DATE=11/16/1999
TYPE=BACKGROUND REPORT
TITLE=CHINA W-T-O
NUMBER=5-44767
BYLINE=AMY BICKERS
DATELINE=HONG KONG
INTERNET=YES
CONTENT=
VOICED AT:
INTRO: Monday's breakthrough bilateral trade pact
(concluded Monday) between Washington and Beijing will
have a wide variety of effects on businesses and
workers in China. As Amy Bickers reports from Hong
Kong, the deal will strengthen some companies and
sectors, while others will have to contend with heavy
foreign competition.
TEXT: The long-awaited trade deal is a vital step in
China's drawn-out campaign to join the World Trade
Organization. While Beijing still has to seal deals
with other nations, the two way trade pact will have a
tremendous impact on China's economic landscape.
It will increase competitive pressures, but it will
also mean many more products on store shelves. Ken
Davies (PRON: DAVIS), a Hong Kong-based economist,
says that as American products find their way to
Chinese stores, prices will fall on items and services
such as cars, furniture and mobile telephone rates.
/// DAVIES ACT ///
It means that consumers in China are going to
have much more choice in what they buy in the
shops. They will be able to buy American cars
with American credit so that major companies
will be able to bring in their own credit
companies like GM Card and Ford Credit. So it
will increase the range of goods and the number
of films they can see from abroad. So it is
generally a very good thing for consumers in
China.
/// END ACT ///
Chinese banks and insurance companies will also have a
run for their money, since they will have to compete
with U-S financial institutions. Chinese hotels will
also face a squeeze, since the accord allows for
wholly owned U-S hotels to open their doors in just
three years. More western food products - including
staples such as corn and wheat - will also be for
sale.
But economist Li Kui Wai, of Hong Kong's City
University, says not all Chinese consumers will
encounter the new products and services.
/// LI ACT ///
Some of the coastal regions will have the
opportunity to consume Western agricultural
products, while for the remote areas, it will be
some time for them to catch up. Probably this
will also lead to some reform of agricultural
production and output. For other industries
such as I-T (information technology), more firms
and individuals will begin using this industry
and there will be bigger demand and foreign
investment in this area.
/// END ACT ///
Mr. Davies says China's countless farming communities
are likely to face tougher times, since the tariff on
agricultural goods will drop to 14-and-a-half percent
from the current rate, which is more than double that
figure.
/// DAVIES ACT ///
What this deal does is to present quite a
serious challenge and part of the result of it
will be that a lot of farmers stop farming and
move to the cities and engage in other pursuits.
So yes, in the short term it is a challenge, in
the long term it will be met by readjustment of
production.
/// END ACT ///
Major readjustment will also take place in China's
state-owned sector, where many unproductive firms now
languish. Mr. Davies says reformers in the Chinese
government hope the foreign competition will
accelerate a drive to create leaner, meaner public
firms.
/// DAVIES ACT ///
What it does is to take an axe to the
inefficient enterprises by lowering tariff
barriers, providing access, distribution and
trading rights to foreign companies to bring
their products into China and to compete head on
in the Chinese consumer market with domestically
produced goods. So those state owned enterprises
that are extremely inefficient and have been
able to pass their goods off on consumers will
no longer be able to do so. Many of them will go
out of business eventually.
/// END ACT ///
That is one of the most politically sensitive issues
related to China's membership in the world trade body.
Many in the country fear that as companies close,
unemployment will rise rapidly and lead to social
unrest. (SIGNED)
NEB/AB/FC/JO
16-Nov-1999 05:56 AM EDT (16-Nov-1999 1056 UTC)
NNNN
Source: Voice of America
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