It has been almost 6 years since China ascended into (or shall I say onto) the WTO. And what a six years it has been for China and the other member countries of the WTO! For optimists, the six years have been a period of remarkable progress in terms of regulatory reformation and unprecedented market access into China. A recent report brought forth by China Trade Gateway rings such an optimistic tone, yet with restrained hope for more reforms to be undertaken by China.
First off, the report shows some notable benefits that China has harvested from its entry into the WTO. Contrary to fears of many Chinese, foreign competition resulting from the WTO has increased domestic companies ability to survive an ever more competitive market. For example:
[T]he price of imported vehicles are getting lower but at the same time cars made in China are increasing their market share more, banking reforms are coming into place, the insurance sector is finally improving, the entertainment industries are opening up to the West, but also Chinese movies and music are targeting Western audiences.Along the same line, many Chinese companies have “selectively adopted” Western practices, such as “management principles and customer service, which leads to a beneficial integration in companies, and in the long term into the consciousness of Chinese people.” I agree with this observation and believe the Chinese will catch up with some Western companies soon, adopting and adapting to skills, methods, and technologies brought by foreign firms.
Second, WTO member countries have also mutually benefited from China. Most obviously, improved market access means more opportunities to invest in sectors and industries previously inaccessible. Retail, franchising and other means of distribution have become bright spots for investment due to more friendly governmental regulations. In all, according to this report, “China has reviewed more than 2,000 trade related laws and regulations…and has abolished over 700 of them, amending others to bring the country into compliance.” As reflected in figures released by the World Bank, “the Chinese economy contributes to 13 percent of the world's economic growth.” Furthermore, the report cites that a total of “USD 57.94 billion was remitted out of China as profits” in a span of five years following China’s entry to the WTO. These are impressive figures and presumably rewarding profits.
Third, areas of outstanding concerns exist despite the mutually beneficial relationship between China and other member countries. Cited by the Europeans and the Americans, the following areas remain problematic and contentious:
China's enforcement, the transparency and consistency of Intellectual Rights Protection, the currency evaluation of the renminbi, existing trade barriers in China for agricultural products through Sanitary and Phytosanitary measures, continuous interferences of the state in certain industries, such as telecommunications and for example the steel industry, as well as recent import tariffs on foreign auto parts. On the other hand, China still faces protection from the US and European governments in industries they feel threatened by, leading to high anti-dumping cases.Finally, looking beyond the haze of remaining issues, the author of the report sees promising opportunities ahead in many major industries and areas. Examples include banking & financial services sector, telecommunication, distribution and retail sectors, services as well as mergers and acquisitions.
The future sure looks good in the eyes of this report, does it? Read the full article here.