FEB - MARCH 2002 THE ON-LINE PUBLICATION OF THE FOREIGN CORRESPONDENTS' CLUB OF HONG KONG
		CLUB SPEAKERS China and the WTO: True Believers The FCC was honoured to have the present and future World Trade Organisation Directors-General, Mike Moore and Supachai Panitchpakdi, within one week of each other. Jonathan Sharp reports. The highly newsworthy subject of China's entry into the World Trade Organisation (WTO) was addressed at FCC lunches by two people who should know all about it: the current head of the WTO, Mike Moore, and the man who takes over from the New Zealander in September, Thailand's Supachai Panitchpakdi. Supachai Panitchpakdi Mike Moore Understandably both men are true believers in the benefits of the world's most populous country joining the trade body, and none more so than Dr Supachai, who has co-authored a book on the subject. He sees China's accession to the WTO as a boon to China on a wide front, and takes issue with the view - also recently aired at the FCC - that the strains unleashed by WTO membership could result in the collapse of the Communist government. He acknowledges that doubts persist over whether China would be able to devote sufficient resources to abide by the commitments that accompany WTO membership, but he has no doubts that the necessary will on Beijing's part is firmly in place. And if there are violations by Beijing of the myriad undertakings that it has pledged to implement, he is confident that such missteps would not be by intention. "It is a tremendous effort that China will have to put up. But by sheer intention, seriousness, determination, I have seen from China's leadership that they are ready for this," Dr Supachai said, noting that understanding has to be shown when any country is subject to membership conditions. He added: "There might be a period wherein the economy would not, of course, be going through this purple patch as we are seeing the Chinese economy go through at the moment. So there might be unforeseen circumstances, but the determination is there, the intention is there.". Supachai also said that most of the agreements with the WTO would be beneficial in that they would help to underpin the reform efforts of the past two decades. "It will only help the Chinese leadership to sustain the momentum of the massive reforms far beyond the terms of the present leadershipSChina will have to present all kinds of measures to several committees looking at all aspects of reformSon IP (intellectual property), on prices, on agriculture, on telecoms. Various agreements that China has with the WTO will be subjected to a consistent assessment and following-up process for the next eight consecutive years. And finally the performance of China will have to be submitted for review, for consideration by the General Council at least once every year." Entry into the WTO would also help China save money from what Dr Supachai termed wasteful subsidies. "They can re-allocate the funds to be used in more productive projects that would create more employment because there will be dislocation of people, particularly in the agriculture sector." Others have argued that the "dislocation" in China's agriculture as a result of a reduction in subsidies and increased imports of food could result in enormous economic and social problems. But Dr Supachai disagrees. He says more imports of agricultural products will be a blessing, enhancing the freedom of choice for China's consumers and bringing about a more healthy trade balance with, for example, the United States. He also saw WTO membership as hastening much-needed legal reform in China, helping to bring the uniformity and transparency that foreign investors have long sought and often not found. Investors should also be encouraged by the elimination of existing restrictions that discriminate against foreign producers, Supachai said. These include requirements on using local content and technologies up to prescribed levels and balancing foreign exchange costs and earnings. "There will be no discrimination against foreign producers at all." He said China needed to reform its hugely debt-laden banking system "very quickly", and foreign competition would help this process as well. He said that in 2007 China would have to treat foreign banks on the same basis as local ones. "It will mean that within five years Chinese banks will have to get their act together. It's a good thing that they know that if they are not going to get their act together, improve their management, credit analysis, data systemsSthey will lose out tremendously." Finally, Supachai foresaw there would be "certain difficulties" in applying such a host of reforms that could lead to disputes between China and fellow WTO members. He said it was his intention as the next WTO head to adapt the present dispute settlement mechanism, which he said was burdened by what he called over-litigation. He said the aim should be to resolve disputes before they reached the WTO's mechanism, which would not be able to cope with the flood of disputes as WTO membership increases. China already faced 450 cases involving alleged dumping of exports. "New ones will probably be forthcoming." Supachai pleaded for s spirit of understanding and compromise in China's cases. "We should have a mechanism that keeps following up on what China has been doing and try to eliminate full-blown conflicts that should be prevented from the beginning." Asked about the political risks that China is taking in entering the WTO, Supachai noted that many doomsayers had warned of tremendous pressures building up in China as a result of its economic reforms. But he said: "I would confirm my belief, which is that whatever China has agreed to do with the WTO would be things that China would have to consider implementing themselves anyway. If China were to go its own way alone, single-handed it will be very difficult and I think the doomsday prediction will materialise." But this will be prevented by the beneficial forces released by joining the world's trading mainstream. For his part, Mike Moore spoke of China's entry into the WTO as one of the defining moments of economic history. "This is a remarkable achievement. Chinese leaders have said to me that this is the most important decision made in 50 years. I believe that the Chinese leadership wants this thing to work," he added. Thousands of universities were working on WTO matters and the country needed 200,000 more accountants and 300,000 more MBAs. "China is trying to build up the public service infrastructure to handle this. I believe that they are serious and they are committed to our process." Moore said he told a Chinese friend that China would become the strongest economy in the world in 25 years, given the present growth rates. "He looked at me and said China has always been the strongest economy in the world - except for the last 200 years!" He said Russia, still not a member of the WTO, could join in the next 12-18 months although there were still enormous problems to be overcome in areas like agriculture. Moore politely dodged a question on how quickly China's entry into the WTO could lead to normalisation of relations between the Mainland and Taiwan. But he was certainly forthright about the experience of being head of the WTO in the face of the rising clamour of the anti-globalisation movement. He said it felt like Muhammad Ali in the first few rounds of his fight against George Foreman in Zaire, leaning on the ropes and waiting to be hit. (Ali, of course, got his own back by knocking out Foreman). He also recounted how in one demonstration, protesters carried pictures of him with a Hitler moustache. Not that Moore seemed unduly concerned. "I wanted a copy for my office."		PUBLICATIONS COMMITTEE Convenor: Paul Bayfield Editor: Saul Lockart Publications: Terry Duckham The Foreign Correspondents' Club Hong Kong 2 Lower Albert Rd Central Hong Kong Telephone: [852] 2521 1511 Fax: [852] 2868 4092 E-mail: fcc@fcchk.org