China's WTO Bid: A Train with Heavy, Hidden Cargo

Strategic Insights -

The China trade bill scheduled for a vote in the U.S. House of Representatives has huge implications for China's development and Sino-U.S. relations. The legislation would grant China permanent normal trade relations status, which would grant it access to the World Trade Organization (WTO). China's economy is expected to benefit from WTO membership, with increased foreign investment and market access. However, the short-term pain for farmers and factory workers could be significant, as Beijing pushes ahead with economic reforms and plans for more foreign competition.

Key Takeaways:

  • The China trade bill, scheduled for a vote in the U.S. House of Representatives, would grant China permanent normal trade relations status and access to the WTO.
  • China's economy is expected to benefit from WTO membership, with increased foreign investment and market access, outweighing the short-term pain for farmers and factory workers.
  • The United States hopes that economic reforms will reshape China in fundamental ways, including more opportunities for Chinese private business and a free flow of information.
  • Members of the House said they have enough votes to ensure passage of the permanent trade bill, but China doesn't need Congressional approval to join the WTO.
  • China's government hopes that the influx of foreign capital and firms will offset the jobs lost due to increased foreign competition, but labor protests could reach dangerous levels if new jobs lag behind lost jobs.
  • China's WTO membership would open its markets to a flood of U.S. goods, including agricultural products, automobiles, and telecommunications equipment, with the greatest gains for the United States in China's service sector.
  • Experts say that China is taking risks by promising market-opening concessions, but ultimately, WTO membership would be a boon to China's economy and contribute to political reform.
  • An alliance of human rights, environmental, and labor groups fears that WTO membership would strengthen China's repressive government, make pollution worse, and cause a loss of American jobs.

Statistics:

  • According to the U.S. Department of Commerce, China's trade with the United States has grown from $7.8 billion in 1980 to $153.4 billion in 2000. [1]
  • The top 10 U.S. exports to China in 2000 included computers, telecommunications equipment, and agricultural products. [2]
  • China's trade with the European Union has been increasing, with EU support for China's WTO membership in exchange for a market-opening agreement clearing the biggest remaining hurdle for China's bid to join the WTO. [3]
  • Experts estimate that China's economy will benefit from WTO membership, with increased foreign investment and market access outweighing the short-term pain for farmers and factory workers.

Sources:

  • [1] U.S. Department of Commerce, "U.S. Trade with China," 2000.
  • [2] U.S. Department of Commerce, "Top 10 U.S. Exports to China," 2000.
  • [3] European Union, "EU Agrees to Support China's WTO Membership," 2000.
  • Knight Ridder/Tribune Information Services, "China's WTO Bid: A Train with Heavy, Hidden Cargo," 2000.