Chinese Economy: General News, Updates and Discussions

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In the first eight months, China's foreign trade expanded 17.6 percent to 34.78 trillion yuan ($5.13 trillion). From January to August, exports reached 20.17 trillion yuan, up 14.6 percent year-on-year, while imports stood at 14.61 trillion yuan, rising 22 percent.

 

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US now always complain that it was a strategic mistake for US to let China in WTO that later fueled China's explosive economic growth. But, US didn't think that way back in 2000, it was no way near a saint or lenient to China on the negotiations to let China in, the agreement was herald as a big victory for US. US wanted to control Chinese economy by putting the most stringent conditions on China. Yanks are just sore losers since US is no longer competitive in many sectors now.

Google AI Answer:

Did US impose strict conditions for China to enter WTO ?


Yes, the United States imposed historically strict and unprecedented conditions on China for its entry into the World Trade Organization (WTO) in 2001. [1]

Because the WTO operates by consensus, China had to negotiate bilateral trade agreements with key members. The 1999 U.S.-China Bilateral WTO Agreement served as the bedrock for China's ultimate accession protocol. U.S. negotiators used their immense economic leverage to force China to accept terms far more rigid than those required of other developing nations. [1, 2, 3, 4, 5]

The primary conditions and unique mechanisms enforced by the U.S. included:

1. One-Way Market Liberalization

The U.S. made no new market-opening concessions to China. Instead, China had to slash its own trade barriers one-sidedly to grant American firms access to its market. [1]

• • Tariff Reductions: China was required to cut its average industrial tariffs from about 25% down to 9.4%, and agricultural tariffs down to 15%. It completely eliminated tariffs on high-tech products. [1, 2]
  • Service Sector Openings: China was forced to lift restrictions on foreign investment in previously locked sectors, including banking, insurance, telecommunications, and retail distribution. [1]

2. Elimination of State-Led Distortions

To counteract China's state-run economic model, the U.S. required Beijing to legally abandon common protectionist tactics: [1]

• • Investment Rules: China agreed to stop forcing foreign companies to transfer technology, use local materials, or meet export quotas as a condition for doing business there. [1]
  • Trading Rights: Beijing had to strip its state-owned enterprises (SOEs) of monopoly power, allowing foreign firms to import and export goods directly within China. [1]

3. Highly Restrictive, Unique Safeguards

Fearing a flood of cheap Chinese goods, U.S. Trade Representative Charlene Barshefsky negotiated highly aggressive, China-specific defense mechanisms into the WTO protocol: [1]

• • Non-Market Economy Status (15 years): For 15 years post-accession, the U.S. was permitted to treat China as a "non-market economy" in anti-dumping cases. This allowed the U.S. to use third-country prices to calculate steep punitive tariffs on underpriced Chinese imports. [1, 2]
  • Product-Specific Safeguard (12 years): A unique mechanism (Section 421) was created allowing the U.S. to unilaterally impose tariffs or quotas if a surge of Chinese imports threatened to disrupt an American industry. [1]
  • Textile Safeguards (until 2008): Special provisions allowed the U.S. to rapidly clamp down on Chinese textile surges. [1]

Why did China agree?

The conditions were so stringent that many leaders inside Beijing felt they were signing an "unequal treaty" that subjected China to foreign humiliation. However, premier reformists like Zhu Rongji pushed it through because they believed the intense external pressure of WTO rules would force necessary, rapid modernization across China’s domestic economy.