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Essay on China's Entry Into The WTO
The membership in to WTO signifies that China's reform policy has survived the Deng era and is ever expanding. China is voluntarily taking up many commitments in the WTO. In an unprecedented move, China is opening its internal policies to external scrutiny, such as annual reviews of progress. It also agreed to grant full trading rights, eliminate quotas, and be bound by WTO dispute resolution processes and sanctions, making China very attractive for foreign businesses.
Despite the immense potential, it remains very difficult to do business in China. The WTO agreement will be implemented by registration. During the registration and implementation processes, the bureaucracy may take a very legalistic approach, creating new and different obstacles to foreign investors along the way. This will make doing business in China harder and more frustrating than some investors may expect. The industries most affected by China's entry into the WTO will be agriculture and financial services.
Historically, these industries have been very weak in China and required heavy subsidization by the government, and hence should stand to benefit greatly from foreign investment.
There is a wide range of opinions on how much impact China's entry into the WTO will have on Southeast Asia. On the one hand, there will be only negligible regional effect because industries such as telecommunication and financial services are domestically focused and little affect Chinese exports. On the other hand,
China's entry will bring great challenges to Southeast Asia and may even cause another round of currency devaluation.
A major challenge for Southeast Asia resulting from China's entry, the low labor costs in China could pose a serious threat to the economy of many countries, including India. Moreover, China's entry will not benefit Southeast Asian countries in terms of investment in China....
