Sign in Subscribe
China

China's WTO Entry Paves Way for $21bn Annual Boost to Western Exports

Strategic Insights

— 1 min read

Last night, Beijing and Washington agreed on a package of trade liberalisation measures, marking a significant step towards China's full membership in the World Trade Organisation (WTO). The agreement, which has been in the making for 13 years, is expected to provide new opportunities for the west's banks, insurers, farmers, internet companies, and film makers. China's president, Jiang Zemin, hailed the deal as a "win-win" agreement, despite concerns among some in the Beijing leadership that it may lead to short-term economic pain for China's workers.

Key Takeaways:

  • The agreement will provide a $21bn (Pounds 13bn) annual boost to western exports, according to the Institute of International Economics in Washington.
  • China's 1.2bn consumers will have access to hi-tech companies, Wall Street, telecommunications firms, and farmers, who will be able to get access to China's heavily protected agricultural market.
  • The deal is seen as setting the seal on China's transformation into a fully fledged free-market economy, ending 13 years of often difficult negotiations.
  • The European Union has expressed caution, stating that it will expect "equivalent" terms for EU firms from China before Brussels can support Beijing's membership.
  • Senior trade diplomats have stated that the breakthrough with Washington was crucial, as it is unlikely that any other country or trading bloc can negotiate more favorable terms.
  • The US administration has been under pressure from corporations such as Motorola and Boeing to bring China into the WTO, despite concerns about Beijing's human rights record.
  • China's decision not to devalue its currency last year has strengthened its case for WTO membership, as it supported the devastated economies of east Asia during the financial turmoil.

Statistics:

  • $21bn (Pounds 13bn) annual boost to western exports
  • Access to China's 1.2bn consumers could benefit hi-tech companies, Wall Street, telecommunications firms, and farmers
  • 13 years of negotiations between China and the US
  • 60% decline in China's trade balance in the first five months of 1999
  • 10 years of rapid expansion for China's economy, followed by a significant slowdown in the past year

Sources:

  • Institute of International Economics (Washington)
  • World Trade Organisation (WTO) (www.wto.org)
  • HK Trade Development Council (www.tdc.org.hk/main/china.htm)

Read more