Why did China’s leaders place so much importance on the accession to WTO?
The most widely cited reason for China’s push to join is to keep the process of reform going. In many ways, the WTO membership was the best way for China to hold economic growth. The world economy has become much more complex and interdependent, and China's participation - based on the rules of international trade - was essential for China and for the rest of the world.
As a WTO member, China would be able to participate in the formulation of rules governing international trade and investment. At the same time, China would be able to protect its trade interests using the existing WTO dispute settlement system. Chinese exporters will benefit from the fact that their trading partners must comply with WTO rules. This means, for example, that WTO members will not be able to take on discriminatory measures against Chinese goods.
Another factor was a result of watching the technological revolution of the 1990s. Chinese leaders wanted China to participate in these developments, and this would be much easier if China was seen as a satisfying economic partner. Cooperation with WTO would also include protection of intellectual property (Prime, 2002).
WTO membership is also expected to attract more foreign investment, some of which would bring desired new technology or help enhance China’s own capabilities for technological development. The fact that China joined the Information Technology Agreement, which phases out all tariffs on information technology products by 2005, gives credence to this as one factor supporting membership (Prime, 2002).
China’s exports have increased substantially throughout the reform period, helping China earn foreign exchange for needed imports and stimulate growth through demand. Continued increases, however, are problematic. The willingness of countries to open their markets even more to Chinese goods is being tested by political resistance to what is seen as unfair trade in terms of China’s willingness to reciprocate. This problem would be greatly reduced within the WTO framework, because China will then be seen as part of the fair trade system. In addition, quotas blocking more Chinese imports will be phased out as part of the terms of China’s membership. Both of these changes will help increase China’s exports (Prime, 2002).
Another important condition for China has been...