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China tackling challenges in WTO transition
Updated: 2004-12-11 23:38

As the end of its WTO transition nears, China is coping with the challenges brought by foreign competition, said an official with the Ministry of Commerce.

"After three years accession to the World Trade Organization, domestic industries in China have witnessed great development in all aspects," said Zhang Xiangchen, deputy director at the Department of WTO Affairs with the ministry.

He said that instead of dramatically impacting Chinese industries, WTO accession has helped China to expand its market, accelerate restructuring its industry and improve its legal system.

Statistics from the Ministry of Commerce show that the total volume of international trade in 2004 has exceeded one trillion US dollars, making China third worldwide. Foreign investment reached 53.51 billion US dollars last year and is expected to exceed 60 billion this year.

China has revised more than 2,500 laws and regulations to bring more transparency in its policy making to meet the WTO commitments.

Zhang said that one reason Chinese industries have not undergone a shock after the WTO accession is that many industries are still in transition. This protects them from possible impact of foreign competitors.

The auto industry, for example, Zhang said, has quotas on imported autos until 2005. Some sectors such as telecommunication, distribution and banking services have up to six years of gradual transition.

Another way China has worked to prevent shock to domestic business was to open some sectors, such as retailing, in advance of the date in the commitments, he said.

By the end of 2003, 25 foreign retailers, including Wal-Mart, B&Q, Auchan and Lotus, had been granted business licenses. With a total investment of 1.54 billion US dollars, retailing turnover of these suppliers that year reached 1.3 billion US dollars, a 17 percent increase year-on-year.

The overall international environment has also contributed to the easy transition of Chinese industries, Zhang said.

Foreign investment has not yet fully entered the telecommunication sector, which is continuing to research policies, plan marketing strategies and analyze the market. With broader foreign investment in telecom sector, Chinese counterparts will have to face fierce competition, Zhang said.

According to its WTO commitments, China will allow foreign capital to hold shares in wholesale and retail companies beginning Saturday. By the end of 2005, China will allow foreign capital to independently run courier and freight forwarding agency services and by 2006, China will grant foreign banks full access to all business. By 2007, China will free foreign service suppliers from all restrictions.

With the ending of its WTO transition, some profound conflicts of China's economic structure are emerging including low efficiency in state-owned enterprises, geographic imbalance of development and a weak financial system, he said.

"We will face more challenges and difficulties in the coming future," Zhang said. "It's still early to judge whether WTO has brought more benefits or harm to China," he added. "All depends on the work and efforts made by the government and enterprises after the transition."

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