After 15 years of
negotiation, and making maximum concessions to WTO members, China eventually
gained accession to the WTO. The mass media in China was filled with euphoria.
However, let us take a close look at some of the facts revealed by the press in
order to come to some assessment of the pros and cons of China’s
accession.
The editorial of the
Hong Kong Wen Hui Bao, on the day following China’s accession,
wrote that this implies China will enjoy multi-lateral, steady and
unconditional most favoured nation treatment, defend China’s
state interests, and prompt China’s accelerated economic systemic reform and
restructuring. This will also imply China’s marketization and
internationalization. The editorial ended with the phrase “the
formation of China’s socialist market economy will rise above
all obstacles”.
The sector that may
benefit most from the accession is textiles. The USA, EU, Turkey and others
will formally cancel all quota restrictions on China’s textile
exports by 2005. Next to that is the electronics industry. The World Bank gave
an optimistic estimate of China’s annual economic growth to be 2%. Niu
Wenyuan, Chief Scientist of the Sustained Development Strategy Division of the
China Academy of Sciences, estimated that in the next five to ten years, about
30 to 40 million jobs will be created.
However, there are
worries about possible severe impacts on agriculture, state enterprises and
current product quality. With China drastically reducing tariffs on imports,
foreign industrial and agricultural goods may be dumped into China, creating
serious difficulties for Chinese products to compete. It is estimated that in
the four years starting from the beginning of 2002, the overall level of tariffs
on industrial goods will drop from 15.3% to 12%. The decrease will affect over
70% of tariff items, and low tariff items (lower than 10%) will increase to
about half of all items. The average tariff rate for over 300 information
technology products will be reduced to about 5%, of which over 100 items will
be tariff-free. By 2005, there will be further drastic changes, and items with
tariff over 25% will be reduced by half from now, and constitute less than 5%
of all items. The general tariff rate will go below the average level of
developing countries (9-10%). The tariff for automobiles will go down from the
current 70-90% to a standard 25% by July 2006. This will create much pressure
on the domestic automobile industry.
It is also estimated
that with such competition and with the economic restructuring, tens of
millions of workers will be laid off. The impact on peasants will also be
serious. Take soya bean as example. The price of imported soya beans is lower
by 15-20% compared to domestic products. The tariff rate is only 3%.
According to the tariff
agreement, China will by stages reduce tariff on agricultural products starting
from January 2001. By 2004, the average tariff rate on imports will be reduced
from the present 20-30% to 14.5-15%. By 2006, the quota on certain imported
agricultural products such as soya oil and vegetable oil will be cancelled, and
all tariffs will be uniformly reduced to 9%. The Minister of Agriculture of the
USA commented that US farmers will immediately benefit from exporting
agricultural goods to China, and it is estimated the annual increase will be
USD 2 billion. It is also believed that more peasants will be transferring to
the urban or industrial sector.
Telecommunications and
insurance will be the two major sectors that will be open to foreign capital.
Related ordinances restricting their operation by foreign capital have been
removed. That means China could be attracting more foreign capital and
investment, providing the ground for activity by global capitalism. Major
state-owned enterprises will also be restructured and shares will be sold to
foreign investors. Statistics show that by the end of 1999, 81% of state-owned
enterprises have been corporatized. On the other hand, the operating mechanisms
of two-thirds of small state-owned enterprises have been changed through
shareholding system, joint capital ventures, sale or bankruptcy.
There are also
orientations towards privatization of land ownership through the idea of “operating
agriculture by science and education”. This could allow
limited transfer of land use rights from individual peasants to corporations.
There have obviously
been differences of views concerning China’s accession to the
WTOI, which is why the Premier Zhu Rongji, in a meeting on Dec 9, stressed that
“all
levels of leadership should correctly understand the significance of the
accession to the WTO, and unify all opinions under the central leadership’s
policies.”
It is also expected that the masses of workers and peasants will resist the
adverse impacts on their working and living conditions with China’s
accession to the WTO and further concessions to the forces of global
capitalism. More resistances, protests and organization will inevitably follow.
25 December 2001