APPROVAL OF CHINA'S WTO APPLICATION INCREASES PRESSURE TO REFORM

Date: 09-17-2001

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HONOLULU (Sept. 17) -- Approval over the weekend of China's application to become a member of the World Trade Organization will step up pressure on the Chinese government to hasten reform and improve government services, U.S. and Chinese officials said today at the East-West Center.

"The Chinese have been anticipating this and it's real now, but so are the challenges," said Tianshu Chu, an East-West Center specialist on China's accession into the WTO. She said the "short-term pain" associated with China's entry into the WTO included more unemployment due to increased competition. Farmers will also suffer because of weak marketing and distribution systems in China. The private sector, on the other hand, will be able to compete on a level playing field with state-owned enterprises.

A two-day conference on "China's WTO Accession: Challenges and Policy Implications on the Asia Pacific Region," started today at the Center. Participants include academics and government officials from the region.

Fan Zhai, deputy director of the Economic Forecasting Division in the Policy and Fiscal Affairs Department of China's Ministry of Finance, said there will be more pressure "coming from the inside rather than the outside" for China's government to reform, hasten development of programs such as social security, and improve infrastructure. "Most Chinese believe the WTO will create opportunities. Most people think the direction is right."

Chu said WTO accession has already hastened reforms. Last month private businesses in China were for the first time allowed to import and export directly rather than go through state trading companies.

Now that China's WTO application has been approved, approval of Taiwan's application is expected tomorrow, according to Shih-Hsun Hsu, a professor in the Department of Agricultural Economics at National Taiwan University. He said WTO membership will pressure Taiwan's government to "open the door and lift restrictions" such as limits on direct trade and investment in China. It will also open opportunities to join regional trade agreements, important for kick-starting Taiwan's economic growth.

China's WTO membership now requires final ratification by the WTO's 142 member countries and China's national legislature. This will lead the way for Beijing to join the global trade body early next year.

Tianshu Chu can be reached at chut@eastwestcenter.org or 808-944-7404. Shih-Hsun Hsu can be reached at hsu@taigem.agec.ntu.edu.tw or 886-2-2365-6329. Fan Zhai can be reached at fzhai_99@yahoo.com or 8610-6855-5184.

To interview them or other conference participants Tuesday, contact Susan Kreifels at 808-944-7176 or EastWestWire@EastWestCenter.org

Other participants:

Ching-Cheng Chang Associate Professor Department of Agriculture Economics National Taiwan University 886-2-27822791 ext. 201 emily@econ.sinica.edu.tw

Theresa Greaney Assistant Professor of Economics University of Hawaii (808) 956-7521 greaney@hawaii.edu

Masahiro Kawai Professor of Economics Institute of Social Science University of Tokyo 81-3-3581-4720 c/o miwa.miyata@mof.go.jp

Jong-Eun Lee Assistant Professor Department of Economics Sejong University Seoul, South Korea 82-2-3408-3137 ljongeun@sejong.ac.kr

Jong-Wha Lee Professor of Economics Korea University 82-2-3290-2216 jongwha@korea.ac.kr

Jose Tongzon Associate Professor National University of Singapore Department of Economics (65) 874-6258 jtongzon@hotmail.com

Anming Zhang Associate Professor Department of Economics and Finance City University of Hong Kong (852) 2788 7342 efanming@cityu.edu.hk,br>
Shukai Zhao Fairbank Center for East Asia Pacific Research at Harvard University (919) 684-3075 zsk59@hotmail.com