China's Economic Benefits from Its WTO Membership

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China's Economic Benefits from Its WTO Membership



China officially applied to the General Agreement on Tariff and Trade (GATT), the predecessor of the World Trade Organization (WTO), in July 1986 to resume its status as an original contracting party.  After the WTO replaced the GATT in 1995, China's application was to become a member of (to "access to") the global trade organization.  Thus, even if China becomes a member of the WTO in 2001, as many now believe, its effort to join the trade body will have taken fourteen years, much longer than the application process of any current WTO member.  China's great effort for WTO membership is a testimony of its importance to the Chinese economy.  It would not be an exaggeration to say that if Deng Xiaoping's economic reform and open door policy marked China's opening to the world, then China's accession to the WTO will mark its entry to the world.  Fortunately, China got the permission to enter WTO last year.  Our efforts finally got paid.  It is a great pleasure to us Chinese people.  As English major students who are specialized in Business English, we must have a more specific idea than those ordinary people who just know the term WTO itself instead of the true meaning of this word.

In the following paragraphs I shall summarize the major economic benefits China is expected to derive from its WTO membership.  They include (a) stability in external economic relationships; (b) firmer and speedier economic reform; (c) long-term growth based on efficiency and innovation.  This paper is presented as partial fulfillment of our Business English Reading class.  Thanks for the kindness of Miss.Shang.

1. Stability in External Economic Relationships

WTO membership will give China a more stable access to foreign markets because it will reduce disruptions in foreign trade that are caused by unpredictable policy shifts.  Given this, China will be in a better position to attract foreign investors who use China as their export platform.  In addition, it will also attract foreign investors who feel more secure about developing China's domestic market.  Regardless of whether it is export-oriented or attracted by the huge domestic market, foreign direct investment (FDI which we have learned in Miss.Shang’s class) not only brings in additional capital, but more importantly management, technology, market information, and global production and distribution networks that link China more tightly to the other economies.

It would be unrealistic to expect the WTO membership to eliminate trade and investment frictions between China and other economies since such frictions are not uncommon between existing members.  But these frictions will be better managed under the WTO's trade rules and the organization's dispute settlement mechanism.  This will be a big improvement over the existing relationships, under which trade and investment disputes tend to be settled by mutual threats and brinkmanship. 

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2. Firmer and Speedier Economic Reform

From the experience of many countries undergoing economic reform, external pressure and obligation have proven useful in countering the opposition of powerful domestic interest groups. In the case of China, the state-owned enterprises are a powerful force against China's march toward a market economy.  It would not be an exaggeration to say that the bilateral and multilateral agreements behind China's accession to the WTO are a summary statement of the China's economic reform in the next decade or so.  They not only constitute a road map for economic reform in the coming decade, ...

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