Gains and Losses from WTO Entry Counted

A year has nearly gone by after China's entry into the WTO. The wholesocietybothered a lot about the importation problem at the time of China'saccessioninto the WTO. As time went on and with Chinas commitments for the WTO beinggradually honored, whether the import would be increased? Would it affectmoreimpacts on domestic industry and market?

Notwithstanding China's custom tariff was reduced from 15.3 to 12 percentand aseries of non-tariff measures were taken, the import trend in the yearindicates that nothing has happened as people imagined that would have tohappen a year before.

One saw decrease in importation of agricultural produce instead ofincrease andno headlong influx of foreign auto-manufacturing industry and accessorypartsinto China. And no serious importation impact was found in the sensitivefieldthat people were most concerned for.

Agriculture was taken as the most quickly affected field after China'sentryinto the WTO. Starting from Jan 1, 2002, the tariff for agriculturalproducewas reduced from an average 18.8 percent to 15.8 percent and cancelled thepermit for allocated quota of grain, cotton, edible oil and sugar and woolaswell. What was out of people's anticipation is that the passing yearwitnesseda bigger increase in the exportation of agricultural produce instead ofimportation and an even development in China's agriculture. The grain, anagricultural produce of mass production and superiority in foreign landshasnot only failed to increase in importation into China but on the contrary aslight decrease, showing a better result than as expected.

Nor did we see any "on-rushing-in of foreign goods" in manufacturingindustry,the most obvious trade being the automobile industry. Judging from thematurityof the industry, the openness of the market and its production andmanagementthe auto-industry should be one of the seriously affected industries.However,the result of actual operation went contrary to people's anticipation.

From this we can come to a conclusion that the sensitive fields in whichpeoplefelt most unsure did not receive heavy impact after China's entry into theWTO.This indicates what determines the increase of importation is still thedemandsin the market though China's door has been flung wide open. Besides, thetransitional factor must not be ignored for it's only a short span of oneyearafter China's entry into the WTO, in which the influence still hasn't madeitself obviously felt upon China's relevant industries. According to thestatistics from the customs, China saw a surplus of US$24.7 billion in itsexport and import trade from last January to October and the yearlyfavorablebalance is going to be of US$30 billion as expected. The import is smallerthanthe export in general.

The import increase told a heavy pressure in iron and steel and chemicalfertilizer industries, making these industries of no worry within a shortperiod to land in a potential worry for a long time to come. In the yearstocome, the import may possibly turn out a completely contrary trend in someofthe fields.

At the beginning of the year, the average tariff rate for China'sindustrialgoods was reduced from 14.7 to 11.3 percent and cancelled the control onallocated quota permit in iron and steel, acrylic fibers, polyester fibersandfillets, chemical fertilizer and part of tires. With the result therewitnesseda big reduction in custom tariff and the import increase of non-tariffproducts. In the last three-quarters of the year, we saw an importincrease ofthe eight tariff-cut goods to reach US$25.93 billion, accounting for 83percentof the total import volume. Due to the weakened protective role of theallocated quota there appeared an obviously abnormal move in iron andsteel andchemical fertilizer industries, hence the abrupt rise in importation.

Since last year, the US, European countries and Japan have taken somespecialor provisional measures for the protection of their iron and steelproducts,restricting its importation. On the contrary, China after its entry intotheWTO reduced to a great extent its custom tariff and released non-tariffbarriers. This incurred the influx into China a great batch of low-pricedironand steel products. From January to October, we saw iron and steel importtoreach 20.57 million tons, an increase of 45.5 percent while the export ofittold a drastic downturn.

Take the agricultural produce for example, some people, judging from thepresent situation say that the influence of the WTO entry on the Chineseagriculture is not up to something at all and others holds that it plays abigger positive role than negative. About this, Dr. Cheng Guoqiang, the R& DCenter of the State Council points out, the pressure entailed from theimportof agricultural produce will exist for a long time to come and not to betoosanguine with. Next year and a long time afterwards will see China'sagricultural produce face a more critical situation than that encounteredinthe first year and this must not be neglected.

The domestic auto-industry is also faced with a potential import threat.Chinahas to call off all allocated quota permit for automobiles before Jan.1,2005and by the time of Jul.1, 2006 the custom tariff for a car as a whole andforall accessory parts will be lowered to a respective 25 and 10 percent. Bythattime how the market sponge cake will be severed by the imported carsnobody canforetell for the moment.

The impact is unavoidable and the difficulty in import management isincreasing. However, the most important is to strengthen the mechanism forcoping with it and the first thing is to raise the competitiveness of thedomestic products. The situation in the initial year of China's entry intotheWTO reminds us of the unevenness of advantages and disadvantages indifferentindustries and the uncertainty of their changes. Since the impact isunavoidable what we should do is to get to known, master and use the WTOrulesand regulations as soon as possible so as to grasp the advantages whileavoiding the disadvantages and trying our utmost to turn the challenge intoopportunities.(People’s Daily December 10, 2002)

--------------------------------------------------------------------------------

Copyright © China Internet Information Center. All Rights ReservedE-mail: mailto:webmaster@china.org.cnTel: 86-10-68326688