News / Asia

China WTO Anniversary Marked by Progress, Challenges

Forklift arranges shipping containers near Shanghai port, China, March 2, 2011 (file photo).
Forklift arranges shipping containers near Shanghai port, China, March 2, 2011 (file photo).
William Ide

It was 10 years ago this Sunday, Dec. 11th, when China joined the World Trade Organization.

Since then, the country has grown to become the world's second largest economy and millions of Chinese have been lifted out of extreme poverty. But while China made dramatic reforms after joining the global trade club, analysts say the process of moving away from being a state-planned to a more open economy has not been a definitive success, and many challenges remain.

The view from Beijing

From China’s perspective, the past decade has been a period of historic change.

According to a recent opinion piece in the state-run China Daily, since becoming a WTO member, China has become the world’s number one investment destination, with outbound investment nearly doubling every two years since 2002. Chinese companies, the article adds, are increasingly making their mark, with 54 now listed among the world's Fortune 500 companies, compared to 12 when it joined in 2001.

Such rapid growth has had a dramatic impact on the global economy and surprised Chinese officials.

"I have to say that exceeds far more what we expected at that time, especially the size of China's economy, the size of China's exports and imports, and the market expansion of some of the industries, like cars, from two million to 18 million within ten years," says Long Yongtu, chief negotiator of China’s accession to the WTO.

Lingering U.S. trade deficit

But China's economic rise comes at a cost to the United States and other traditional manufacturing nations. The country's massive production of inexpensive exports means other nations' goods are undercut, causing their industries to suffer.

U.S. exports to China are growing, but the trade deficit with China has boomed. There is also concern among WTO member nations that while Chinese companies are gaining more access to the global economy, foreign companies in China are having a different experience.

Michael Punke, U.S. ambassador to the World Trade Organization, says that over the past five years other members of the WTO have seen a troubling trend of intensified state intervention in the Chinese economy.

Many of the trade disputes with China can be traced, he says, to Chinese policies that promote or protect state-owned and domestic enterprises.

Patrick Mulloy, a member of the U.S.-China Economic and Security Review Commission, says the issue of forced technology transfers - the contract-based acquisition rather than domestic development of new technologies - is of particular concern.

"The government will say, you want to be a friend of China, put more manufacturing here, put more research and development here, be a friend of China, help us grow our economy," he says. "And the companies will say, 'Well, I might be able to afford to give them this type of technology because I am really holding this part back,' but then you have 100 companies transferring technology and helping China move up the food chain. It’s good for China and if I were them I would be doing the same thing, but it’s not good for us and it’s contrary to China’s WTO commitments."

Investor complaints

Foreign companies operating in China frequently raise concerns about the myriad licenses that businesses are required to apply for, and the problems faced receiving them in a fair and timely manner.

Undervaluation of Chinese currency has also long been considered an obstacle to free trade, and U.S. lawmakers are working to pass legislation that seeks to punish Beijing for keeping its currency artificially low, which makes the cost of its exports cheaper.

China's industrial subsidies also remain a contentious issue, which, competitors say, make its products cheaper and more attractive to buyers.

And despite Beijing’s 2006 pledge to allow foreign credit card companies access to its market, they have yet to deliver on the promise.

Mulloy says such barriers to trade demand action.

"These are things this country really has to get to grips with and understand," says Mulloy. "China is not our enemy, but they have a strategy and they are moving their people up a food chain of economic growth as quickly as they can and we have no counter strategy and that’s our problem."

A topic of debate

With U.S. unemployment high and the economy waffling, trade with China has become an increasingly prevalent subject of debate in U.S. campaign politics -- a topic that's likely to persist as the 2012 presidential election draws near.

Mitt Romney, one candidate for the Republican Party nomination, has repeatedly criticized China’s trade practices and says the U.S. is already in a trade war with the world’s second largest economy.

But Daniel Ikenson of the CATO Institute, a libertarian think tank headquartered in Washington, D.C., says these disputes are just part of the process and a good reason to have China in the WTO.

"The relationship is maturing. The world's second largest and largest economy has grown, [and] there are going to be frictions, they are going to be complaints," he says. "We've had many more trade disputes with Europe and Canada than with China. That's the way mature relations settle their differences."

He cites growing social unease in China and the government's ability to maintain control as a greater concern. While China continues to see rapid economic growth, there is also growing public discontent with corruption, environmental pollution and property policies and real estate properties.

If China implodes, Ikenson says, that will really have an adverse effect on the rest of the global economy.

You May Like

At International AIDS Conference One Goal, Many Paths

The 12,000 delegates attending 20th International AIDS Conference in Melbourne have vastly different visions about how to eradicate disease More

Disasters May Doom Malaysia’s Flag Carrier

Even before loss of two jets loaded with passengers on international flights, company had been operating in red for three years, accumulating deficit of $1.3 billion More

Afghan Presidential Vote Audit Continues Despite Glitches

Process has been marred by walkouts by representatives of two competing candidates, Abdullah Abdullah and Ashraf Ghani More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Nature of Space Exploration Enters New Agei
X
Elizabeth Lee
July 20, 2014 2:36 AM
Forty-five years ago this month, the first humans walked on the moon. It was during an era of the space race between the United States and the Soviet Union. World politics have changed since then and -- as Elizabeth Lee reports -- so has the nature of space exploration.
Video

Video Nature of Space Exploration Enters New Age

Forty-five years ago this month, the first humans walked on the moon. It was during an era of the space race between the United States and the Soviet Union. World politics have changed since then and -- as Elizabeth Lee reports -- so has the nature of space exploration.
Video

Video Chicago’s Argonne Lab Developing Battery of the Future

In 2012, the U.S. Department of Energy’s Office of Science awarded a $120 million grant to a new technology center focused on battery development - headquartered at Argonne National Laboratory in suburban Chicago, Illinois. As VOA’s Kane Farabaugh reports, there scientists are making the next technological breakthroughs in energy storage.
Video

Video In NW Pakistan, Army Offensive Causes Massive Number of Displaced

Pakistan’s army offensive in North Waziristan has resulted in the large-scale displacement of the local population. VOA's Ayaz Gul reports from northwest Pakistan where authorities say around 80 percent of the estimated 1 million internally displaced persons [IDPs] have settled in Bannu district, while much of the remaining 20 percent are scattered in nearby cities.
Video

Video Kurdish Peshmerga Force Secures Kirkuk, Its Oil

The Kurdistan regional government has sent its Peshmerga troops into the adjacent province of Kirkuk to drive out insurgents, and to secure the area's rich oil fields. By doing this, the regional government has added a fourth province to the three it officially controls. The oil also provides revenue that could make an independent Kurdistan economically strong. VOA’s Jeffrey Young went out with the Peshmerga and filed this report.
Video

Video Malaysia Reeling: Second Air Disaster in Four Months

Malaysia is reeling from the second air disaster in four months involving the country’s flag carrier. Flight 340 vanished in March and despite an extensive search, no debris has been found. And on Thursday, Flight 17, likely hit by a surface-to-air missile, came apart over eastern Ukraine. The two incidents together have left more than 500 people dead. VOA Correspondent Steve Herman reports from Kuala Lumpur.
Video

Video Diplomatic Crisis Grows Over MH17 Plane Crash

The Malaysia Airlines crash in eastern Ukraine is drawing reaction from leaders around the world. With suspicions growing that a surface-to-air missile shot down the aircraft, there are increasing tensions in the international community over who is to blame. Henry Ridgwell reports for VOA from London.
Video

Video Undocumented Immigrants Face Perilous Journey to US, No Guarantees

Every day, hundreds of undocumented immigrants from Central America attempt the arduous journey through Mexico and turn themselves over to U.S. border patrol -- with the hope that they will not be turned away. But the dangers they face along the way are many, and as Ramon Taylor reports from the Rio Grande Valley in Texas, their fate rests on more than just the reception they get at the US border.
Video

Video Scientists Create Blackest Material Ever

Of all the black things in the universe only the infamous "black holes" are so black that not even a tiny amount of light can bounce back. But scientists have managed to create material almost as black, and it has enormous potential use. VOA’s George Putic has more.
Video

Video Fog Collector Transforming Maasai Water Harvesting in Kenya

The Maasai people of Kenya are known for their cattle-herding, nomadic lifestyle. But it's an existence that depends on access to adequate water for their herds and flocks. Lenny Ruvaga reports for VOA, on a "fog collector."

AppleAndroid