Gloom forecasts on post-WTO China falter

Updated: 2006-12-11 15:23

American lawyer Gordon Chang, whose book "The Coming Collapse of China" was released five months ahead of China's entry into the World Trade Organization (WTO) on Dec. 11, 2001, may have a credibility issue.

Instead of experiencing what he called a "rapid fall," China has emerged as the world's fourth-largest economy, contributing a yearly average of 13 percent to the world's economic growth over the past five years.

Shenzhen, China's window to the outside world, has seen its economy more than double in five years with exports jumping 30.4 percent annually in the period.

Even the auto sector, which many Chinese feared would be crushed by a flood of foreign imports after China agreed to lower tariffs as required by the WTO, remains dynamic and vigorous.

Many of the doom and gloom scenarios proffered by Chinese and foreign experts on post-WTO China have faltered. WTO Director General Pascal Lamy said that the country¡¯s membership in the global trade body is a ¡°big plus for everyone.¡±

Li Shufu, chairman of Geely, a private auto firm based in Zhejiang, said: "Some Chinese feared China's WTO entry and cried, 'The wolves are coming,'  but I saw opportunities."

His vision for Geely sees the automaker evolving into a world-famous brand by 2015 with an annual output of 2 million cars, including 1.3 million sold overseas.

China's farmers who grew land-intensive bulk commodities with paper-thin profits such as soybean, corn and oil seed have borne the brunt of cheaper imports.

Experts have suggested farmers turn to higher-value, more labor-intensive horticultural and animal products while the government has encouraged farmers to migrate to cities.

The per capita disposable annual income of Chinese farmers has surged 29.2 percent since 2000 to 3,255 yuan (US$405) last year and the impact on the farming sector has been "substantially less than expected."

Transformation benefits

Embracing WTO rules has allowed China to import cheaper BMWs, enjoy better bank services and access a wider variety of products from supermarket giants like Carrefour and Wal-Mart.

The country's economy on the whole has reported an annual average growth of 9.5 percent, surging from almost 11 trillion yuan in 2001 to 18.2 trillion last year.

Foreign companies have poured US$275 billion in aggregate investment and wired back US$57.9 billion in combined profits, official data reveals.

Lingering worries

What did catch China off guard, however, was the surging number of trade disputes which it had hoped would diminish with WTO membership.

Anti-dumping moves against China affect exports worth US$40-50 billion a year. Now about one in seven anti-dumping complaints in the world are lodged against China.

In the past five years, more than half of the trade conflicts between China and other countries involved Shenzhen companies. High-profile anti-dumping cases included those for Shenzhen's car windshields and color TVs. The city's exports of garments and other textile products, which exceed US$3 billion each year in the past several years, also face increasing "safeguard" measures in the United States, EU and other countries.

"China cannot afford to underestimate the negative impact of its ballooning trade," warned professor Zhang Hanlin of the University of International Business and Economics.

Excessively rapid growth in international trade growth could sour China's trade relations with other partners, Zhang noted.

As competition in banking, agriculture and other sectors is likely to intensify, it would be wishful thinking for China to expect smooth sailing in the years to come.

To defuse risks, China must "learn to strike a proper balance between WTO compliance and an active effort to evolve the existing WTO rules for the good of the vast number of developing countries", Mei Xinyu, a researcher with the Ministry of Commerce, said.

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