A deal that may transform China

Six days of US-China talks have reached agreement on China's WTO entry.Next hurdles: Congress, EU, Canada.

American officials and Chinese scholars say Beijing's joining the World Trade Organization, which is virtually assured now that the two Pacific powerhouses have signed a pact, could trigger a momentous shift in US-China ties.

A similar sea change will accompany China's accelerated embrace of the free market under WTO mandates.

The move will spell the end of Communist control over large sectors of the economy and speed up the economic and cultural globalization of a land that only 30 years ago was almost completely sealed off from the rest of the world.

After the two sides signed a deal on China's entry into the WTO yesterday, President Clinton's top economic adviser suggested China and the US were finally leaving behind the cold-war thinking of the past 50 years to open a new chapter in bilateral ties into the 21st century.

"This is bigger than a trade agreement," said White House economist Gene Sperling at a press conference last night in Beijing.

He said the WTO pact was also about the future of China-US ties, the global economy, and China's rise as a member in good standing on the world economic stage.

US Trade Representative Charlene Barshefsky said, "This is a profound and historic moment in US-China relations ... that will provide the world with an additional element of stability."

China has sought the power and prestige of membership in the world trade body for the past 13 years. The US delegation said an 11th-hour deal was only reached after the personal intervention of President Clinton, Chinese President Jiang Zemin, and Premier Zhu Rongji.

China's trade surplus with the US last year topped an average of $1 billion per week. But under the WTO agreement, China must dismantle the great walls of protectionism around its state-dominated economy. Open and equal competition under WTO rules is likely to give a big boost to private firms here after long isolation of Chinese markets.

Yan Xuetong, a scholar at the Chinese Institute for Contemporary International Relations in Beijing, says "entering WTO will give China a big push toward joining the rest of the world."

He also says that "as the American and Chinese economies grow closer under liberal WTO trade rules, the two countries could see stronger cooperation in politics and security." He adds that "some people like Jesse Helms will still see China as a threat." The US Congress still must grant China permanent normal trade-relations status. And all 130-plus members of the WTO must agree to China's accession.

Mr. Yan says Beijing's integration into world structures is good not only for the rest of the world, but also for China's 1.25 billion citizens. With fundamental changes that have swept over China since the 1966-76 Cultural Revolution, he adds the WTO move will help make China's march into the global arena irreversible.

During the fanatical Cultural Revolution, Chairman Mao Zedong's power was greater than that of most of the emperors who ruled before him, and Mao's xenophobia made unauthorized crossings of the Chinese border a capital offense.

For a time, "China closed its embassies worldwide," says Yan, and "no one inside China knew what was going on in the outside world. We had to line up for tofu or rice rations, but many believed [government propaganda] that China had raced ahead of most other countries," he adds.

China in 1999 is consumer-oriented and increasingly linked to global economic and pop-culture trends.

"Everyone can see foreign movies, hear Western music, and watch American TV," says Yan.

And that trend is likely to pick up speed with China's entry into the WTO.

As part of its market-opening concessions, China has agreed to lower tariffs on a wide range of foreign goods. An import ceiling on foreign films will be raised from 10 to 20 movies per year, and Western theater operators will eventually be permitted to open cinemas here.

Foreign investors will also gain increasing access to China's huge Internet, telecommunications, banking, and music markets.

"Chinese culture will undergo a new revolution, but this time it will be triggered by a foreign cultural invasion rather than by the closing of China's borders," says a young filmmaker in Beijing.

"The danger is that many Chinese filmmakers and musicians will be crushed by the invasion, but eventually everyone will have to learn to compete with the world," he adds.

Hu Angang, an economist at the Chinese Academy of Sciences, says joining the WTO will help reformists in the Communist Party "break down resistance to market changes by entrenched, conservative interests."

Party hard-liner Li Peng, who heads the Chinese legislature, along with the heads of state monopolies in telecommunications, computer services, and banking, is believed to have opposed China's joining the trade group.

The WTO will require Beijing to phase out subsidies to most industries, which will cut into the party's control over not only many economic sectors, but also tens of millions of workers.

Although unemployment could initially rise, "1.25 billion Chinese consumers will have access to cheaper cars, telecommunications services, and electronics, and that will build support for the move," says Mr. Hu.

Ms. Barshefsky said the WTO pact will also give momentum to reform of China's legal system. "This agreement will strengthen the rule of law in China, including basic rules on transparency and judicial review," she said.

New York-based Human Rights Watch said Monday the WTO deal "is good for trade but also for human rights and the rule of law."

The group added that "China's membership in the WTO could increase pressure for greater openness, more press freedom, enhanced rights for workers, and an independent judiciary."

(c) Copyright 1999. The Christian Science Publishing Society

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