China and the WTO

Geography

Located in E. Asia largest country in the world (size wise)

4th

Terrain: mostly mountains, high plateaus, deserts in west; plains, deltas and hills in

the east.

Population
1.3 Billion Age 0-14: 21.4% Age 15-64: 71% Age 65 and older: 7.6% Median age in China is 32

Economy
4th

largest GDP (ppp) 9th largest GDP Real Growth Rate GDP By Sector: -Agriculture: 14.4% -Industry/Construction: 53.1% -Services: 32.5%

Labor Force
Largest Labor Force in the world (791.4 billion) Half of Labor Force is in agriculture Industry and Service provide the other 50% Unemployment rate is 4.2%

Trade
4th largest in exports 4th largest in imports Main Trade Partners: -USA -Japan -Hong Kong -South Korea -Taiwan

What is the WTO?

World Trade Organization International, multilateral organization which sets rules for global trading system Resolves disputes between member states China is 143rd member of WTO. All member states must be signatories to its about 30 agreements. Main goal is to encourage smooth and free trade

China entry to WTO

China was voted in as a member on November 11, 2001 but became an official member one month later, December 11, 2001 In order for China to gain member status, China had to agree to separate negotiations with all of the current WTO members China tried to get member status for 15 years prior to 2001

China and WTO obligation

2001: After membership china will open new cities to foreign banks for local currency business. 2002: China will eliminate restrictions on foreign firms and allow the institution to open the new offices. 2004: Foreign companies are permitted to provide health and group insurance to the chinese.

Continue.
2005: US to eliminate Chinese textile quota but adopt measures to prevent import surges. 2006: China to reduce auto tariffs to 25% from current 80-100%. 2007: Foreign companies can hold 49% in telecom services through joint venture.

Timeline for Qualification

1986 -- China applies to join General Agreement on Tariffs and Trade (GATT), predecessor to WTO. 1989 -- China's suppression of pro-democracy demonstrators in Tiananmen Square on June 4 derails negotiations. November 1995 -- China unveils economic and trade reforms aimed at winning U.S. backing to enter the WTO. It plans to slash import tariffs by 30 percent and allow joint venture companies to be set up. April 8, 1999 -- President Bill Clinton and Premier Zhu Rongji sign a joint statement in Washington welcoming substantial progress and committing them to completion of a WTO deal by the end of the year. The gap is closed on about 90 percent of WTO issues. May 7, 1999 -- China freezes WTO talks after NATO forces accidentally bomb the Chinese embassy in Belgrade. September 11, 1999 -- Clinton and Chinese President Jiang Zemin agree on the sidelines of the Asia-Pacific Economic Cooperation (APEC) forum in New Zealand to resume WTO negotiations. November 15, 1999 -- U.S. and China announce a WTO pact. China agrees to open a wide range of markets, from agriculture to telecommunications. Clinton must persuade the U.S. Congress to grant China permanent normal trade relations (PNTR).

Timeline for Qualification

May 19, 2000 -- The European Union signs a WTO accession pact with China October 10 -- Clinton signs a law giving China normal trade status with U.S. January, 2001 -- Further multilateral talks end in acrimony as China and some WTO members disagree on farm subsidies. June 9 -- China and the U.S. announce consensus on issues holding up China's entry, including farm subsidies, after meetings on the sidelines of an APEC trade ministers' meeting. June 20 -- The European Union says it has resolved outstanding bilateral issues with China over its accession. September 14 -- WTO members agree on terms for China's entry at an informal meeting, clearing the way for the nation to join by the end of the year. November 10 -- Trade ministers from across the world officially approve China's entry. The move was approved unanimously at the WTO meeting in the Gulf state of Qatar December 11 -- China ends its 15-year quest to join, officially becoming a fully-fledged member of the international trading system. http://archives.cnn.com/2001/WORLD/asiapcf/east/09/18/china.wto.timeline/

What has been changed/reformed?

Chinas entry into the WTO set in motion the most far-reaching reforms since Beijing since 1978. Over 1100 laws and regulations have been changed since 2001 China can not impose one level of barriers (e.g., tariffs) against one member country and another level for others China will participate in the WTO's dispute settlement system Manufactured goods saw the largest decrease in tariffs. Tariffs were eliminated on computers, semiconductors and other information technology products in compliance with the Information Technology Agreement In agriculture, it has pledged to bind all tariffs and reduce them from an average level of 31.5 percent to 17.4 percent Foreign car makers will be able to distribute and retail vehicles on their own, and provide financing to buyers.

What has been changed/reformed?

China has promised to open its telecommunications, financial services, distribution, and many other industries to foreign service providers. Pledged to apply its trade policy uniformly across the country and to enforce only those laws, regulations, and other measures that have been published beforehand. Agreed to eliminate all prohibited subsidies (including those to state-owned enterprises), liberalize trading rights, and require state trading companies to conduct their operations in a commercial manner. http://www.imf.org/external/pubs/ft/fandd/2002/09/adhi kari.htm

WTO Entry Boosts Economy

GDP grew by 7.9% in the year following entry to WTO Increase of 18.4% in trade volume with the United States after one year Chinas exports increased by 19.7% after one year Due to improved trading environment, China became the 4th largest trade body in the world behind only the United States, EU and Japan.

Foreign Investment
Influx of foreign investment has increased rapidly since entry to WTO because of increased confidence from multinationals China experienced an increase of 22.55% in foreign direct investment one year after WTO entry Foreign Investment has exceeded the United States, making the country the largest foreign investment destination in the world Low cost labor and vast market, which provide a great scope for profit, make investors confident in investing time and resources into China

Private Sector

Private Sector has seen rapid growth after being discriminated against in the past Private Sectors have been barred from direct foreign trade Financing had been blocked by government policies which blocked growth WTO policies forced China to treat all enterprises, whether state owned or not, equally All domestic enterprises can trade freely and idependently in foreign trade In Zhejiang Province, for example, 80 % of the 1,700 enterprises that were granted the right to conduct foreign trade this year are private firms. In the first nine months of this year, the foreign trade volume of those private companies was 3.5 times that for the same period last year.

Automobile Sector
Changes in Car Market Current market structure for a car financing in china: Only 16% were financed Launching of financing services Bank & Non-Banking can set up auto financing institution.

What does the future hold for China in the WTO?

Economic growth will continue and more reforms will be made China will have access to advanced technology By 2010, all of Chinas tariffs will eventually be reduced to 15% Banks will begin to launch massive market oriented reform programs to prepare for competition from outside markets Business standards will continue to rise Chinese citizens will begin to receive 3 key things: 1. More Rights 2. Better Government Services 3. Equal Treatment

GMAC
GM is the largest corporate FDI contributor to China. GMAC has numerous manufacturing partner to leverage. GMAC has a numerous GM network partners to leverage.

Final Question
As Chinas economy grows, so does their demand for energy. This is reflected through examples like cnoocs attempted acquisition of Unical and Chinas involvement with anti-American nations like Iran and Sudan. -How will Chinas acquisition of energy in anti-American countries change the ChinaU.S. relationship?

The End