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The role of WTO in China Essay

China completed a 15-year quest on 10th November in 2001 in the Qatari capital of Doha to join the World Trade Organisation (WTO). It brings a market of 1.3billion people into the global system and changes the way China dose business with the world.

France’s finance minister Laurent Fabius said, ” We are talking about the WTO. Yet the ‘W ‘ without China is not the World. Now it will be.” It indicates the entry of China – the world’s most populous nation into the World Trade Organisation is inevitable.

WTO membership will open more markets for China’s rapidly expanding economy. It means China is mastering enormous opportunities. But it will also make China’s industries into merciless foreign competition as tariffs are lowered. Tense of millions of people could loss their work. China is facing more challenges also. As a result, joining the WTO will impact on the economic, political and social life in China within a decade.

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The Impact of WTO Entry On China’s Economic

By the report (the report is about WTO accession to China), we can draw four policies: cutting tariffs on industrial products; phasing out non- tariff barriers in industrial departments; liberalizing agricultural trade; and phasing out the Multi-Fiber Arrangement (MFA) quotas for Chinese textile and garment exports to developed countries.

The policies indicate that joining the WTO will increase China’s economic efficiency. However, joining the WTO means more economic restructuring, with restructuring, with structural unemployment as the chief adjustment cost. China has to challenge the industrialization and globalization. At the mean time, China will strive to master the opportunities rather than refuse them. The analysts think the benefits of China’s WTO entry would be the standardization and expansion of China’s export market, and the sanctions of China to enjoy more treatments in trade. Nevertheless, China’s industries and enterprises will face reforming and fiercer competition from international corporations.

WTO and China’s Industries

The analyses shows there are 8 main industries will be affected deeply with the WTO accession. They include textile industry, steel industry, petroleum and petrochemical industry, machinery industry, automotive industry, information technology industry, telecommunication industry and financial service industry.

First of all, China is the world’s largest textile product and exporter, and the production and exportation of textile is quite important both to economic development and foreign exchange balance. The new system for international textile trade will have a far- reaching impact on the international pattern. According to the needs of competitions, China’s textile industry has to change the economic growth mode; adjust the industrial structure and productive forces to narrow the gap between China and the outside world; and create a market environment for fair competition.

Secondly, as one of the sectors providing basic raw materials, china’s steel industry plays a decisive role in the national economy. At present, China’s tariff rate for steel products almost meets WTO requirements. Therefore, China’s WTO entry well not have much impact on most of its steel products, but will seriously challenge the industry’s current trade policy and management system.

Thirdly, in machinery industry, WTO entry will help deepen the reform of the machine-building industry; improve the export environment for machinery products; and facilitate the introduction of foreign technology. In general, China’s machinery industry is facing opportunities for getting ahead in the international market, for attracting international capital. However, many uncompetitive enterprises will suffer bankrupts. The Chinese economists have recommended the main solutions to the China’s machinery industry. For example, strategically recognizing the machinery industry and optimise the industry’s organizational structure; adjusting the product structure; accelerating the opening of the machinery industry to the outside world; developing large enterprises groups; and utilizing tariffs to balance production and consumption.

Fourthly, China’s automotive industry is still in its infancy. It will require a certain of protection to allow it to grow after WTO entry. In terms of long-term development, China’s automotive industry needs to sharpen its competitive edge through global market competition.

finally, there are some advantages and disadvantages in other China’s industries.

In terms of development, China’s industrial -level comparative advantage is chiefly found in production and results from fairly low labour costs.

WTO and China’s Enterprises

From 2001-2006, China is to cut tariffs across the board, from an average of 24.6 percent to 9.4 percent. It will allow more foreign goods into the domestic market at lower prices. Imports into China are predicted to rise. After phasing out the restrictions on foreign companies to produce and sell within the domestic economy of China, Transnationals will be free to establish their warehouse, marketing and customer support. All of these will increase the pressure and competition on Chinese enterprises.

So, how to catch up the world trend, to improve the competitiveness and to keep up with the international track has become the emergency of each enterprise. WTO help the enterprises realise the construction and development of imformationization in the following ways.

Firstly, They pay more attention to the information, human resources management; via network technology so as to reduce the cost and enhance the production efficiency; form their own windows of promotion, sales and communication with the clients via network technology so as to strengthen the contact with outside.

secondly, they set up industry network platform. It form the industrial community and accelerate the communication among the enterprise; obtain the latest, rich industrial and commercial information and grasp the chances in time; establish cooperation relationship, and learn from each other and create glory together.

Thirdly, the China enterprises not only obtain the overseas industry information, but also open contacting offices overseas, building the double channels between enterprises and the world, both on line and off line. In this way, it enables the China enterprises understand the operation styles of international enterprises and change their notions; develop the overseas markets and become stronger and stronger in international competition.

In other aspect, with China’s entry into the WTO, improving the awareness to safeguard the environment has become more urgent. Over the years, pollutants discharged from factories have severely damaged China’s environment. China’s economic activities will become more and more dynamic in the future, industrial development will be restricted if such environment issues are not solved. The enterprises should not be responsible for not only the quality of their products, but also their impact on the environment. China will facilitate international exchanges to help more enterprises learn how to better protect the environment.

So, in terms of the growth of multinational corporations, the international competitiveness of Chinese enterprises is still in making.

WTO and China’s politics

China’s WTO membership will impact significantly on the way the government administers its industrial and commercial enterprises. The government is speeding up management system reform. In addition, China’s commercial law is being subjected to hundreds of changes to protect the property rights of foreign corporations and private businessmen.

WTO and China’s Social Life

In the last three years alone, at least 30 million jobs have been shed by state- owned enterprises. But now the government make some welfares to the people who are out of the workers, such as pension, medical insurance etc.. in order to avoid to exaggerate the social polarisation.

Conclusion

Generally speaking, joining the WTO is important to China with changing a set of strategic issues, such as the mode and level of China’s integration into the global economy, the establishment of its international position, and the safeguarding of its security. China should employ a long-term, open, independent development mode to strength its comprehensive economic and integrate into the world economic.

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