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WTO Will Bring Changes in China - 2001-11-13

Economic experts such as Stephen Cheung of the City University of Hong Kong say some inefficient parts of the Chinese economy will be forced to fire many workers when WTO membership strips away protection from foreign competition.

Under WTO rules, tariffs and other barriers to trade are to be eliminated, phased out or reduced. China is expected to enter the trade body at its meeting in Qatar, which began Friday. "So we are going to see some restructuring within these industries, we may see high unemployment resulting from China's ascension to the WTO," said Mr. Cheung.

Experts point to farming as one area of concern as foreign farmers, with modern methods and machinery, produce food at low prices that China's often-impoverished farmers can not match.

Foreign competition also will bring factory closures and layoffs to inefficient Chinese state-owned enterprises.

But Patrick Powers of the U.S.-China Business Council has said this kind of economic restructuring was under way in China long before it was ready to join the WTO. "Job dislocations have been going on for well over 15 years. Millions of people have left the state-owned enterprises and the farms and have gone into other careers," he said.

He says China's economy is growing at seven percent a year, and that growth creates new jobs for people displaced from uneconomical industries. He says WTO membership will help that growth continue.

That is critical because China has millions of unemployed people and very little in the way of a social safety net to care for them. Experts say adding millions more unemployed people to this large group could spark social unrest.

WTO membership is expected to encourage more investment from other nations.

Fiat, the auto maker from Italy, is an example of growing foreign investment in the Chinese market. Luciano Bay, Fiat's chief representative in China, says his company expanded its operations in China from a $4 million investment six years ago to $1 billion worth of joint ventures that employ more than 10,000 people today.

Mr. Bay thinks the government will work hard to modernize the economy. But he has said experience shows him that the farther you get from Beijing, the tougher it is for the central government to make changes that boost the economy in the long term, but cost jobs in the short run.

"In the past, certain legislation was passed and approved by parliament and by the top government in Beijing and was not necessary implemented by the far-away provinces," he said.

Foreign Ministry spokesman Zhu Bangzao says China keeps its promises, and has been working hard to smooth its transition into the global trade system. Mr. Zhu says China always fulfills its international obligations and will make the changes agreed in the WTO.

Patrick Powers, of the U.S. China Business Council says it would be unwise to underestimate Beijing's will to change China into a modern, prosperous economy. He says the changes that are supposed to come with the WTO - easier trade, less corruption, more reasonable laws - are steps toward that goal.