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New China WTO Membership Poses Challenges - 2001-12-22

China faces tough challenges next year as a new member of the World Trade Organization, when it opens its market to more foreign goods and services. One of the biggest tasks will be preparing the courts and the bureaucracy to cope with changing trade laws.

Huang Jinshan huddles with a group of other idle car salesmen on this bitterly cold afternoon, and complains that business is bad. Mr. Huang, a manager at a car market in Beijing, says everyone is waiting for import tariffs to drop before they shell out the money to buy a car. He says that in the past, his company sold as many as 500 cars a day.

But in the past few months, he says on good days, the company has only sold 100 cars. Mr. Huang hopes the customers will come back after January 1, when WTO rules cut average car tariffs by a third, down from as much as 100 percent now.

China's long-awaited entry to the World Trade Organization affects virtually every sector of the economy. Some changes already have started. On December 11, the formal date of WTO accession, China cut import tariffs on a range of products.

In 2002, duties on farm products such as wheat, corn, rice and sugar will fall by as much as half.

Mou Xinsheng, director of China's Customs Administration, says tariff cuts will reduce customs revenue next year by around three and a half billion dollars - about ten percent of total customs revenue this year. At a recent investment forum in Beijing, Mr. Mou said he expects the tariff cuts to be offset by an increase in overall imports.

Another change next year: Foreign banks operating in China will be able to provide some services to individuals, instead of to just a few companies.

Also starting in 2002: Foreign securities firms will be able to more easily trade some shares in Chinese companies.

Zhou Xiaochuan, head of the Securities Regulatory Commission, says the changes in banking and securities are essential to China's economic development. Mr. Zhou says that as the Chinese become more affluent, they will look for more ways to invest money. But, he says, China's securities firms must improve their transparency and services to compete with world-class financial institutions entering the market.

The hardest part of all these WTO changes may be implementing the complex new trade laws. Beijing is rushing to reform its legal system, training judges and provincial leaders on the laws. Zhang Zhigang, vice-chairman of the State Economic and Trade Commission, says the government is still revising hundreds of laws and regulations to meet WTO rules. A few days after China's WTO entry, Mr. Zhang urged patience from the world as China strives to fulfill its commitments to the global trade body.

Ning Xuanfeng, a Beijing lawyer who specializes in anti-dumping cases, says the legal revisions will take time to be completed. But even now, she says, some European and American companies are lobbying their governments to take trade grievances to the WTO's dispute settlement body.

Before, trade disputes with China had to be handled with often lengthy bilateral negotiations.

State media report that more than 30 countries have started almost 500 investigations against Chinese manufacturers suspected of dumping cheap products on foreign markets.

Ms. Ning also notes that Chinese manufacturers are lining up to file complaints against foreign importers.

Already, there are signs that trade disputes may rise next year. Beijing has blasted U.S. proposals for limits on steel imports, saying they go against WTO principles.

Part of VOA's Year End Series for 2001