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China and the WTO

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China and the WTO

Agricultural Challenges after its Accession to WTO

Who is really benefiting from it?

The membership of Taiwan Province of China in the International Monetary Fund and the World Bank in the early 1980s contributed to ending China’s isolation of its economy from the world.

By 1986, China had started lobbying to be readmitted to the General Agreement on Tariffs and Trade after it had left it in 1949 when the People’s Republic of China was founded.

As the result of 15 years of laborious negotiations, on December 11 2001, China officially became the 143rd member of the World Trade Organization, and while an economy as large as China can cause commotion for developing countries in the short run, it must also be noted that it should benefit China’s trading partners in the long run.

While China transitioned from a centrally planned economy to a market-oriented one, its exports grew from $10 billion in 1978 to $278 billion in 2000, making it the sixth largest trading nation in the world (from the original 30th position it enjoyed in the 1970s). The trade-to-GDP ratio, (often called the trade openness ratio, is the average share of exports and imports of goods and services in GDP) increased from a 10% to about a 40% in the late 1990s. China’s inflows of foreign direct investment, which according to the IMF may lead developing countries to regard it as the private capital inflow of choice, reached $47 billion in 2000, second in size only to the United States.

Because it’s inevitable that the inclusion of China to the global economy will lead to shifts in the world production, trade, investment and employment, there have been provisions in China’s Protocol of Accession to WTO (which requires resolution of ...

... middle of paper ...

...Urban-rural Income Gap

Li Shi, Yue Ximing

http://www.caijing.com.cn/english/2004/040220/040220coverstory.htm

China’s Agriculture: New developments since the WTO Entry

Tan Xingyu, A.Lei

www.china-pictorial.com

Chinese Academy of Social Sciences

CASS

www.cass.net.cn

Organisation for Economic Co-operation and Development, OECD

http://www1.oecd.org/publications/e-book/92-2003-04-1-7294/C.2.1.htm

International Monetary Fund, IMF

What will WTO Membership mean for China and its trading Partners?

Ramesh Adhikari and Yongzheng Yang

http://www.imf.org/external/pubs/ft/fandd/2002/09/adhikari.htm

Comrades or Competitors?

Trade Links Between China and Other East Asian Economies.

By Prakash Loungani

http://www.imf.org/external/pubs/ft/fandd/2000/06/loungani.htm

The American Society of International Law

http://www.asil.org/insights/insigh13.htm

In this essay, the author

  • Explains that china's membership in the international monetary fund and the world bank helped end its isolation of its economy from the world. china lobbyed to be readmitted to the general agreement on tariffs and trade.
  • Explains that china became the 143rd member of the world trade organization after 15 years of laborious negotiations. an economy as large as china can cause commotion for developing countries in the short run, but it should also benefit china's trading partners.
  • Explains that china's exports grew from $10 billion to $278 billion in 2000, making it the sixth largest trading nation in the world.
  • Explains that china's inclusion in the global economy will lead to shifts in production, trade, investment, and employment. china’s protocol of accession to wto requires resolution of critical questions about its future status within the organization.
  • Explains that china has agreed to reduce its tariffs, eliminate export subsidies, and increase the volume of tariff-rate quotas on some of their imports. they also promise to end quantitative restrictions, cut the average tariff from 24.6% to 9.4% by 2005.
  • States that china has agreed to eliminate all prohibited subsidies, liberalize trading rights, and require state-owned enterprises to conduct their operations in a commercial manner.
  • Explains that the united states in return has granted china, permanent most favored nation (mfn) status, which was previously subject to an annual us congress renewal.
  • Explains that china has a lot to gain from opening up its economy to the world, but there are certain risks to these gains. china's trading partners may impose restrictions on chinese imports based on "market disruption or threat of market disruption".
  • Explains that china's textile and clothing exports are to end by january 1, 2005, but there is a special safeguard mechanism in place until 2008, which allows importing countries to restrict chinese imports when they stem from market disruption.
  • Explains that chinese exporters can be faced with dumping charges, in which case the importing countries can also use the prices or costs of similar products in third countries instead of chinese prices.
  • Opines that the wto's economic impact on china will not be doubted. the chinese consumers will benefit greatly from a more efficient economy even though the heavily protected sector will be harmed.
  • Explains that china's industries will need to adjust, while heavily protected industries like automobiles and petrochemicals will contract. these adjustments can lead to cournot equilibrium where each firm concludes that their output should match their competitors.
  • Explains that china's agriculture may contract due to the loss of comparative advantage in the land intensive grain industry and water shortage because of construction from the big cities.
  • Opines that labor-intensive agricultural industries like fruits and vegetables still enjoy a comparative advantage. if villagers have more money, this will translate into more prosperity to the countryside and the population will not live in the past.
  • Opines that other state-dominated fields, such as the financial sector, will likely experience pressure from the impending entry of foreign firms.
  • Opines that agriculture is of great importance to china's national economy. issues concerning agriculture, farming, land use rights, and rural labor working in rural and urban areas are of primary importance.
  • Explains that china's urban-rural income gap has continued to widen based on a survey on urban and rural income disparity organized by cass.
  • Explains that the study indicated an alarming increase in income disparity, which leads to growth stagnation.
  • Opines that economic reform has already brought many losers and it will be imperative that the government does what it can to help those who are left behind.
  • Recommends minimizing the immediate effects of wto’s membership on agriculture by promoting the migration of people from rural areas to non-agricultural sectors.
  • Opines that china's entry into the wto has a unique opportunity to use foreign trade and investment reforms to offer the people of the republic of china an richer, freer world where more people have more choices.
  • Argues that the well-being of rural labor working in urban areas is a major concern that deserves attention. china's current resident registration system divides the total population into two main categories: the rural people and the urban residents.
  • Opines that china's commitments to the wto will lead to a rapid increase in the import of agricultural products and an oversupply in domestic market, affecting rural employment and farmers' incomes.
  • Explains that if consumption in rural areas cannot be stimulated, the full expansion of domestic demands, engine for economic growth, will be threatened.
  • Opines that china's entry into the wto has brought numerous opportunities for agricultural development, which will help restructure chinese agriculture, attract foreign investment, bring up to date technology, and ultimately increase the competitiveness of chinese agricultural products.
  • States that china's minister of agriculture, du qinglin, has recently stated that the agricultural structure will focus on four main areas to restructure rural employment: adjusting and optimizing the mix of agricultural products and making the most of regional advantages.
  • Explains that the chinese government has made great efforts in optimizing and restructuring scientific research institutes for agriculture.
  • Opines that increasing investment in agriculture, accelerating infrastructure construction in rural areas, and letting more farmland revert to forest, are the chinese government priorities to increase the per person net income of farmers.
  • Explains that china's president hu jintao has maintained that increasing the income of rural people and the development of agriculture are essential for sustainable and coordinated development.
  • Explains that the transfer of rural population to other sectors is an inevitable factor in the development of modernized agriculture and the creation of a freer farm produce market.
  • Opines that china will need to adapt its agricultural policies through continuing tax reforms in rural areas and move to raise income for agriculture workers, especially for grain producers.
  • Opines that greater efforts should be made to help surplus rural laborers find jobs in cities, while removing discriminatory regulations and unreasonable charges for migrant workers.
  • Argues that china needs to create the most rigorous system in the world to protect farmland from being depleted for excessive industrial development.
  • Explains that instead of exerting control on agricultural production through quotas, tariffs and price regulation, the chinese government has slowly adopted policies to promote free trade of agricultural products in domestic markets as well as efficient import and export of products abroad.
  • Argues that if the government leaves to the people to make the choices of where to live and work, chinese will finally be allowed to experience competition, with free flow of information, in markets where no participant can influence price and where everything is up to a large number of buyers and sellers.
  • Concludes that production shifts into china are global rather than just an american phenomenon. china offers easy access, reduced shipping times and costs to a wide number of countries.
  • Opines that china's entry will signal an era of increased world trade and greater prosperity and security for its people.
  • Opines that it will be important to see whether the world trade organization can legitimize their implicit role of allowing countries worldwide a fighting chance against poverty.
  • Opines that china as a developing economy and emerging superpower will be key to bridge between the developed and developing member countries in an effort to voice the need to balance wealth amongst all nations.
  • Cites douglas a. irwin, susan l. shirk, supachai panitchpakdi, mark clifford, and steven beckman.
  • Explains the us china economic and security review commission (uscc)'s report on the yawning urban-rural income gap.
  • Describes the implications of wto membership for china and its trading partners.
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