China's recent admission to the World Trade Organization will ease, but not eliminate, barriers to international trade, visiting professor Peter Walters said Thursday.
Walters, head of the Department of Business Studies from the Hong Kong Polytechnic University, outlined the positive and negative aspects of potential international trade in China after the nation officially joined the WTO in December. He said the new regulations would certainly increase trade, but added that, "various problems on the mainland won't disappear just because of the WTO."
His presentation, organized by the Anderson Schools of Management, was prompted by the debate surrounding China's accession to the WTO after a 15-year struggle. The main objection to China's joining the WTO was based on alleged human rights violations. Chinese officials finally agreed to the WTO terms, which led to China becoming its 143rd member.
Walters said China's restrictions on foreign companies will lessen over several years while the opening of Chinese markets will create many opportunities. Exports to the Chinese market and foreign direct investment should become easier with the new regulations, reduced tariffs and the eventual elimination of import quotas, he added.
Competition in global markets, especially for labor-intensive goods, is expected to become tougher, he added, stating that big opportunities for services such as telecommunications, insurance and banking will rise as well.
Despite his belief that opening the markets will be good for the average Chinese consumer, he cautioned that the nation's average consumer is very poor.
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Walters said the U.S. International Trade Commission's current forecast is that U.S. exports to China will grow faster than U.S. imports, but a large U.S. trade deficit will still remain.
He stated that problems will occur due to many Chinese trade regulations that need to be revised to comply with the WTO, in addition to local opposition to the organization. The Chinese government, Walters said, still has ways of getting around the new trade regulations.
Walters cited the case of Chinese farmers who import soy bean products, which are sometimes genetically engineered. He said the Chinese government demands authorization for import of any product that has been genetically engineered. However, he said, no authorization forms have been designed yet, making it impossible to ship those goods.
Walters pointed out that trade with China is also government and business "relationship-based." He said the need to develop a good relationship with the government and local officials is much more important than in the United States.
Some areas, such as the media, will be excluded from the liberalized trade, he said.
The United States, Walters added, shouldn't assume that it wouldn't encounter domestic or other foreign competition. He said China has very strong local competition in many parts of the country.
He raised other concerns, such as whether Chinese exports and foreign direct investment would be treated fairly in overseas markets
"It's not just a question of whether China's going to implement the WTO, the other aspect is foreign counties," Walters said. "Are they going to implement the WTO in full spirit when they have to compete against very cost-effective Chinese enterprises?"