China joins WTO, Taiwan to follow Jan. 1

Asian Political News, Dec 17, 2001

BEIJING, Dec. 11 Kyodo

China -- the world's most populous country with a fifth of the global labor force -- formally joined the World Trade Organization (WTO) on Tuesday, becoming the 143rd member of the global trade body.

Taiwan, which China considers a renegade province, will become the 144th WTO member Jan. 1.

Upon accession, China will ease its grips on trade and markets on a wide-ranging basis, including phasing out restrictions on operations by foreign banks, relaxing regulations on foreign retailers and allowing foreign firms to take bigger stakes in mobile phone companies in China.

The government will also abolish import permissions and export quotas. It will cut import tariffs to 9.8% on average in 2010 from the current 15%.

With China pledging to play the trade game by international rules, major trading partners such as Japan and the United States hope their companies will find it easier to invest in and trade with a country with a population of 1.26 billion.

Market opening following the WTO entry will boost productivity and investment and push up the growth rate of China's gross domestic product by 0.5 percentage point on average annually for the next 10 years, one estimate says.

However, the stagnant global economy, further hit by the Sept. 11 attacks on the U.S., is hanging heavy on Chinese exports, one of the main engines for the country's high-flying economy. Export growth this year is likely to slow to around 4%, off sharply from a 27.8% surge last year.

Direct investment from overseas, especially from the U.S., has also lost momentum.

With economic growth showing signs of decelerating, the impact on the Chinese economy of the market opening and structural reforms now is rather more uncertain than when both the global and the Chinese economies were roaring along.

Premier Zhu Rongji said Sunday that China's WTO membership was a major decision taken by the government that conforms to the country's fundamental and long-term interests because it will give a firm push to China's building of a ''socialist market economy'' via economic moderation, state-run news agency Xinhua reported.

Zhu, however, warned that the negative effects of WTO membership must not be underestimated and that an adverse impact on a few industries, enterprises and products will be inevitable.

''Whether the gains are larger than the losses will depend on our work,'' the premier was quoted as saying.

China's accession to the WTO was approved by the WTO ministerial meeting in Doha in November.

China spent 15 years trying to join first the General Agreement on Tariffs and Trade, the WTO's predecessor, and then the WTO.