March 12, 2000
Despite launching a nationwide campaign on the virtues of entering the World Trade Organization, China's government remains divided about whether the world's most populous country should join the group that polices international commerce. Even as Chinese trade officials push ahead with the process, reaching agreements in recent weeks with India and other countries, a loose alliance of Chinese security agencies and state-owned monopolies remains deeply uncomfortable with the move, Chinese officials say.
Resistance to the WTO already has appeared in some ministries, which moved to insulate themselves from changes the pact could bring after China and the United States agreed in November on terms under which Beijing could join. The debate in China mirrors the controversy in the United States, where President Clinton last week formally asked a skeptical Congress to approve permanent normal trade relations with China. Right now, Chinese officials say, WTO supporters have the upper hand here. But if Congress rejects normal trade ties with China, the backlash in China against engagement with the United States and the outside world could be significant.
"The WTO has been the most hotly debated political topic in China since 1989," said Zhou Mingwei, head of the Foreign Affairs Bureau of Shanghai, referring to the crackdown on student-led pro-democracy protesters around Beijing's Tiananmen Square. "But accession is necessary for China to move forward into the new century."
Over time, WTO membership is expected to have a profound effect on China's economy, society and politics. It will open up its markets to direct foreign competition and even more Western management ideas, news and information than are already flowing into this country at an unprecedented rate. As tariffs fall, millions of jobs may be created in China's export businesses, but its inefficient farm sector may face a significant challenge: 10 million peasants are expected to lose their source of livelihood from the deal.
The driving force behind the WTO push is Premier Zhu Rongji, who has staked his career on reforming China's economy. He is joined by China's trade ministries and officials from influential cities and provinces such as Shanghai and Guangdong, which would benefit from the deal.
On the other side, China's security services, its military and certain ministries and economic interests, such as the Information Industries Ministry, China Telecom, steel conglomerates and some agricultural firms, oppose the agreement. China's security agencies, including the People's Liberation Army, are concerned, analysts say, that joining the WTO will mark another step toward privatizing China's economy and importing even more Western ideas about management and civil society--a headache for those whose job it is to ensure the longevity of the one-party Communist state.
"This is not a simple political scene anymore," said one American businessman. "There are now many voices in the room." Officials say that a root cause of the Chinese government's divide on the WTO issue is the lack of a strong leader. More bureaucratic survivor than political chieftain, President Jiang Zemin has maintained his hold on power by allowing a multitude of voices to push and pull China's foreign and trade policy.
In November, Chinese officials and the United States reached agreement on the terms under which China could enter the WTO. But shortly thereafter, several Chinese ministries moved to protect themselves against the effect of WTO membership. The People's Bank of China began to consider severely limiting how much local currency foreign banks can lend in the country. China's Press and Publications Administration forced Western publishers to remove their famous names and logos from a series of magazines in a move designed in part to help China's struggling state-owned magazine business.
The Information Industries Ministry warned Internet start-ups, most of which are backed by American venture capital, that they would not be allowed to be listed on foreign stock exchanges without its permission. And the State Encryption Management Commission, a Chinese agency with close ties to the military, police and Security Ministry, issued regulations requiring all companies doing business in China to reveal to the government the type of encryption software they use by Jan. 31--a rule that if enforced could sharply curtail the growth of foreign-backed Internet commerce in China. Few companies complied.
Then last month, the Taiwan Affairs Office issued a white paper that threatened the island with attack if it put off reunification negotiations. The paper, issued despite opposition from the trade ministry, provoked alarm in the United States and elsewhere and complicated debate on the China trade bill pending in Congress. American labor unions, human rights organizations and conservative religious groups have lined up against the bill, arguing that it would reward a country that oppresses its citizens, spoils its environment and threatens its neighbors. But supporters say that without it, the United States will not share in the wider access to Chinese markets that will occur when China formally joins the WTO, as expected later this year.
Even among Chinese who support WTO entry, the congressional debate has fueled disagreements. They center around a key question: If the U.S. Congress rejects permanent normal trade relations for China--the same trading rights the United States extends to the other 134 members of the WTO--then should China withdraw its WTO application? Or should it continue the pursuit, and once in the WTO, punish U.S. firms by slapping high tariffs on their products and denying Americans the right to, for example, invest in Chinese Internet start-ups? China's trade minister, Shi Guangsheng, is expected to speak about this issue at a news conference on Monday.
"If we don't get [normal trade relations], we won't carry out agricultural agreements" to import American grain and citrus, said Chu Shulong, a senior research fellow at the influential China Institute of Contemporary International Relations. "There are still a lot of problems with the WTO. Zhu Rongji and Jiang Zemin know for the long-term it's necessary for China to join. But in the short- to medium-term, joining the WTO is risky. If things were to be delayed for one year or two, it's also okay for China."
In addition to not honoring agriculture agreements, other fallout from rejection of normal trade relations could include the closing of markets to Boeing aircraft and other big-ticket U.S. exports, and trouble for U.S. firms seeking to invest in China's telecommunications market, Chinese officials and American businessmen say. Beijing faces a delicate task in describing the WTO deal. "We've got to be very careful," said a high-ranking Chinese government official fighting for WTO entry. "If some people here say the U.S. won in its WTO negotiations with China, then they'll say China failed and all of the state-owned industries will collapse. But if we say, 'No, actually we won,' then your Congress won't pass the normal trading bill."
Indeed, until now, almost three months after China's trade agreement was signed with the United States, neither government has released the full details of the deal. While the debate continues, WTO advocates in China's trade ministry are preparing for accession and have launched a national campaign to teach its officials about the WTO, a senior Chinese government trade official said.
"The invitations for me to speak are this thick," he said, placing his hand a foot above a table. "Everybody wants to know what the WTO means for China." Throughout China, officials are learning about the WTO. It is a hot topic in China's universities, in the state-run press and on television. Most of the reports have been glowing, describing the deal as a win-win affair. "The whole country is studying," the senior trade official said. "At my ministry, 1,200 people are in classes now. All officials above the section-chief level will be trained."
Part of the problem is that no university in China teaches a standardized course on the WTO's legal system or the General Agreement on Tariffs and Trade, the WTO's predecessor. "The education is lacking," the official said. The training problem, the official said, is of significant concern. "I'm not omnipotent," he said. "One moment, a phone call comes [asking], 'Can we do this?' The next, 'Can we do that?' We need people to answer these questions. But right now we've got a shortage of people who understand the issue. I am worried that the WTO 'sermon' is going to be distorted by bad preachers."
Even if China does enter the WTO, the official stressed that major changes in China's law and regulations would come very slowly and that China would continue to protect its 800 million farmers from being swamped by American agricultural products. Some Western reports have said that China's farming sector could be ravaged once the country enters the WTO; for example, the U.S. National Corn Growers Association recently said American corn exports to China could triple.
"If you were the leader of a country with 800 million farmers, would you have them stand each year with their mouths open waiting for American wheat?" he asked. "Of course not. That's a security and stability issue. It would be equivalent to sacrificing your political position, sacrificing the nation. "We've got to go slowly. Other countries are far ahead of us and have climbed many steps. We can't climb three at once, but we'll climb two."
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