293766197 - In services FOEs will have the ability to set...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
4. Analysis of China’s Accession to the WTO 4.1 Advantages for China The advantages of accession to the WTO for China are large, encompassing almost every aspect of the Chinese economy. To begin with, admission to the WTO will give the reform process a much-needed impetus and encourage FDI, which has become the driving engine of China’s economy, currently accounting for some 20% of GDP growth. In addition, trade and foreign investment reforms are "first- generation" reforms, necessary for the precipitation of later advancements in judicial reform, regulatory reform, large-scale privatization and the reform of labor markets and central-local government relationships. 9
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Overall, the Chinese economy will prosper and grow due to the new opportunities and technology that WTO membership will bring. The USITC (United States International Trade Commission) estimates that as a result of joining the WTO under the terms offered by Premier Zhu in April of 1999, China’s GDP would increase by 4.1% and Welfare (Consumption) would increase by 2.1%. Incomes in China will also increase (due to growth effects and technology), offsetting some of the hardships that will inevitably be encountered as SOEs are shut down or made more competitive—it is estimated that GDP growth from accession will add 2.5-5.0 million jobs per year. In addition, China’s trade and interaction with the rest of the world will increase: exports are expected to increase by 12.2%, and imports by 14.3%. Total trade is projected to increase from $324 billion (1998) to $600 billion (2005). As of 1996, it is estimated that trade is responsible for approximately 36% of GDP. In particular, China will find itself in a better position to exercise its comparative advantage in labor, attracting low-skilled labor intensive manufacturing jobs away from other Asian countries, as well as medium-skilled value added jobs (such as assembling), particularly in the technology sector. Many of the SOEs that have been enjoying subsidies and protections from the state are finding themselves forced into a position where they will either become efficient or go bankrupt. China’s accession to the WTO will only hasten this process. The central government will end the subsidies and support given to most SOEs, and modernize the banking system that gave the loss-making SOEs easy access to credit and loans. Although this has serious social consequences for unemployment and social health (discussed in section 4.2), it will allow the industries currently dominated by the SOEs to move forward, by allowing DPEs to come in when the SOEs fail, and by stimulating growth and development through foreign competition and the use of new technology that FOEs/JVs will bring. In addition to the advantages of increased efficiencies and growth, China will also
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 12

293766197 - In services FOEs will have the ability to set...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online