CHINA ON THE ROAD TO CAPITALISM

This past March, Robert Cassidy – the chief negotiator in bilateral talks with Long Yu Tu, China’s Vice Minister of Foreign Trade, over China’s entry into the World Trade Organization – made a promotional tour of Chinese universities and business organizations pitching the wonders of trade liberalization. Cassidy no doubt expected a standing ovation sprinkled with profuse thanks after he delivered his speech “How the WTO will help China meet the challenges of the 21st century” at Chongqing Commercial Institute.

Instead, poor Cassidy was showered with questions in broken English croaked out by emotional students about the plight of the workers and the farmers after trade liberalization. Cassidy grew defensive, blustered about the need for those unfortunate men and women to retrain themselves and was finally rescued and ushered out by his Chinese translators and hosts.

As he left, the students smiled, thanked the American from New England profusely and asked for his email address – which he grudgingly gave. Afterwards students described in excited tones the need for China’s domestic economy to open itself to foreign competition in order to become more efficient and profitable. As most of them are from the west of China, they are also aware that foreign companies will put their mothers and fathers out of jobs.

DROOLING BUSINESSMEN

Cassidy is a member of a large informal club of drooling businessmen hooting and hollering over “China’s potential market.” One of their formal entities, the U.S. China Business Council, posts information about the concessions China will make in order to enter the WTO with glee, noting that “while China has a long list of commitments, all the US has to do is accept the offer.”

In response to arguments concerning job losses in the US, the USBC publishes “the cold hard facts,” which end up being a short list of quotes from members of the club. China joining the WTO will kickstart a number of industries currently in a slump.

The Chinese automobile industry is one of the fastest growing in the country and a priority for both foreign companies and the Chinese government. The industry is in its infancy and therefore will receive a lot of protection. Foreign automobile industries, faced with global stagnation in the auto market, are rubbing their hands in anticipation of WTO membership and the chance to sell cars and car parts to Chinese.

China has focused on building highways not railways and the potential market for cars (also a serious status symbol) is considered to be very large and very lucrative.

Foreign transnationals, with their advanced technology and huge sums of capital, might make mincemeat out of companies like the Jialing Group, China’s “King of Motorcycles.”

Chinese businessmen up and down the eastern seaboard are drooling too. Shanghai’s Pudong economic center is poised to compete with Hong Kong for the title of “China’s Global City,” although Joseph Yam, Chief Executive of Hong Kong Monetary Authority believes “China has room for two global cities.” Shenzhen has been a Special Economic Center for years now and has had extensive dealings with Hong Kong. Fujian and Guangdong provinces also have strong connections with the foreign business community, including overseas Chinese, the majority which are from these two provinces.

Businessmen in the west are anxious to get their hands on some dollars too, but they aren’t nearly as well situated as their eastern countrymen – many of which have already moved west to reap the benefits of an underdeveloped region in need of investment. But the west has oil and natural gas and minerals and is largely undeveloped – western businessmen expect a lot of foreign investment.

China is considered a developing nation by the WTO, but its list of commitments are more suited for a developed economy: cut all tariffs from 24% to 9% by 2005; eliminate high-tech tariffs by 2005; expand market access for US agricultural goods; open telecommunications, insurance, services and Internet sectors; and reduce auto tariffs.

Agriculture and Telecommunications are especially sensitive as one employs 80% of the population and concerns food security while the other is considered a vital component of sovereignty and national security.

The reality is that China is divided into separate economic regions with the most basic division being between the developed East and the developing west. Both areas will experience sweeping changes come WTO membership – the experience of the west may prove the more vital one.

But China is not a member of the WTO yet. In a May 24th Agence Presse France article, incoming WTO director general Supachai Panitchpakdi told a seminar in Beijiing that China’s foundation was not up to the demands of the WTO.

“If China joins the WTO with a weak foundation … then China will not be a helpful member of the WTO,” he said.Read more by Sascha Matuszak