really to get out and see the world.
I was interested in immersing myself in another culture, and excited
about what I might learn from new people and the changes it might bring about
in myself. I chose Sydney mostly because of UNSW, due to its very
comprehensive study abroad program, as well as Sydney's big city,
cosmopolitan atmosphere, which has so much to offer an eager student able to
get out and explore. My interest in China stems from its growing world influence in
both political and economic issues.
Its recent advances in industrialisation and emerging technologies
make it an exciting world competitor.
The presence of this global powerhouse has large implications for
policy issues crossing boundaries of all disciplines. |
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Transitioning from a centrally
planned economy based on self-sufficiency to a market-oriented one focused on
growth, China made its first tangible step along its long path when it
assumed the membership of Taiwan Province of China in the IMF and the World
Bank, of which it had been one of the founding members, and then launching a
campaign by 1986 to resume its contracting party status in the General
Agreement on Tariffs and Trade (GATT), from which it withdrew in 1950. Representing a fifth of the
world’s population and over three percent of its trade, 2/ the opening of the Chinese economy to the world has vast
implications for the economic and social welfare of China, East Asia, and the
World. Since the beginning of reform,
China’s economy has been growing at a rate of nearly 10 percent annually and
its external trade has been expanded by more than 15 percent a year. Since China is ranked as the 9th
largest trading nation in the world, a World Trade Organisation without China
as a member would fall short of the World Trade
Organisation’s claim to represent the global economy. 3/ In its continued
reform, China has abolished trade plans, decentralised trade, slashed
tariffs, unified the dual exchange rates (1994), and removed exchange
controls on current account transactions (1996). 4/ Following this past unilateral
reform, the accession of China to the World Trade Organisation (WTO) on
December 11, 2001, after 15 years of arduous negotiations, brings that
nation’s continuing economic reform and its potential contribution to world
growth to a decisive level. The various avenues of reform
agreed upon by the members of the WTO in China’s entry will fundamentally
restructure the Chinese economy in all sectors of production; opening the
market, liberalising trade, improving efficiency, and shifting Chinese
industry towards its sectors of comparative advantage. While the opening of an economy
as large as China’s to the world can be disruptive both to China and its
developing trading partners in the short run, in the long run, it should
benefit all interested parties with China and the industrialised world to
realise the greatest gain. Furthermore, China’s emergence
into a world economy free of barriers to trade will shock the domestic and
East Asian production and employment markets as reforms are progressively
phased in. However, the negative
impacts can be mitigated and absorbed in the short term by various economic
and social policy options, and proven worthwhile in the long term with
continued growth. |
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In order to convert the Chinese
economy from one that is closed with large barriers to foreign entry and high
reliance on self-sufficiency, to one that is open, price driven, and
market-oriented, reform is pursued on five fronts:
This will bring China into
compliance with the General Agreement on Tariffs and Trade (GATT) and create a
framework for impact analysis. Non-discrimination The principle
of non-discrimination is included as part of China’s WTO agreement. In complying with non-discrimination
standards, China is required to grant optimal business conditions to all
members of the WTO regardless of origin.
In doing so, China is required to treat equally competing suppliers,
not discriminate between domestically produced and imported goods and
services in the domestic market, eliminate the dual pricing system which
China has historically used to differentiate between domestic and foreign
prices, phase out restrictions on trading, and employ uniform administration
standards and judicial review to all suppliers. 5/ These principles are those
conveyed in the “Most Favoured Nation” principle. 6/ These changes
reflect China’s shift from self-reliance to accepting the influx of foreign
goods and services based upon best value rather than a policy of supporting
only Chinese goods regardless of efficiency or value for money. In making these changes, China
will need to focus not only on the central government, but also on regional
authorities due to their involvement in internal trade and regulation. In the past, Chinese authorities have put
large emphasis on supporting local industry, for example the Chinese auto
industry, and granting preferential treatment to businesses or individuals
which follow their buy domestic policy.
This activity, in conjunction
with larger scale discrimination against imports from foreign suppliers, will
cease as a result of the implementation of non-discrimination
principles. Furthermore, the
disparity between domestic and border prices will lessen, and importers will
gain access to a fair goods market. Market Opening Potentially the most impacting
avenue of reform will be the opening of the Chinese market to world
trade. This principle is reflected
and pursued through commitments both by China and its trading partners. Having begun the process of market
opening in the late 1970’s, the process is continued with China’s agreements
in meeting the WTO requirements. Most
significantly, China has agreed to abolish all non-tariff barriers, reduce
tariffs in general, and open its services sector, which has previously been
limited to government and Chinese owned firms to foreign competitors. Arguably the most significant
component to market opening, China has implemented and offered
substantial cuts in overall tariffs which will result in a 6.8 percent weighted
average tariff by the end of the implementation period (2010), down from 40.3
percent in 1992. 7/ These concessions by China are
met by commitments by countries importing from China to
abolish the quotas on textiles and clothing that were originally imposed
under the Multifibre Arrangement (MFA), and in commitments by the United
States and other countries to grant China permanent MFN status (which
includes MFN level tariffs). 8/ Both the reduction of Chinese
tariffs and the abolition of foreign quotas represent large concessions for
all parties. The stark reduction in
tariffs will allow an influx of foreign goods to China, mostly industrial and
capital intensive, as will the removal of quotas allow cheap textiles and
clothing (fuelled by China’s comparative advantage in labour intensive goods)
to flood foreign markets. Although the influx of goods
will be mitigated in the short term by special provisions to allow parties to
progressively reduce tariffs and quotas during the implementation period
through 2007, the longer term will bring a shift in imports and exports to
reflect the respective comparative advantages of trading partners, as well as
increase the welfare of consumers through the availability of cheaper foreign
products. Transparency and
Predictability Aside from quantitative changes
in China’s trade policy, the general manner in which China conducts trade
will also experience various reforms which aim to stimulate trade and
facilitate foreign participation in the Chinese marketplace. In the past, the administration
of trade in china – relevant laws, practices, and regulations – have been
primarily only the business of the government. Taking steps to increase the transparency and predictability of
the trading regime will allow trading partners to be aware of tariff
schedules, relevant regulatory procedures, and means for resolving disputes,
prior to engaging in business, thus eliminating the risk associated with
selective application or modification of practices, as has been the case in
past trade with China. Specific reforms include the
publishing of trade rules and regulations, a wholly uniform application of the trade regime to all trading partners, an independent
judicial review for the resolution of disputes, an established mechanism for
disputing parties to report to and resolve problems with the central
government, a binding of the tariff schedule for all goods with no tariff
increases in the future, a phasing out of restrictions on trading rights for
all products (accepts few commodities that will remain under state controlled
trading), and the allowing of entry of foreign suppliers into distribution
and wholesale services. 9/ In general, through these measures,
China will move from a sort of black box trading entity to one with fully
participates openly and consistently with trading partners. Both China and its trading partners serve
to benefit from such reforms through increased trade resulting from increased
ease of business making due to an established and regulated trade regime. Undistorted Trade Included in WTO provisions of
accession are regulations focused on the protection of
inefficient domestic industries and the resulting influx of cheap goods on
foreign markets. The provisions
regarding undistorted trade address such general disciplines as subsidies and
countervailing measures, antidumping, and safeguards. 10/
The provisions applied to China
are primarily focused on the potential influx of cheap Chinese textiles and
clothing as a result of the elimination of foreign quotas on their
imports. These regulations aim to
protect the domestic industry of China’s trading partners. Troubling for China, the WTO
agreement includes the Product-Specific Transitional Safeguard Provisions,
which allow WTO members to reinstitute quotas or delay the reduction of
tariffs for up to 12 years in order to protect their own industry. While these provisions seek to protect
trading partners, if exploited, could result in a stiffer trading environment
than that which would exist without China’s WTO accession. Therefore, in order to protect
domestic industry as well as realise the benefits associated with China’s
accession, both China and other WTO member nations have it in their best
interests to work cooperatively to avoid retaliatory measures and
progressively allow changes in trade patterns to take place. Preferential
Treatment for Developing Countries Preferential treatment is accorded
to developing nations in their accession to the WTO under the assumption that
it is more difficult (would result is greater disruption of the domestic
economy) for them to abide by WTO regulation than it is for the
industrialised and developed world. As stated, due to China’s large
size and strong growth through the 1980’s and 90’s, China was accorded
developing status with provisions to account for its unique
circumstances. While
in many cases China will have access to developing status provisions, in
other cases, it will experience tighter provisions than other developing
nations. 11/ Specifically, China has obtained
transitional arrangements which allow the progressive phasing out of quotas
and licenses for exporting, and the phased entry of foreign enterprise
participation in the domestic market.
Subsequently, although China had to accept a limit of 8.5 percent on de
minimis domestic support, as apposed to the usual 10 percent for
developing countries, limiting its ability to protect its domestic industry,
the progressive nature of tariff and foreign entry provisions accord it
greater ability to mitigate impact on its domestic industry from another
front. While China’s
domestic industry will ultimately be impacted by the changes associated with
accession, limited preferential treatment as a quasi-developing nation will
allow it greater flexibility in easing economic disturbances in its
transition. Most relevant to China
are the reforms associated with market opening and undistorted trade. 12/ Although all avenues will
realise significant impact in the Chinese economy, the broadest shifts in
production and trade will be as a result of the stark reduction in tariffs,
the ending of subsidies for inefficient Chinese industries (most specifically
the State Owned Enterprises), as well as the extent to which trading partners
institute antidumping proceedings. As quotas and tariffs are
reduced, and Chinese production shifts in favour of its industries of
comparative advantage, the nature of long run trade patterns will be reliant
upon the extent of cooperation of trading partners in allowing these drastic
shifts to take place without exploiting antidumping provisions in protection
of their own industries. |
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The specific changes taking
place will realise shifts based upon their respective sectors of impact, with
the three main sectors of economic analysis, the agriculture, manufacturing,
and services sectors, serving to illustrate the major impact of economic
transition. Sectoral Impacts of
Accession Agriculture With half the national workforce
and nearly one fifth of total output reliant on
agriculture, the impact on China’s agricultural sector as a result of
accession is of great concern. 14/ The major impact on agriculture will stem
from a lowering of the overall average agricultural tariffs by more than a
half, and the elimination of several non-tariff barriers. However, while tariffs are
lowered and barriers eliminated, China will continue the
use of tariff-rate quotas (TRQs) for several key agricultural products as
well as maintain a state trading system in grains (wheat, maize and rice),
soybean oil, and cotton, therefore the real level of protection which
persists is difficult to estimate. 15/ In the short term, net impacts
will be small. The TRQ system will be able to mitigate liberalisation
pressures, and international barriers will prevent full exploitation of
potential benefits. Specifically,
impacts on meat and livestock will be positive, with a negative impact on all
other agriculture. China has a low ratio of capital
stock and of arable land relative to labour, generating a comparative
advantage in labour-intensive industry.
Therefore in the longer term, market liberalisation and foreign quota
size increases will lead to a decline in land-intensive sectors (such as
grain and cotton), and an increase in labour-intensive sectors (livestock,
fruit, flowers, vegetables), due to structural shifts towards China’s
comparative advantage. In general, the long-term net
impact will be slightly positive while varying across provinces depending on
local agriculture. 16/ These shifts in production
trends will result in short term increases in unemployment for farmers mostly
outside cities. However, due to the
removal of foreign quotas on Chinese textiles and clothing, farm workers will
be able leave the inefficient farm sectors and find reemployment in the
expanding textile and apparel industry.
Furthermore, farming is increasingly
becoming a part time occupation in china, with potential for farm incomes to
be supplemented by off farm employment, providing relief for structural
unemployment changes in the Chinese economy. Manufacturing The Chinese manufacturing sector
serves to benefit more than agriculture due to accession. Historically, the manufacturing sector has
been marked by a dualistic nature: a
liberal export regime met by a protected trade policy. With accession, the liberal export regime
will be expanded and the protected trade policy will be progressively
eliminated. The most dramatic changes will
take place as a result of a drop in tariffs on manufactured goods from 24
percent in 1997 to 7 percent within 5 years of
accession, coupled with the elimination of the MFA for all WTO members. Furthermore, tariffs on information and
communications technologies will be fully eliminated (from 13 percent today),
and auto tariffs, which stand at 80-100 percent today, will be cut to 25
percent by 2006. 17/
The general result will be a
surge of competition from foreign firms in China’s domestic market in the
capital-intensive industrial sector (automobiles, petrochemicals, metal), as well
as energy, processed foods, and pharmaceuticals due to an attack on
inefficient, government-subsidised Chinese industry. Due to the structure of China’s
labour market which carries large excess capacity, and
many firms with excess labour and low profitability, the shift in production
will force large increases in unemployment.
In conjunction, there is an expectation of accelerated consolidation
of the manufacturing industry with foreign market share increasing for all
manufactured goods except for electronics where China will gain. 18/ More specifically, medium sized
Chinese firms, which have been operating in a competitive domestic market,
are fast growing and have flexible cost structures, will be able to
aggressively enter foreign markets and compete in the tighter market
environment. Conversely, larger firms
that have relied heavily on government support and monopolised industry, lag
significantly behind global competitors and will experience large and
threatening competition in the new global marketplace. These
significant threats to the Chinese manufacturing industry are met by huge
potential for gains as a result of the phasing out of WTO agreements on
textiles and clothing, which leave room for extensive growth of the Chinese
apparel industry due to its significant comparative advantage. While the automobile sector will
see the most significant cut in tariffs (from 80-100 percent to 25 percent),
as the world’s largest textile producer and exporter, the doubling of wearing
apparel production and significant increase in other textile related
industries will prove to be the greatest gain in manufacturing as a result of
accession. 19/ As is the case with the
agricultural sector, the reduction of tariffs and trade barriers in the
manufacturing sector, coupled with foreign reduction of import quotas, will
result in an overall shift towards China’s comparative advantage. As a result, remaining industries will
experience increased competition, increased efficiency, and the nation an
overall increase in GDP due to the expansion of primary industry. Services The projected boom in the
Chinese services sector will bring the most dramatic
changes in China’s employment, consumption, and production structure. Prior to entry to the WTO “a highly
restrictive policy regime for services delivery that does not allow it to
respond effectively to the growing demand for services” existed in China. 20/ Most services were entirely managed
and controlled by the government with dominant providers in major services
such as banking, insurance, telecommunications, passenger air transport, and
railways having great monopoly power.
A high social welfare dimension
created high policy-induced barriers to entry, including price regulation,
low resource efficiency, and low product innovation and quality
improvements. As a result, Chinese
consumers were left with inadequate or poor quality services met by
ever-rising prices. A full liberalisation of the
services sector will take place as a result of accession. Specifically, liberalisation of the
financial sector consists of foreign banks being allowed to conduct renminbi
(RMB) businesses with Chinese firms and retail
customers, restrictions on the securities business, financing by non-bank
firms, and insurance business will be reduced, restrictions on distribution
services and logistics management will be removed within three years of
accession, and the progressive liberalisation of the telecommunications
sector will take place. With
currently only 1.6 percent of bank assets being foreign, there is enormous
potential for change. 21/ As experienced foreign firms begin to enter the Chinese market, competition
will force inefficient Chinese firms to either exit the industry, or
consolidate and reorganise in order to better compete. Furthermore, the nature of the services
sector - customer interface, labour intensity, high domestic content –
implies large growth in employment with expansion of the services industry. As a result, wages of unskilled
workers in China are expected to grow between 60 and 90 percent faster than
skilled workers despite the expected retrenchment in manufacturing and the
secular decline in agriculture. 22/ In general, the expansion of the
services sector represents the opportunity for greatest growth within the
domestic Chinese economy both with the influx of foreign participation in the
sector and its impact on increased employment for Chinese workers. |
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While increased exports from
China will lower the import prices of its trading partners and improve their
competitiveness, countries that specialise in similar products for which
China has a comparative advantage will experience increased competition in
foreign markets, potentially leading to the diversion of foreign direct
investment (FDI) from competing countries to China. China’s WTO accession will
impact East Asian nations through 4 major channels:
These channels of impact will
result in a small overall impact, however trade induced productivity gains
could amplify effects substantially. 23/ Channels of Impact Increased access to China’s domestic market With more than 60 percent of
China’s imports coming from other East Asian Nations, increased access to
China’s large domestic market creates large potential for exports to China
from the region to gain as a result of China’s accession. 24/ The commitment of the Chinese
government to extend national treatment to foreign funded firms creates
greater opportunities for exporters of services ranging from
telecommunications to banking. In
manufacturing, agreements to abolish non-tariff barriers
and reduce tariffs from 13.3 percent in 2001 to 6.8 percent by the end of
implementation 25/, leaves room for increased imports
of more efficient suppliers of capital-intensive goods to flow into the
Chinese domestic market. In
agriculture, the projected increase in imports to china of non-labour
intensive goods will also serve as an exogenous shock to the economies of the
region. These shifts, which open up a
large economy in the East Asian region, and have low
transportation costs for regional exporters, create increased demand in
China’s major trading partners.
Importers will be able to offer a higher quantity of goods at lower
prices to Chinese consumers representative of their domestic comparative
advantages. The result will be an
inflow of capital-intensive goods from East Asian producers, and an increase
in welfare for Chinese consumers who will enjoy lower priced foreign
substitutes. 26/ Increased imports from China Reductions in protection for
Chinese industry will be the main fuel for increased exports from China. The decrease in protection will only allow
efficient firms to compete and drive down export prices from china, thus
increasing the appeal of China as an efficient supplier. The East Asian region will benefit from increased
welfare from cheaper imported goods as well as increased output using cheaper
intermediate inputs from china to be used in their own manufacturing. While both China and its trading
partners serve to benefit from the increase in Chinese exports, in order to
exploit all benefits, partners will have to resist protectionist pressures
for their own industry as cheaper Chinese goods may displace their own
domestic goods. Increased competition in third markets As the Chinese market is
progressively opened, competition with Chinese goods will increase in third
markets as a result of the drop in prices of Chinese goods. Countries which have a similar comparative
advantage in labour-intensive goods as China does will be challenged to
compete with an exporting giant. As a result of the removal of
quotas and tariff reductions, China will increase market share in non-quota
constrained Asian countries from both exploiting developing economies of
scale as well as using cheap foreign imports as inputs to Chinese
manufactured goods. East Asian
countries will generally lose market share for their exports of labour
intensive goods and be forced to shift production towards sectors which
either complement Chinese exports or are driven by efficient use of other
unrelated resources. Shifts in investment patterns The main impacts of accession on
investment patterns are those associated with the reduction of restrictions
on foreign participation in the Chinese marketplace, which will bring down
transaction costs and fuel increased foreign investment in Chinese industry,
especially the expanding services sector. As trade liberalises, production
costs and the price of capital goods will decrease, and rental rates will
increase, resulting in a rising return on capital in China. This shift could draw investment away from
East Asian countries previously seen as most profitable, and towards the new
and larger Chinese market. However, increases of FDI in
China will lead to increases in productivity associated with advanced
technology, thus increasing demand for high technology imports and perhaps
FDI in those countries supplying the imports. Additionally, relief of local
content requirements under Trade-Related Investment Measures (TRIMSs) could
encourage the diversification of the locations of different stages of the
production process for manufactured goods, potentially increasing the
linkages between industries in the region, thus spilling over increased FDI
to production networked countries in East Asia. Therefore, the net shift in
investment patterns will be the aggregate of investment flows out of other
East Asian nations due to the liberalised Chinese market, and investment
inflows due to increased demand for high technology as well as an increase in
the inter-reliance of production in the region. Lastly, the factors contributing
to FDI patterns change with time. As
a result of trade induced productivity gains, China can
be expected to expand and shift its comparative advantage towards higher end
products. Thus China’s accession may
also lead to increased competition in global markets for FDI for the newly
industrialising countries of East Asia. 27/ Impact on Newly
Industrialising Economies of East Asia (NIEs) Fittingly, China will be the
largest beneficiary of its accession to the WTO gaining around 1 percent of
its GDP annually. 28/ Although Japan and the NIEs of East Asia
including Taiwan, Korea, and Hong Kong will also benefit, their gain will be
small relative to the size of their economies and their previously projected
growth. As suppliers of raw materials
to China, they will realise improvement in terms of trade and returns to
capital, which will largely benefit the domestic economies on multiple
fronts. While domestic garment
industries will experience increased competition as quotas on Chinese exports
are removed, their relatively large textile industries will see a raise in
output of textiles with increased demand to fuel China’s expanding apparel
industry. Furthermore, there will be
an increased demand for imports of petrochemicals, electronics, light
manufactures, and metals from countries with the lowest respective tariffs. Aside from the large focus on
textiles and apparel, possibly the largest sector to gain will be from the
increased demand for all services including transport, communications, and
financial services (primarily from HK) which the NIEs have gained experience
in with industrialisation. With this increased
demand, FDI should rise due to increasing returns to capital as the East
Asian NIEs are generally suppliers of raw materials to China rather than
competitors in industries which China has a comparative advantage. Additionally, they will become suppliers
of services whose sectors are underdeveloped and uncompetitive in the
domestic Chinese market. Overall,
although domestic textile industries of East Asian NIEs may suffer, increases
in demand for raw materials as inputs to Chinese manufactured goods as well
as high technology goods and services will result in a net benefit to the
newly industrialising countries of East Asia. Impact on Developing
Economies of East Asia The developing economies of East
Asia will experience small declines in real GDP and welfare due to China’s
accession. Mixed impacts including
increased opportunity for exporters with increased competition for some
sectors, most notably apparel and textiles, will force significant
adjustments in domestic economies. Growing import demand gives
opportunity for expanding agroprocessing, electronics, machinery, and
equipment with expanded exports of oilseeds, sugar, raw materials (timber, energy products), also compensating for
increased competition in sectors sharing China’s comparative advantage. 29/ An important negative impact
concerns the downward pressure to be experienced by unskilled labour wages due to contraction in unskilled
labour-intensive industries. As a
result, “the developing East Asian economies will need to invest in training
of unskilled workers and other labour policies in order to facilitate the
transition from textiles and clothing production to high end manufacturing”. 30/ In consolation, reduction of protection
for Chinese markets offers opportunities for exporters to China; increasing
competition with China in third markets, and shifting FDI flows mostly into
the developing economies farm, timber, energy, and other manufacturing
sectors with increased demand from China. With developing nations in great
need for foreign investment in order to progressively industrialise, the
overall impact of foreign investment flows will depend upon the policy
decision of individual countries. With
opportunities for growth stemming from complementing production industries as
discussed above due to the removal of domestic content requirements in China,
net impact on FDI will be the sum of shifts to industries of comparative
advantage as well as these new opportunities for investment. While the global economy stands
to benefit from the opening of China to world trade, the developing economies
of East Asia will be the ones to experience the greatest negative impacts on
general welfare and the largest externally induced structural adjustments. |
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Exploitation of new foreign
markets as a result of the removal of quotas on Chinese goods represents the
major avenue for increased gain.
China’s comparative advantage in labour intensive manufacturing should
be promoted, and inefficient government supported capital intensive industries
should give way to large-scale consolidation and productivity improvements
through advanced technology. To mitigate labour
pressures, barriers to rural-urban labour mobility should be reduced,
possibly with the elimination of the hukou system, as well as the removal of
residence permits, social insurance, and land reforms. 31/ The elimination of such barriers
would allow dislocated agricultural workers to migrate to cities and find
reemployment in the growing textile and apparel-manufacturing sector. Secondly, China should put great focus on
increasing the availability and quality of education at all levels both to
foster a highly educated professional class as well as to educated unskilled
workers. As short-term labour
dislocations negatively impact rural Chinese, the policy options would
increase their ability to migrate towards sectors with increasing demand for
labour, as well as increase their skill level and the overall productivity of
Chinese industry. Similarly, China’s East Asian
trading partners should pursue analogous policy options. Specifically, the newly industrialised
economies would benefit from the exploitation of the new market for their
exports of capital intensive goods, possibly utilising consolidation of
industry in order to take advantage of economies of scale in attempting to
satisfy the demand of a large market, as well as shifting their production
focus from those sectors which compete with China’s comparative advantage to
those which complement it. In order to survive the
potentially harsh transition, the developing economies must invest in
education, develop durable social safety nets for dislocated workers in
labour intensive industries, and train unskilled workers to be employed in
new, higher end manufacturing. The mitigation of the adverse
effects of China’s accession on the developing nations will be wholly a
function of the respective governments and industries ability to accept the
shift in production away from China’s comparative advantage, and channel
investment towards industrialising industries with potential for future
growth. Here, labour mobility and
education will be key, with attempts to protect inefficient domestic industry
and impose retaliatory trade barriers only leading to future strain on
domestic markets. |
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For China, short term labour
dislocations and consolidation and reform of State Owned Enterprises (SOEs)
will be met by a boom in long run export capacity due to the elimination of
foreign quotas as well as the availability of cheaper intermediate inputs to
manufactured goods available with the reduction of tariffs. Similarly, China’s East Asian
trading partners will experience increased competition both in domestic and
third markets for goods whose production share a comparative advantage with
China, while they will be able to exploit a large new market for both capital
intensive, raw material, and high technology goods, as well as a lucrative
opportunity for expansion of foreign provided services. With China’s move to join the global economy, it as well as the
industrialised world will clearly experience a net gain,
with China’s share of World trade expected to double. 33/ Although short term transitional impacts
may be adverse for many involved nations, with informed policy decisions as
well as patience, China’s entry into the World Trade Organisation will result
in long run gain for both China and its East Asian trading partners. |
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Bhattasali, Deepak and Kawai,
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2. Stiles,
Julie, China and the WTO: What it Means
for Us? ECHO, No. 1 (September 2003) pp 8-9 (Sydney, Australia). Return to text. 3. Zhai, Fan
and Li, Shantong, The Implications of
Accession to WTO on China’s Economy. Development Research Centre, The
State Council of the People’s Republic of China (May, 2000), p.2. Return to text. 4. Adhikari,
Ramesh and Yang, Yongzheng, “What
Will WTO Membership Mean for China and Its Trading Partners?” Asian
Development Bank, Finance and Development, Vol. 39, No. 3 (September
2002). Available at: http://www.imp.org/external/pubs/ft/fandd/2002/09/adhikari.htm. Return to text. 5. Krumm,
Kathie and Kharas, Homi, East Asia
Integrates: A Trade Policy Agenda for Shared Growth, The World Bank,
2003, p. 36. Return
to text. 6. Zerby,
John, China’s Entry into the WTO,
Lecture, Dwyer Theatre, University of New South Wales, 18 August 2003. Return to text. 7. Krumm and
Kharas, op. cit., pp. 36-37. Return to text. 8. Ibid. p.36. Return to text. 9. Ibid, p.37. Return
to text. 10. Ibid, p.38. Return
to text. 11. Ibid, p.39. Return to text. 12. Zerby, op.
cit. Return
to text. 13. Adhikari
and Yang, op. cit. Return to text. 14. Bhattasali,
Deepak. and Kawai, Masahiro, Kawai, Implications of China’s Accession to the
World Trade Organisation, The
World Bank, Washington DC, April 12, 2001,
p.7. Return
to text. 15. Bhattasali
and Kawai, op.cit. p.8-9. Return to text. 16 Ibid, p.10. Return to text. 17 Ibid, p.11. Return to text. 18. Ibid, p.11. Return to text. 19. Ibid,
p.12. Return
to text. 20. Ibid, p.13. Return to text. 21. Ibid, p.13. Return to text. 22. Ibid, p.14. Return to text. 23. Ianchovichina,
Elena and Walmsley, Terrie, Impact of
China’s WTO Accession on East Asia, World Bank Policy Research Working
Paper 3109, Washington, DC, August
2003. p. 2-3. Return
to text. 24. Ibid, p.4. Return to text. 25. Ibid, p.5. Return to text. 26. Ibid.
Return to text. 27. Ibid, p.7. Return to text. 28. Ibid, p.11. Return to text. 29. Ibid, p.14. Return to text. 30. Ibid.
Return to text. 31. Ianchovichina,
Elena and Martin, William, Economic Impacts of China’s Accession to
the World Trade Organisation, World Bank Policy Research Working Paper
3053, Washington, DC, May 2003. Return to text. 32. Bhattasali
and Masahiro, op. cit. p.22. Return to text. 33. Ibid,
p.23. Return to
text. |
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