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| Forklift arranges shipping containers near Shanghai port, China, March 2, 2011 (file photo). |
It was 10 years ago this Sunday, Dec. 11th, when China joined the World Trade Organization.
Since
then, the country has grown to become the world's second largest
economy and millions of Chinese have been lifted out of extreme poverty.
But while China made dramatic reforms after joining the global trade
club, analysts say the process of moving away from being a state-planned
to a more open economy has not been a definitive success, and many
challenges remain.
The view from BeijingFrom China’s perspective, the past decade has been a period of historic change.
According to a recent opinion piece in the state-run
China Daily,
since becoming a WTO member, China has become the world’s number one
investment destination, with outbound investment nearly doubling every
two years since 2002. Chinese companies, the article adds, are
increasingly making their mark, with 54 now listed among the world's
Fortune 500 companies, compared to 12 when it joined in 2001.
Such rapid growth has had a dramatic impact on the global economy and surprised Chinese officials.
"I
have to say that exceeds far more what we expected at that time,
especially the size of China's economy, the size of China's exports and
imports, and the market expansion of some of the industries, like cars,
from two million to 18 million within ten years," says Long Yongtu,
chief negotiator of China’s accession to the WTO.
Lingering U.S. trade deficitBut China's
economic rise comes at a cost to the United States and other traditional
manufacturing nations. The country's massive production of inexpensive
exports means other nations' goods are undercut, causing their
industries to suffer.
U.S. exports to China are growing, but the
trade deficit with China has boomed. There is also concern among WTO
member nations that while Chinese companies are gaining more access to
the global economy, foreign companies in China are having a different
experience.
Michael Punke, U.S. ambassador to the World Trade
Organization, says that over the past five years other members of the
WTO have seen a troubling trend of intensified state intervention in the
Chinese economy.
Many of the trade disputes with China can be
traced, he says, to Chinese policies that promote or protect state-owned
and domestic enterprises.
Patrick Mulloy, a member of the
U.S.-China Economic and Security Review Commission, says the issue of
forced technology transfers - the contract-based acquisition rather than
domestic development of new technologies - is of particular concern.
"The
government will say, you want to be a friend of China, put more
manufacturing here, put more research and development here, be a friend
of China, help us grow our economy," he says. "And the companies will
say, 'Well, I might be able to afford to give them this type of
technology because I am really holding this part back,' but then you
have 100 companies transferring technology and helping China move up the
food chain. It’s good for China and if I were them I would be doing the
same thing, but it’s not good for us and it’s contrary to China’s WTO
commitments."
Investor complaintsForeign
companies operating in China frequently raise concerns about the myriad
licenses that businesses are required to apply for, and the problems
faced receiving them in a fair and timely manner.
Undervaluation
of Chinese currency has also long been considered an obstacle to free
trade, and U.S. lawmakers are working to pass legislation that seeks to
punish Beijing for keeping its currency artificially low, which makes
the cost of its exports cheaper.
China's industrial subsidies
also remain a contentious issue, which, competitors say, make its
products cheaper and more attractive to buyers.
And despite
Beijing’s 2006 pledge to allow foreign credit card companies access to
its market, they have yet to deliver on the promise.
Mulloy says such barriers to trade demand action.
"These
are things this country really has to get to grips with and
understand," says Mulloy. "China is not our enemy, but they have a
strategy and they are moving their people up a food chain of economic
growth as quickly as they can and we have no counter strategy and that’s
our problem."
A topic of debateWith U.S. unemployment high
and the economy waffling, trade with China has become an increasingly
prevalent subject of debate in U.S. campaign politics -- a topic that's
likely to persist as the 2012 presidential election draws near.
Mitt
Romney, one candidate for the Republican Party nomination, has
repeatedly criticized China’s trade practices and says the U.S. is
already in a trade war with the world’s second largest economy.
But
Daniel Ikenson of the CATO Institute, a libertarian think tank
headquartered in Washington, D.C., says these disputes are just part of
the process and a good reason to have China in the WTO.
"The
relationship is maturing. The world's second largest and largest economy
has grown, [and] there are going to be frictions, they are going to be
complaints," he says. "We've had many more trade disputes with Europe
and Canada than with China. That's the way mature relations settle their
differences."
He cites growing social unease in China and the
government's ability to maintain control as a greater concern. While
China continues to see rapid economic growth, there is also growing
public discontent with corruption, environmental pollution and property
policies and real estate properties.
If China implodes, Ikenson says, that will really have an adverse effect on the rest of the global economy.
Source: VOANEWS.COM