China Debates the Price Of Joining World Body

Hard-liners oppose US demands for entering WTO

To the outside world, especially the United States, China's position on joining the World Trade Organization reflects a consensus in Beijing.

But in reality the ruling Communist Party is deeply divided over the pace of economic reforms that would allow China to be integrated into global structures, such as the WTO.

The debate in China is almost as heated as the one between Washington and Beijing over whether China, as the world's largest nation and potentially its biggest economy, should be admitted as an industrialized, developed country.

The US insistence that China's economy be treated like an advanced one would force Beijing to rapidly lower trade barriers and cut aid to state industries. If China entered the WTO as a developing country, as Beijing insists, then it would have a longer timetable for reforms.

Calls by the US for Beijing to dismantle its state-guided economy by 2000 in exchange for WTO membership are triggering an anti-American backlash among China's conservatives and hurting its reformists.

Party hard-liners are opposed to quick-paced moves toward a market economy and free trade in part due to fears over the potential political and economic effects.

"Some conservatives say that when Washington pushed Moscow for rapid market changes, Russia's economy and society dissolved into chaos," says a senior Chinese official. "They believe the US is now trying a similar tactic against China."

Many outsiders support Beijing's bid. "China is like a lumbering tanker, not a speedboat, and economic change must come slowly," says Paul Cheng, former head of the American Chamber of Commerce in Hong Kong. "If you push China's leaders too far, they will say they don't want to join the WTO."

Chinese and American scholars say Beijing is poised at a pivotal point in history, with a central question over whether the successors to senior leader Deng Xiaoping will continue his strong backing for economic reform and opening to the rest of the world. The alternative, they say, would involve responding to nationalistic pressures and fear of change by turning inward and freezing reforms.

President and party chief Jiang Zemin has sent out mixed signals on China's links with the global village. While he told President Clinton in Manila last month that Beijing hoped to speed up its entry into the WTO, Mr. Jiang has also mobilized cadres nationwide to halt the "infiltration" of Western cultural influences into China.

Many WTO member states agree that too quickly reducing Beijing's funding for state enterprises and farmers could lead to disaster. China's 800 million peasants earned an average 55 cents daily in 1995. "Some peasants earn barely enough to survive, and abruptly subjecting them to global competition could push them off the edge," says the Chinese official.

Two-thirds of state firms failed to turn a profit last year, and millions of Chinese workers received only subsistence wages.

"Until a national unemployment system is set up, massive bankruptcies ... from halting government funding for state companies could cause widespread suffering," he says.

US trade officials say permitting China to continue some protectionist policies would allow Beijing to flood the American market with low-cost goods while blocking US imports. Washington's trade deficit with Beijing exceeded $30 billion in 1995.

A Chinese customs official recently said the West's "excessive demands" and obstruction had caused China to become apathetic about entering WTO, but officially the bid is still active. "By calling for the immediate and drastic transformation of China's economy, the US is undermining the position of reformists in the party who back stronger links with the West," says the other Chinese official.

Mr. Cheng concurs and says China's more liberal leaders would lose their battle to join the WTO if it required "too great a sacrifice."

"Although some of China's larger cities like Shanghai are advanced, the countryside, which holds four-fifths of the populace, is still at a developing stage," says Cheng, who is also a member of Hong Kong's elected Legislative Council.

"The central issue is whether the US tries to isolate China and hopes that its economy eventually meets WTO standards or works with Beijing within the group on a trade reform schedule," says Robert Ross at Harvard University's Fairbank Center for East Asian Research.

Like many US scholars, the European Commission advocates a phased-in approach for China's admission to the WTO.

"China is huge and is expected to have the largest economy in the world in 20 years," says Etienne Reuter, head of the European Commission office in Hong Kong.

Mr. Reuter says while China maintained immense protectionist policies, "moving from central planning to a market economy cannot be done overnight."

"By integrating it into the world, China is more likely to accept its obligation to cooperate in economic and other issues that affect the whole of the planet," he said.

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