Filling the Glass Half Full: The WTO and Structural Reform in China

By R.P. McMurphy, Hong Kong

On December 11 2001, after years of protracted negotiations, China finally became a member of the World Trade Organization (WTO). At the time, the foreign business community had grand hopes that China's WTO accession would finally open the Chinese economy to foreign companies, create unified national markets for a range of goods and services and promote transparency and further implementation of rule of law principles. In the words of US Trade Representative Robert B. Zoellick: "China's accession to the WTO will promote openness in China, development of the rule of law, and political and economic reform."¹ But, notwithstanding such optimism, many China watchers, lawyers and business people were privately less sanguine. In expressing their reservations, the Chinese idiom "上面有政策,下面有对策" was often used. Loosely translated, this means that "the authorities above have their policy, and the people below have their counter-strategy".

In summarizing China's progress in the first year since accession, the U.S.-Chinese Business Council (the Council) described China's implementation record as a "glass more than half full".² The Council focused on Chinese efforts in the following areas:

• the repeal and revision of laws and regulations incompatible with WTO requirements and issuance of new laws and regulations;
• tariff reductions; and
• WTO-related training efforts.

In contrast, the Economist Intelligence Unit (EIU) issued a more guarded review of China's WTO implementation efforts.³ Although, like the Council, the EIU praised China's ambitious legislative agenda and tariff reductions, it cited Chinese WTO countermeasures such as non-tariff barriers and concludes that "[a]s China's bureaucrats become more familiar with the ins and outs of the WTOone can expect both more liberalization and increasingly cunning controls".