China joined the World Trade Organization on February 20th, 2006, becoming one of the last major trading countries to join the organization. This sends a clear message to the world that China is ready to become a fully powerful member of the global economy. Joining the WTO will bring great benefits to China: expanding trade, promoting further economic reform, attracting more foreign investment and promoting the rule of law.
At home, joining the WTO will undoubtedly bring great responsibilities and challenges to the leaders of China and the people of China. Abroad, this will fundamentally redefine China's relations with other countries, especially with the United States, China's most important export market, not to mention China's relations with its Asian neighbors.
One thing is certain: China's accession to the WTO will bring changes far beyond its trade relations with other countries, which will bring benefits and challenges. How to maximize benefits and reduce risks is still a controversial issue for policy makers, business people and consumers.
Why does China need WTO?
China's rapid economic development in the past 20 years is a well-known successful experience. Driven by strong reform measures, the average annual growth rate of nearly 10% has created a lot of new employment and investment opportunities, making China more prosperous. China's transformation from a closed-door planned economy to a more market-oriented trading power has had an impact on the global economy, affecting everything from consumer choice to investment flows.
But rapid development is not without cost. In particular, it mercilessly reveals some structural weaknesses in China's economic system, especially in agriculture, finance and state-owned enterprises. The contradiction facing China has always been, and will continue to be, how to best maintain the momentum of economic growth and structural reform, because if one of them stagnates, the other is likely to be frustrated, which may lead to another series of new economic challenges and difficulties.
In many ways, joining the WTO is the best choice for China to keep the pace of economic development and reform. As the world economy becomes more complex and interrelated, it becomes more critical for China, the United States, Asia and the world for China to participate in the world economy according to international trade rules. As a member of WTO, China will be able to participate in the formulation of international trade and investment management rules.
Similarly, China will be able to use the dispute settlement mechanism of the WTO to protect its trade interests. One advantage of China exporters is that they can now be sure that their trading partners must abide by WTO rules. For example, this means that WTO members will not be able to discriminate against China products in their own domestic markets. Joining the WTO will make China more attractive to foreign investors. More investment in China means more high-paying jobs, more government taxes and more technology transfer. China's commitment to the WTO will help to increase competition in various economic fields. Consumers in China will directly benefit from more choices, lower prices and higher quality brought by competition, not to mention their knowledge and understanding of intellectual property rights and consumer rights. Competition will help to improve efficiency and productivity, and ultimately strengthen China's economy and enhance the ability of China companies to compete with the best multinational companies in any market.
China's economy will benefit from the expansion of service industry. After China's entry into WTO, foreign companies hope to introduce insurance, finance and distribution industries into China. Competition in these fields will in turn stimulate the domestic service industry in China, thus giving enterprises and consumers a wider choice.
Perhaps most importantly, as China fulfills its commitments to the WTO, especially those laws and regulations aimed at creating the most transparent and non-discriminatory trade, consumers and companies will benefit from the broader rule of law.
China's obligations in the WTO.
China will benefit a lot from joining the WTO, but joining the WTO not only means enjoying certain rights and interests, but also means taking on specific responsibilities. China joined the WTO after 15 years of hard negotiations, especially with the United States and the European Union. China has made many promises. In order to fully understand these commitments, people need to study the 65,438+0,000-page China Protocol, the report of the Working Party and the schedule of commitments for goods and services. Here we only outline the main contents of China's WTO accession documents:
◆ Reduce tariffs
The most important industrial tariff of American enterprises will be reduced from 25% to 7%.
The most important agricultural tariff for American farmers and herdsmen will be reduced from 3 1% to 14%.
◆ Committed to the service industry
Open a wide range of service industries, including important industries in the United States, such as banking, insurance, telecommunications and professional services.
◆ System reform
:: Extensive reforms in transparency, notification and consultation, consistent law enforcement and judicial review will help remove obstacles for foreign companies to do business in China.
◆ Abide by the current WTO agreement.
China will undertake the obligations stipulated in several existing WTO agreements, covering agriculture, import license, trade intellectual property rights, technical barriers to trade and trade-related investment measures.
◆ Trade liberalization provisions specifically for China.
The right to direct import and export trade with China customers within three years.
The right to sell all products in China within three years after China's accession to the WTO (except chemical fertilizers, crude oil and refined oil, which can be sold in wholesale after five years, and chemical fertilizers can be sold in retail after five years).
Approval of investment and import is no longer subject to trade-distorting requirements, such as technology transfer, foreign exchange balance, export performance and the proportion of local raw materials.
You don't need to invest and register in China to have the right to export to China. Non-tariff measures such as quotas and licenses for hundreds of products will be phased out, and all non-tariff measures inconsistent with WTO rules will be phased out before 2005 1.
Cancel the monopoly of state trading companies on the import of industrial and agricultural products.
State-owned enterprises are required to make purchasing and sales decisions based entirely on commercial considerations.
Cancel export subsidies for agricultural products and import substitution and export subsidies for industrial products.
◆ Guarantee mechanism
The United States and other WTO members can continue to use special non-market economy methods to measure dumping in anti-dumping cases against China in 15.
According to the safeguard mechanism specifically involving China, the United States and other WTO members can limit the growth of China's imports that disrupt their markets within 12 years.
The time and energy spent negotiating these commitments prove that China is determined to become a fully integrated member of this rules-based global trading system. Although the victory of China's entry into the WTO is hard-won, China is facing another challenge that is equally worthy of efforts but equally difficult in many aspects. From the commitments listed above, we can see that China is undergoing great changes to fulfill its WTO obligations, such as reorganizing its industry, publishing previously published laws and regulations internally, establishing formal dispute adjudication procedures, and providing a level playing field for foreign companies. China agreed to lower tariffs, cancel import quotas, cancel export subsidies and open competition in the service industry. Some of these changes will be realized immediately, and some will be gradually realized in a few years.
China and its neighboring countries and regions.
China has a population of1300 million, and China's economy is becoming more diversified and stronger. China's accession to the WTO (at the same time as Taiwan Province Province) will inevitably change the structure and characteristics of this trade organization, which will have a direct impact on China's relations with other countries, especially its neighbors. Many Asian countries are facing economic recession, and these countries hope to revive their economies by increasing exports. In some ways, China not only poses a competitive challenge for these countries to achieve their goals, but also provides them with opportunities to benefit from China's strong economic performance.
From 1995 to 200 1, the proportion of China's exports in the world increased from 2.9% to 3.9%, while Thailand and Indonesia's exports stagnated in the same period. In the past four years, China has surpassed Malaysian and Singaporean in the export of electronic products to the United States.
On the other hand, China's entry into WTO will also help countries and regions exporting high-value products to promote the growth of GDP. According to a recent research report of ubs warburg Investment Bank, China's entry into WTO will promote the economic growth of Taiwan Province Province, which will be equivalent to 65,438+0.7% of Taiwan Province's GDP in 2000 by 2005. With the increasing demand of China for the export products of other newly industrialized economies in Asia, it is estimated that the income of these economies will reach 65,438+0.65,438+0% of their GDP in 2000.
However, for most Southeast Asian countries, the prospects are not so bright. UBS Warburg Company estimates that by 2005, the losses suffered by Southeast Asian economies will be equivalent to 0. 1% to 0.2% of their GDP in 2000. For India, this figure may be as high as 0.7%. This is one of the reasons why ASEAN and China agreed to work hard to open up trade.
US-China relations
How China fulfills its WTO membership obligations will directly affect the future of US-China relations. China leaders have repeatedly stated their determination to fully implement the commitments made in China. The interests of both the United States and China require avoiding the increase of US-China trade friction caused by China's inability or unwillingness to fulfill its WTO commitments.
Of course, the trade friction between the United States and China will not disappear with China's accession to the WTO, just as the trade friction between the United States and many established WTO trading partners has not disappeared. On the contrary, at least in the initial stage of China's entry into WTO, the possibility of friction will increase due to the expansion of the scale and scope of trade relations between the two countries. China's trade surplus with the United States is growing rapidly. If American companies find that China's market access commitment cannot be realized as quickly as expected, the result may lead to the slow growth of American exports, the politically unsustainable bilateral trade surplus between China and the United States and the intensification of trade frictions to varying degrees.
The United States and other WTO members can play an extremely important role in avoiding the above situation by helping China fulfill its obligations to the WTO. For example, the US Consulate General in Shanghai, in cooperation with u.s.-china business council, held a video conference to let American trade law experts talk with China officials. Similarly, the US Embassy in Beijing cooperated with a local TV Correspondence College in Peking University to provide online training opportunities related to WTO for China communities. The Commercial Office of the Embassy organized a series of seminars to let local officials know about WTO principles. The EU has also allocated about $23 million to help China officials understand WTO rules and concepts as soon as possible, such as the protection of intellectual property rights.
Although China is under great pressure to abide by international rules and fully fulfill its WTO commitments, it should be remembered that trade disputes are not always one-way. China will also be able to resort to the WTO mechanism to resolve its trade disputes with other WTO members.
Although China faces challenges, there is no doubt that joining the WTO is the right choice for China and is beneficial to the world economic system. Joining the WTO will make China closely linked with the international economy and society, and will eventually bring more employment and investment opportunities to China, and bring greater social stability because the rule of law is further rooted in economic operation and management. The American people will benefit from more export opportunities to China, more domestic employment opportunities and more overseas investment options. With the expansion of trade and commercial relations between the two countries, direct contact, exchange of views and technology transfer between the people of the United States and China will also increase. In addition, with the closer cooperation between the United States and China in a wide range of fields related to global economic stability, security and prosperity, the growing sense of interdependence through the WTO will help strengthen the sense of mission of the two countries.