Eu, China Paper Over Lovers Tiff On Wto

China got into a public spat with the European Union over its admission to the World Trade Organisation. Chinese vice-premier Li Lanqing argued at a plenary session of the World Economic Forum here that the WTO needed China just as much as China needed the WTO, and that the WTO could not play its full role without having China as a member.

In response, European Commission vice-president Leon Brittan said China was not doing the WTO a favour by seeking admission, and pointed out that while he hoped a breakthrough would come in 1998, several issues remained to be addressed, including tariff peaks, mandatory export requirements, and licensing restrictions. Brittan also mentioned in passing that it was China which had walked out of Gatt (WTOs predecessor) in 1949.

 

In response, Li said tartly that in Chinese history its longest struggle had been against Japanese occupation, and that this had lasted eight years. By comparison, he said, the negotiations with Gatt/WTO had been going on for 11 years, and this was now Chinas longest struggle.

Li said the Chinese people were patient, but people in China would ask why he was wooing WTO when it was clear that WTO did not love China. Brittan brought the house down by responding that not only was the love mutual but that it would soon flourish into a passionate affair and end in a climax.

Brittan conceded that Europe did not expect China to meet all its membership obligations at the start, and that it recognised China would need time to phase in all the required reforms; in short, there would be a transition period after membership.

During the rest of the session, held to a full house in the main hall of the conference centre, Li wowed the gathering of businessmen with Chinas impressive statistics. He said China proposed to undertake $750 billion worth of investment in infrastructure alone over the next decade, and GDP growth, after averaging 9.8 per cent over the past 17 years, would average 7 per cent in the first decade of the next century, by which time China would have emerged as a middle-income developed economy.

He said Chinas trade totalled $320 billion (five times Indias), its forex reserves were $140 billion (six times Indias), that its debt-serving ratio was barely 6 percent of export earnings (one-third Indias), and that average tariff levels on industrial products would drop to 10 per cent by the year 2005. He said 3000 foreign firms were already operating in China.

Li poured cold water on talk of the 21st century being an Asian century, and said such concepts did not rest well with an integrated world, because no country or region could pursue development in isolation. He added, however, that the Asian miracle was not over, that the Asian economies would recover quickly from their present crisis, and that China would help them by holding unchanged the value of its currency against the dollar. He added that the Chinese economy would not be hit by the Asian flu, and China proposed to speed up its reforms through internal restructuring and greater integration with the world which meant admission to WTO.