Chapter 23 China's Difficult WTO Road

China's accession to the World Trade Organization is an important link on the road to the formation of "China and America". In 1999, the World Trade Organization approved China's accession. In December 2001, China officially became a member of the World Trade Organization.At this time, the United States had just suffered the "9.11" terrorist attack.The United States, Europe, and most countries in the world have pointed their finger at al-Qaeda and the Taliban armed regime in Afghanistan, and history has undergone a major turning point.China's membership of the World Trade Organization is a major event in the modern international community, but China's entry into the global free trade system does not mean bloodshed and sacrifice, and the United States' war on terrorism is like taking the future as a thrilling bet.

Trade negotiation is a long-term, arduous and boring job, which involves the negotiation of hundreds of industries and thousands of commodities, as well as the game of national interests that cannot be measured by quantity.Any country in the world would protect its own agriculture in global trade, because historically, the greatest challenge faced by national governments, regardless of social system, has been the ability to secure a continuous and sufficient food supply .Participating in global free trade will crush the healthy agriculture of many countries. Therefore, striving for favorable conditions in trade negotiations is the basis for trade competition with other countries.Grain is also a commodity. Like other commodities, grain production is not balanced around the world. Some regions are important grain production bases, while others rely on food imports.Grain negotiation is the core of international trade negotiations, and it is also one of the reasons why the negotiation process is complicated and difficult.

Domestic industry and manufacturing are another hot topic in trade talks.Developing countries have good reason to fear that their industries will not be able to compete with the more skilled and capitalized developed countries.The developed countries want to reduce the trade barriers of developing countries through free trade agreements, so as to expand the sales scope of the products of developed countries in the world.Such thinking is also understandable.Therefore, in various international trade organizations, the game between developing countries and developed countries exists all the time.Every time a new country, especially a big country like China, applies to join the WTO, various sensitive topics will surface and become the core issue of whether the applicant country can join.

In the 1990s, China's accession to the World Trade Organization was relatively smooth, mainly because this period was the best period for Sino-US relations since 1949.The decisions of the Clinton administration were not made only by the president, but also by the participation of the best economists in the world, such as Lloyd Bengtsen, Robert Rubin, Lawrence Summers, Alan Greenspan Wait.They all believed that global free trade would benefit not only the United States, but the entire world.The self-confidence, strong economic and military strength of the United States, coupled with the new world order created by the rise of the Internet, all indicate that the United States will become the primary force for peace and stability in the international community in the future.America's biggest challenge comes from China, because China is the biggest pillar of communism in the world.And now China is also absorbing some ideas from the Western world.

When Jiang Zemin was at the core of the leadership, the Chinese government was committed to joining the World Trade Organization. This move indicated that, on the one hand, China wanted to become a major country participating in world development, and on the other hand, it was also a favorable signal—the Chinese government wanted to carry on the reform. , and lead the Chinese people to build a more prosperous society.The Chinese government has decided that Premier Zhu Rongji will be in charge of supervising the negotiation process of China's accession to the WTO, which also means that the Chinese government is serious about China's accession to the WTO.Zhu Rongji undertook this task to show the international community that China would stick to the reform line pioneered by Deng Xiaoping and carry it through to the end.

China's rapid development and accumulation of wealth have fueled strong nationalistic sentiments in the Chinese people, which are now mixed with some distrust of Western "imperialism".Because at the end of the 19th century and the beginning of the 20th century, China was invaded by Western powers. China's distrust of the West has never been more open than it is today.Every time when U.S. senators and congressional representatives raised objections to China's human rights, democracy, and rule of law, China would regard it as interference in China's internal affairs by Western countries.When the US representative opposed China's entry into the World Trade Organization as a developing country, the Chinese side regarded it as a weakening of China's sovereignty and believed that it was an attempt by Western countries to interfere in China's internal affairs.

Sino-US relations gradually deteriorated after 1949. Discussions about "who lost China" arose in the United States, and the United States adopted a containment policy against China's entry into international organizations.This situation did not change until Nixon's visit to China. In 1972, Nixon unexpectedly visited Beijing and met with Mao Zedong, which laid the foundation for the two countries to put aside ideological disputes and establish a new diplomatic relationship based on mutually beneficial cooperation.However, China's "distrust" of the United States has always been accompanied by the development of bilateral relations.

After emerging from the shadow of the Asian financial crisis, Chinese leaders are determined to speed up China's development.Chinese leaders are committed to taking international trade negotiations one step further.Normally, developing countries are at a disadvantage in negotiating when applying to join an international organization dominated by Western countries (the United States or the European Union), but China is different because China does not owe debts to Western countries.When Zhu Rongji realized that China had to make concessions in the negotiations, the advantages of China's state-owned capital emerged and became China's protection against loss in the face of international free trade.China still strictly controls the inflow and outflow of national capital, and the capital control measures act like a dam to hold back the huge waves of global capital.To join the World Trade Organization, China agreed to gradually reduce tariffs and gradually open its domestic market to foreign companies.However, Zhu Rongji had a timetable in mind, and he did not compromise with Western countries on the issue of speeding up the opening of the Chinese market.The strategy of the Chinese government is very simple: agree to the accession conditions proposed by the World Trade Organization for China, but on the issue of the time to reduce the country's trade barriers, China insists on gradually opening up the domestic market within 10 years. In the early 1990s, Russia opened up its domestic market too quickly, which led to many problems.China will certainly not make the same mistake on this issue again.

China's insistence on a timetable for opening its domestic market has drawn dissatisfaction in the United States, where many members of Congress and business leaders believe China's economic order is different from that of a typical developing country.China has more social classes, a more mature economy, and more potential to become a competitor of the United States.Facts have proved that Americans' concerns are correct. In the late 1990s, China's economic development level has made great progress compared with previous years.However, China is still a large agricultural country, and the development of the coast and the backwardness of the northern industrial areas coexisted. At that time, the country's economic development mainly relied on the financial input of the government.

After numerous meetings and thousands of hours of discussions, the ministers and trade officials participating in the negotiations discussed many issues.These questions mainly include: When and under what conditions can American and other foreign insurance companies conduct business in China?How much share can a foreign company own in a Chinese telecommunications company?What kind of business can foreign banks carry out in China, and when can they carry out these businesses?To what extent should China maintain its protection of domestic industries such as steel and textiles?Where can foreign law firms legally operate in China?Once these issues were agreed, the final signing of the agreement was left to the then Chinese Premier Zhu Rongji and US President Clinton.

Although the World Trade Organization has more than 100 member states, the United States, with its powerful strength, has a substantial veto power over WTO decisions.Of course, bundling other member states can also play a role in restraining the US's decision-making. In the spring of 1999, as the negotiations on China's accession to the World Trade Organization entered the final stage, anxiety about China's accession to the World Trade Organization arose in Washington.However, in China, there are also some people who oppose choosing to join the global free trade system dominated by the United States. In order to solve all the thorny problems, Zhu Rongji arrived in Washington in April 1999.At this time, Clinton was very exhausted by the "Lewinsky sex scandal", and the media's focus was on this, leaving no time for others.Even events such as the U.S. sending troops to Kosovo, the tense atmosphere over the no-fly zone in Iraq, and Zhu Rongji's visit to the U.S., which will have a major impact on the development of Sino-U.S. Location. Zhu Rongji launched a series of charm diplomatic offensives in the United States. He made public appearances and also accepted exclusive interviews with the media.In an interview with the "Wall Street Journal", Zhu Rongji emphasized that China has made concessions to the demands of the United States countless times, especially the relaxation of restrictions on foreign companies' ownership of Chinese companies.He said: Why is China making these concessions?The reason is that we want to maintain the prospect of friendly cooperation between China and the United States, and build a constructive strategic partnership between the two countries on this basis... We always believe that China is not the opponent of the United States, let alone the enemy of the United States, but It is a reliable friend of the United States. Companies with trade relations with China are willing to hear such voices, such as FedEx in the United States, while other companies take such a statement from the Chinese leader with disapproval.The American business community is keen to see the normalization of relations between China and the United States and supports the development of bilateral trade between the two countries.Those on the left believe that American companies are doing this at the expense of the interests of American workers and the national economic security.On the other hand, those on the right adhere to the "Cold War mentality", regard the Communist Party as an enemy, and refuse to communicate with China.Whether on the left or the right, those who oppose strengthening Sino-US relations are worried that if China and the United States get too close, China will easily obtain American capital and technology, and the Chinese will use these capital and technology to develop their military and strengthen their national power. Confront the West on some key issues. While the American public's attention was drawn to the Lewinsky sex scandal, the White House and trade negotiators continued to work as usual. At the end of April 1999, Zhu Rongji and Clinton reached agreement on some important issues concerning China's accession to the World Trade Organization.Although the United States agreed to China's entry into the World Trade Organization as a developing country, China has also made huge concessions to US demands, especially in the field of telecommunications.At that time, the "new economy" represented by electronic information and the Internet was at the peak of development, and the electronic communication industry was regarded as an extremely important industry.Zhu Rongji agreed to adopt a more open policy for foreign telecommunications companies, while giving certain protections to American textile companies.Although Zhu Rongji made great efforts in the negotiations with Clinton, in the end, Clinton was still unable to sign the agreement reached between China and the United States and submit it to Congress for approval.The reason is that Clinton was too much negatively affected by the "Lewinsky sex scandal" and had to prepare for impeachment from the US Senate.At this time, Clinton was not sure that the outcome of his negotiations with China would be passed by Congress. Zhu Rongji's trip to the United States is of decisive significance to the future of Sino-US relations.Before Zhu Rongji arrived in the United States, in addition to the "Lewinsky sex scandal", the "Chinese nuclear espionage case" at the Los Alamos National Laboratory in New Mexico occupied the headlines of the United States. ".Wen Ho Lee, a Chinese-American scientist from Taiwan, is accused of espionage for the Chinese government on suspicion of helping China steal U.S. nuclear technology. The "Li Wenhe case" also had a considerable negative impact on Zhu Rongji's visit to the United States, and the "Cox Report" issued by the US Congressional Committee later pushed this negative impact to the extreme. Christopher Cox was a Republican congressman from California who later became chairman of the Securities and Exchange Commission.During his tenure on a congressional committee, he spent months conducting a secret investigation that culminated in a 700-page report known as the Cox Report. The "Cox Report" claims that China has been stealing American nuclear technology since the 1990s and using the stolen technology to develop China's own nuclear military industry, which can explain why China's nuclear power has shown rapid development in recent years situation.The report also asserts that it is unsafe for the United States to rely too much on large corporations to protect core secrets.This is because enterprises cannot absolutely and effectively protect the security of these core secrets while pursuing the maximization of their own interests, and sometimes these secrets may be in danger of being leaked.Compared with realizing the business goals of the company, the protection of core secrets related to national security is sometimes not given priority by the company. The "Cox Report" was completed in January 1999, but it was not made public by the US Congress until May, when Zhu Rongji had already returned to China. The "Cox Report" added another note of dissonance to the already battered Sino-US relations.Not long before the Cox Report was made public, NATO planes bombed the Chinese embassy in Belgrade.The reason why the United States apologized to China was that the map was wrong.The Chinese said it was difficult to accept the explanation of the United States: How could the most advanced military power in the world make such a low-level mistake?The bombing of the Chinese embassy in Yugoslavia sparked protests in China. From the perspective of the United States, China's protests are a signal of China's dissatisfaction, and it has deepened the estrangement and contradictions between the two countries.Before the US bombed the Chinese embassy in Yugoslavia, the Washington government had passed a draft agreement aimed at preventing an agreement with China on its accession to the World Trade Organization.People who have always opposed the establishment of friendly relations between China and the United States believe that the protests in China are intentional by the Chinese government. Representatives who hold this view include Republican Senator Jesse Helms of North Carolina. ) and Democratic Senator Ernest Houings of South Carolina.Under such circumstances, at the end of May 1999, the possibility of reaching an agreement in the trade negotiations between China and the United States was already very small. China in 1999 had already had close ties with the Western world and wanted to integrate into the global economic system.Due to the history of being invaded by Western powers, China has always been wary of the United States.After the bombing of the embassy in Yugoslavia, the Chinese people were passionate and anti-American sentiment continued to rise.Accompanied by this sentiment, Sino-US relations deteriorated rapidly, seeming to stagnate and develop in the opposite direction. However, the truth is not as bad as it seems.To the surprise of many, within a short period of time, the two governments returned to the negotiating table.Zhu Rongji restarted the negotiation process in Beijing, and Clinton also restarted his presidency with the support of supporters in Congress.This time they chose to avoid the public eye and conduct secret talks. The World Trade Organization is also actively pushing for the restart of negotiations between the two countries.By signing the North American Free Trade Agreement, the U.S. government and the business community have seen the benefits of free trade, so they hope that the field of free trade will continue to expand.However, for ordinary people, they are unwilling to see this result, because they think that the faster free trade develops, the greater the price will be paid by ordinary people.Concerns about globalization come to the fore when the term "globalization" is widely used. The development of the "new economy" conceals the real face of the world economy. While the companies in Silicon Valley are getting richer, the lives of millions of American workers are getting worse.The use of computers has greatly increased labor productivity, but it has caused a large number of workers to lose their jobs because less labor is now required to produce the same product.In addition to the threat technology itself poses to ordinary Americans, China is also seen as a huge threat to American workers.China, like Mexico a decade ago, is seen as a US job grabber.China's wages are lower than those of the United States, so it has a clear advantage over the United States in terms of production costs.Some Americans are inherently opposed to communism, coupled with concerns about lost jobs and stagnant wages, these people have formed a powerful interest group, they do not want to see China and the United States get too close, and do not want to See the United States forging strong ties with the rest of the world. Clinton, exhausted by the "Lewinsky sex scandal", has also fallen into a political slump.His judgment that globalization would bring more opportunities to Americans has become unconvincing at home.Lacking strong policy signals from the government, the opposition has used the opportunity to steer public opinion.At the same time, Zhu Rongji has worked tirelessly to advance reform of state-owned enterprises and make them more competitive, and his reforms of the banking system have also encountered enormous resistance.Zhu Rongji wanted China to participate in extensive global competition by joining the World Trade Organization, because he firmly believed that only in this way can those enterprises with low efficiency and poor management be reborn in the market competition as soon as possible. After several months of silence, in mid-September, China and the United States suddenly announced that they had reached an agreement on China's accession to the World Trade Organization.U.S. trade negotiator Charlene Barshefsky (Charlene Barshefsky) and Shi Guangsheng, then Minister of Foreign Trade and Economic Cooperation of China, signed the trade negotiation agreement between the two countries.The agreement signed by Barshefsky and Shi Guangsheng seems to show people that this is a new and extraordinary agreement between the two countries. Business leaders rejoiced at the signing of a trade agreement between the U.S. and China.A manager of Texas Instruments said: "In this way, we will get better investment opportunities in China." A timetable will be set up to gradually increase this proportion.Foreign banks were initially not allowed to do retail business in China, but after a few years they were allowed to expand their business to ordinary Chinese consumers and corporate clients.The story is much the same in other sectors, such as autos and insurance.General Motors is satisfied with the outcome of the Sino-US negotiations. Not only will it be able to obtain a larger share of the joint venture, but it will also be able to establish a GM Financial Services Company in China to provide loan and leasing services to corporate customers.Despite GM's troubles operating in the United States, it has reaped huge profits in China.The trade deal also sets a timetable for China to reduce tariffs on agricultural imports and agrees to reduce Chinese export subsidies for grain, steel and other industrial goods.Originally, China protected these industries through export subsidies.Most of the subsidies and other trade barriers will be phased out over time, the agreement stipulates that this work will be completed in 2005. The agreement between China and the United States still needs to be approved by the US Congress. For the Chinese government, the most important thing is to help state-owned enterprises improve their efficiency and cope with the impact of marketization.China agrees with the U.S. to maintain certain restrictions on textile imports because T-shirts, bras, sneakers, and everything else is cheaper to produce in China than in the U.S.Moreover, China is also determined to take more stringent measures on the protection of intellectual property rights. Regardless of the commitments made by governments, the trade agreements themselves and the World Trade Organization will steer the global economy onto a path of “comparative advantage” rather than purely national interests.Comparative advantage is an important theory of modern economics, which was first created by economist David Ricardo in the early 19th century.The theory of comparative advantage mainly talks about that in a free market, capital should flow to where it can be most efficient, and goods should be produced where the cost is lowest.In the process of global free trade, a country's industry suffers losses, and consumers in this country may enjoy cheaper goods and services.However, the reality is very complicated.Changes in trade and production patterns may benefit some but certainly at the expense of others.The development of technology has changed the traditional production methods of the United States, the European Union and many other countries. If we blindly follow the traditional economic theory, we may encounter even greater difficulties in reality. All in all, trade barriers and trade protection have been repeatedly negotiated during the negotiation process between China and the United States. The time set by China and the United States for the elimination of trade barriers is 2005.Opponents have questioned the agreement between the two countries: Once trade barriers no longer exist, production will be allocated according to the principle of maximum efficiency and minimum cost, and funds will flow to markets with huge future development potential. cannot control their own economic destiny, and once this happens, it cannot be reversed. At the end of 1999, the World Trade Organization held a meeting in Seattle, USA to discuss the next round of global trade agreements.China also conducts separate bilateral trade negotiations with the United States and the European Union.During the Seattle conference, a large number of demonstrators in the United States who opposed global free trade gathered outside the venue. They not only opposed China's accession to the World Trade Organization, but also opposed free trade itself.Opponents believe that global free trade is like a cruel competition. The winning party (mainly some multinational companies) has benefited from globalization and free trade, while the losing party (mostly ordinary people) has paid huge the price. Delegates from 135 countries attending the Seattle meeting of the World Trade Organization faced an outrage in the United States not seen since the end of the Vietnam War.Tear gas, broken glass, and burned cars can be seen everywhere. Some people were injured in the riots and some were arrested by the police.According to statistics, as many as tens of thousands of people participated in the protests and demonstrations. Some of them targeted the World Trade Organization's lack of environmental protection bills, while some challenged the World Trade Organization because of workers' rights issues.The largest trade union union in the United States, the Federation of Labor-Confederation of Industrial Unions (AFL-CIO for short), also expressed its opposition to global free trade and China's entry into the World Trade Organization.An AFL-CIO spokesman said: "We believe that once China joins the World Trade Organization, we will not be able to fight for welfare for workers." The demands of the protesters have not been ignored by the Clinton administration, which, along with Vice President Al Gore, has done its best to protect the interests of American workers in global trade negotiations.However, in the view of the AFL-CIO, the government did not go far enough to fight for workers' rights and improve factory conditions and environmental conditions.In fact, the leaders of the two parties in the United States, including Al Gore and Bush Jr., who have already won the nomination of the party's presidential candidates, support the WTO to absorb new members and are willing to see China's accession.Of course, this is against the wishes of the protesters in Seattle. The protests in Seattle cannot reverse the general trend of global trade liberalization.Ministers from various countries participating in the trade negotiations were not influenced by the demonstrators, but firmly pushed for free trade to move forward.They argue that a more open global trading system is in everyone's interest. In 1999, the US media paid too much attention to China and global trade.From March 2000, the focus of the media began to turn to the Nasdaq stock market. After reaching the highest point, the Nasdaq index began to plummet, and the bubbles in the Internet and telecommunications industries also burst.In Europe, the EU has shifted its focus to internal affairs, and member states are negotiating on issues such as the expansion and consolidation of the EU.In China, Zhu Rongji is dealing with domestic reforms, especially reforms of the banking system and financial system. The "9.11" terrorist attack shocked the world, once again focused the eyes of all countries on one point, and jointly combating terrorism has become a global consensus.Before the "9.11" terrorist attack, Sino-US relations were once tense.A US spy plane has collided with a Chinese navy plane in the South China Sea and has been scrambled to a Chinese military airport.But tensions between the two countries caused by the US-China plane collision were quickly tempered by Beijing's successful bid to host the 2008 Olympics, as the US backed China's bid at an IOC meeting. After a series of unexpected events, Sino-US relations fell to the bottom after 1999. In December 2001, China officially joined the World Trade Organization, but this did not attract the attention of the US government, because at this time the focus of the US government was on how to attack the Taliban regime in Afghanistan and how to find the terrorist leader Osama bin Laden.At the moment, China is consolidating the prosperity of Hong Kong after its handover, and is striving to build Shanghai into a world financial center.