China's Entry Into The World Trade Organization example essay topic

Should the US allow China's entry into the World Trade Organization Sino-American relations have always been characterized as complex and tumultuous. Presently, the United States must reach a decision that would drastically affect the politics, environments, militaries, technology, and most importantly the economies of both nations. This problem the United States must face is whether it ought to allow China's entry into the World Trade Organization. There is much hesitation in taking such steps as American protectionists are weary of a nation whose expanding economy could further "Chinese influence in American politics as a result of Do norgate; continued doubts about Beijing's dismal human rights record; and worries about the U.S. trade imbalance with China- $40 billion and growing". (Shribman 44) Yet there are also many benefits to free trade which outweigh the negative. Sino-American free trade will boost US sales to the world's most populous nation, while building diplomatic relations, and ultimately liberalizing China both politically and socially.

(Christian Science Monitor 98) China, a country in East Asia, is the world's third largest country by area (after Russia and Canada) and the largest by population. China's most populous city is its capital, Beijing. Officially People's Republic of China, it is bounded on the north by the Republic of Mongolia and Russia; on the northeast by Russia and North Korea; on the east by the Yellow Sea and the East China Sea; on the south by the South China Sea, Vietnam, Laos, Burma (Myanmar), India, Bhutan, and Nepal; on the west by Pakistan, Afghanistan, and Tajikistan; and on the northwest by Kyrgyzstan and Kazakhstan. China includes more than 3400 offshore islands, of which Hainan, in the South China Sea, i by far the largest.

The total area of China is about 9,571,300 sq. km (about 3,695,000 sq. mi. ), not including Nationalist China, known officially as the Republic of China (Butler / Encarta 1996) The formation of the Chinese Weltanschauung (world view) can be explained, in part, by the historical and political evolution of China as it emerged from semi-colonial subservience. At the beginning of the twentieth century, China was a weak and divided country under the corrupt rule of the Manchu dynasty. Exploited by the so-called "open door", China had been subjected to the degradation of imperialism and the spheres of influence imposed by the major Western powers, including Japan. As a consequence of foreign economic penetration and intervention, one of the main currents of Chinese political thought that emerged was a distinct xenophobia that resented any foreign involvement in Chinese affairs. Not only were foreign values and culture rejected, but this was paralleled by a reaffirmation of Chinese nationalism. The various strains of political thought that combined to form the ideological fabric of the PRC cannot be fully understood without first examining the historical background that led to the Chinese Communist state in 1949.

The induction of the Communist government in 1949 set a groundwork for Chinese history; in a remarkably short period of time radical changes were effected in both the Chinese economy and society. Since the 1970's, China has forsaken its self-imposed isolation from the international community and has sought to modernize its economic structure. In 1971 the United Nations (UN) admitted the People's Republic of China and expelled Taiwan from membership. For more than 2000 years the Chinese economy operated under a type of feudal system where land was concentrated in the hands of a relatively small group of landowners whose livelihood depended on rents from their peasant tenants. Further adding to the peasant farmers' burden were agricultural taxes levied by the imperial government and crop yields subject to drought and floods. Under these conditions, agriculture remained essentially underdeveloped.

The conclusion of the Opium Wars in 1860 formally initiated a period of Western exploitation of China from the coastal treaty ports. Railroads and highways were constructed, and some industrial development was begun. Such activity had little impact, however, on the overall Chinese economy. In effect, China was set up into a number of competing colonial spheres of influence. "Japan, which tried to attach China to its East Asia Co-prosperity Sphere, was able to create only isolated nodes of a modern economy" (Butler / Encarta 1996). This laid the foundation for a China that was to be exploited by other nations.

The Chinese Communist party emerged in the 1920's in the midst of a mounting economic crisis caused by foreign intervention and increased landlord influence in the countryside. For more than two decades, it expanded its control over large rural areas by introducing an agrarian program based on the control of rent and usury, and by giving power to peasant associations. On October 1, 1949, the Communist party successfully established a unified national government and economy on the mainland for the first time since the end of the imperial period in 1912. There was attention specifically paid to dealing with problems ranging from inflation, food shortages, unemployment, and land reform. Under the first five-year plan (1953-1957), 92 percent of the agricultural population was organized into cooperative farms. In 1958 the rural people's communes were established, and these dominated agriculture in China until the early 1980's.

State ownership of property and of industrial and commercial enterprises was gradually extended in the urban-industrial sector. The second five-year plan was introduced in 1958, and in the summer of that year the regime initiated the Great Leap Forward. This program was characterized by large investments in heavy industry and the establishment of small-scale versions of such industries as steel refining. The program, however, caused great disruptions in economic management and in rational economic growth and was ultimately abandoned in 1960. The Chinese economy then entered a period of readjustment, but ran into problems again, this time being much a result of the Cultural Revolution. Yet again, a fourth five-year plan was introduced in 1971 as the economy began its recovery.

In an effort to deal with the failure of the Cultural Revolution in 1976, China's leaders began to boost up the economy. A fifth five-year program was begun in 1976 but was interrupted in 1978, when the Four Modernizations program was launched. It called for the "all-round modernization of agriculture, industry, national defense, and science and technology by the end of the century so that the economy can take its place in the front ranks of the world" (Butler / Encarta 1996). In at attempt to attract Western technology and investment more programs and plans were put into effect such as one in October 1984 which called for further decentralization of economic planning and for increased reliance on market forces to determine the prices of consumer goods. However the economy temporarily stagnated due to the political crackdown in 1989.

Luckily, the Chinese economy expanded rapidly during the early 1990's as the government continued to loosen controls on the economy. From a political perspective, it would be in the United State's best interest to engage in free trade with China. There has been much opposition from the far right to labor unions to any such association with a nation that has been "suspected of pirating US nuclear secrets - and whose military - industrial barons probably orchestrated illegal campaign contributions during the 1996 US presidential campaign" (Christian Science Monitor 10). However, there are great political stakes that are being overlooked here. An important advantage in free trade lies in the influence western culture will have over China, so as to liberalize this nation. First of all, it must be noted that China is already metamorphosing and great changes are taking place regardless of US involvement.

For instance, power is becoming decentralized and infusing private enterprises with greater freedom. Another important effect American trade will have in China would be that of multinational organizations whose presence will change the working climate. These multinational corporations are said to "create safer workplaces, follow more progressive personnel practices, raise living standards, and introduce new ideas, attitudes, and ways of thinking. A number of American companies such as Mattel and Nike, have adopted codes of conduct requiring local subcontractors and suppliers to eschew child labor and other practices common in China... ". (Weidenbaum 223).

As far as the cultural influence that foreign markets will have in China, the benefits are wide. Advertisers will promote messages of free choice and democracy through marketing. In this day and age of technology, we can not overlook the key role media, Internet, and privately owned satellite dishes will play in transmitting new ideas to this developing nation. It is crucial to understand the importance a healthy economy plays in the politics of China. It is with this thought, that one can correlate a weak economy to the strengthening of the "old-line communists who have reluctantly gone along with Deng's reforms only because they appear to work" (Weidenbaum 223). In order for a more liberal political regime to develop in China, American presence is vital.

A great fear that runs through the minds of Americans is that a higher living standard in China would allow it to develop militarily. Presently, the Chinese military consists approximately of three million troops, 9,400 tanks, and 5,200 fighter aircraft. However, the Gulf War exhibited the obsolescence of China's equipment. Furthermore, their marines are rather powerless.

As for the People's Liberation Army, American fears must not solely be concentrated on Beijing's ability to modernize its technology due to a rising economy. Rather, there is the possibility of the PLA mobilizing its forces in a sub-systemic attempt to keep any political or social uprisings from occurring during times of high unemployment. Far more dangerous than that would be an "attempt to divert public attention from international problems through military adventures abroad". (Weidenbaum 224) This could be just as great a threat as any or as William Shakespeare wrote in Henry V, "To fill idle minds with foreign quarrel".

Another obstacle to China's joining the FTO is their contribution to the pollution of the environment. The double standard created in Kyoto, when China was exempted from environmental provisions the U.S. must now abide by, has caused Sino-American tension. China is the world's largest emitter of carbon dioxide. China relies on coal- the prime emitter of CO [sub 2] and key concern of ecologists- for 75 percent its energy.

Projections show that, during the time period covered by the Kyoto proposals, China is likely to become the world's largest emitter of CO [sub 2], thanks to its inordinate dependence on bituminous coal and vigorous economic growth rate (Weidenbaum 223). Yet another environmental issue brought to the forefront is that of China's use of cholorofluorcarbons (CFCs) in aerosols that deplete the ozone layer. The United States and other industrialized nations have provisions in the U.N. - sponsored treaty on ozone layer protection. "China's consumption of CFC's, however, has soared since 1986 from 3 percent to 18 percent of the world total" (Weidenbaum 223). However, regardless of its antipollution laws, there are still many loopholes available to Chinese owners of factories who are members of the Communist Party. The ruling class made up of the Communist oligarchy still retains preferential treatment in China today.

Once again, the stability and growth of the Chinese economy is vital to the environment. "When countries reach per capita income of about $10,000 a year, they begin to take a more active role in environmental improvement- because they believe they can afford to do so. A curtailment of China's growth rate would delay the achievement of that happy condition. (Its per capita income now is less than $5000.) " (Weidenbaum 227).

Any slowdown in the economy could generate further problems. China is slowly advancing towards a more respectable and international status. It is slowly emerging from its isolationist position and opening up its wings to the influences of Western culture and business practices. Its officials hope to enlarge China's participation in the world economy. However, China is unable to make such strides as long as it is banned from key international bodies such as the World Trade Organization or be included in economic summits such as the G 8 (Weidenbaum 227) The vitality and ingenuity of US businesses are greatly admired by the Chinese.

Whereas, Americans eye Chinese market potential with glee. "The temporary problems of East Asia notwithstanding, the United States is China's leading export market as well the most logical partner to help upgrade its technology through investment, joint ventures, and provision of advanced software and financial services. China, in turn, is the most promising new market for American business and agriculture" (Weidenbaum 228). Two great powers, China and the US, are actually locked in a multi-layered symbiotic relationship. Engaging in free trade with China sets a framework for greater profits for corporate US. China is not only the most populous nation in the world giving it great purchasing power, but its economy now is more than half as large as that of the U.S. and larger than Japan's.

There are two focal points which surround the Chinese economy which make this trading relationship very unique. First, free trade will increase the United State's export market and secondly, for this to happen the US must pay careful attention to any possible decline in the growth of China's economy. Let us begin with the fruits of a growing export market. Exports have generated growth and better paying jobs, especially in high technology, while imports have kept inflation low and benefited us, American consumers, greatly. An examination of any possibility of a major slowdown in the Chinese economy could lead to a downturn in Sino-American economic growth. An article by Weidenbaum explores the problems that may arise out of such a situation.

He states that "Let us assume that China's gross domestic product in the decade will no longer grow at 10 percent a year, but at half that rate. Five percent, of course, is still quite respectable by the standard of the more mature Western economies, which average 2.5 percent economic growth annually. The initial impacts of such a new scenario would likely be negative for the American economy, but quite uneven and limited" (Weidenbaum 228). This would lead to an even lower U.S. export rate which would thus affect mostly machinery and equipment, chemicals and plastics, aircraft, electronic equipment, and agricultural sectors.

Thus augmenting the already huge American trade deficit with China. Ultimately, reducing the chances of approving any more "fast track" treaties and would reduce support for the IMF's support of weak Asian economies. There are many restrictions for US companies trading with China. Amongst these constraints are "its high tariffs, its restrictions on which Chinese companies can trade with the outside world and which foreigners can trade with China; its protection of favored industries; and its history of intellectual-property piracy; and so on". (Economist 18).

One of the primary difficulties in trading with China has been the difficulty in getting a license to operate due to the strict Communist rule revolving around state-run monopolies. But things have been improving. To date, only three foreign insurers (AIG, Tokio Fire & Marine, and Liberty Mutual) have been licensed to do business in China, and then only to limited urban areas. However, a number of foreign companies have opened representative offices in the last few years and it is expected that several additional licenses will be granted each year. There are currently 71 representative offices of 43 separate foreign insurers and brokers from 12 countries (Weidenbaum 228). In the area of insurance, state-run monopolies have presented difficulties, but are now beginning to disappear with time.

China has now taken measures to improve the situation. In fact Premier Zhu Rong ji has attempted to broaden US access to Chinese markets. He has agreed with many American CEO's requests in this area. Change would consist of U.S. banks being able to lend in local currency, manufacturers setting up their own distribution systems, and foreigners having the ability to own up to 49% in telecommunications services.

In the agriculture sector, tariffs for farm products would be curtailed. As for insurance companies they would be able to do business through out China (Business Week 130). In the area of license distribution, things are definitely improving. It is time the United States of America and China end this trade war. Both nations, especially the US, have spent an exorbitant amount of time and energy into China's admittance into the World Trade Organization.

Based upon an analyses of the possible effects of free trade on the political, environmental, military, technological, and economic realms on both parties, it can be concluded that the US ought to allow China to join the World Trade Organization. With the rise of the Chinese economy, the US would be able to balance out the trade deficit, strengthen exports and liberalize Chinese politics. With the proper patience and diplomacy, both nations ought to sit down and negotiate a deal which would benefit both parties economically, politically, and socially.

Bibliography

Butler, C. Orton. "China" Encarta 1996.
Encyclopedia on CD ROM). "An Offer From China We Shouldn't Refuse" Business Week, April 26, 1999, p 120.
Shribman, David. "Going to the Brink Over Trade" Fortune. June 9, 1997, p 44-45.
Weidenbaum, Murray. "The Future of Sino-American Relations" Orbis. Spring 1999, p 223-236.
Zhu-No Innocent Abroad" Christian Science Monitor. April 16, 1999, p 10.
Butler, C. Orton. Shribman, David. June 9, 1997, p 44-45.
Weidenbaum, Murray. Spring 1999, p 223-236.
April 16, 1999, p 10.