DHL allowed to practice domestic courier service in China

How much wider we opened

Three years into the World Trade Organization, China has basically reached its goal in cutting goods trade tariffs, with the general tariff level lowered from 15.6 percent in 2001 to around 10.3 percent today. Tariff cuts for certain products even go ahead of the WTO-set timetable.

The country has seen continuously decreasing of non-tariff barriers in the three years, with the number of quota-administrated commodities reduced to 52 in export and 8 in import. Quota, license and special bidding administration were canceled for goods under 16 tax item numbers including some motorcycles and their key parts, car and key parts, camera and watch.

In the most sensitive service industry, steps in opening up cannot be called small. In the banking system, region and client limitations on foreign-funded banks conducting RMB business were removed, with such business sites extended from Shanghai, Shenzhen to 13 cities. Around 100 foreign-funded banking institutions, or nearly half of its kind, were allowed to conduct RMB business, and establishment of independent automobile mortgage agencies were also permitted. Regarding insurance, international life insurance companies were allowed to operate in more cities and nearly 40 of them have opened 70 businesses in China. In retailing, by the end of last June, the number of foreign-funded companies neared 270 with more than 4,500 outlets. Transnational retailing giants like Walmart, Carrefour, and Metro all expanded investment in China, while the widely concerned Law of Direct Sale will come out at the yearend. What's more, 40-odd laws and regulations conformed to WTO rules has been published, which, in policy, opened China wider to international operators in service trades by lowering market access and improving law transparency. China saw 10,159 newly established foreign-invested enterprises in service trade during last year alone, or 1/4 of new ones of its kind in that period.

China also showed the utmost sincerity in other aspects of fulfilling its commitments. The Foreign Trade Law, revised on July 1, granted full foreign trade rights ahead of schedule, allowing all enterprises at home and abroad as well as individuals to engage in foreign trade on Chinese land. From July to September alone, more than 18,500 registrations were made, including some 200 individuals and 570 foreign funded firms. As for IPR protection, a string of laws and related rules, including Trademark Law, Patent Law, Copyright Law and Regulations on the Protection of Computer Software have been published, and a large batch of right infringing cases investigated and prosecuted by departments of industry & commerce, customs and copyright administration.

China allows selling of imported cigarettes

Why impact limited

From December 2001 to now, it is a three-year transition period China won through painstaking negotiations. During this time, a "stable transition" has basically been achieved, without strong impact on domestic industries as feared before. This is subjectively due to high attention by central and local departments and their effective measures. Objectively it can be attributed to the following reasons:

Firstly, protective policies on related industries played an active role. Thanks to the screening effect of the transition period, domestic sectors have not been hit hard by outside competitions. The automobile sector is a case in point. While fulfilling commitments, the Ministry of Commerce used WTO rules flexibly and insisted on orderly administration and proper control over automobile import quota, and through a series of adjustments effectively cushioned the blow of imported vehicles. Currently, imported automobiles take less than 4 percent of the domestic market (less than 6 percent for sedan cars), while home autos grew rapidly during the period with both manufacture and sales thriving. Another example is fixed-line service, which didn't open until the yearend, thus reduced the impact of foreign fund.

Secondly, some sectors were opened ahead of schedule, such as retailing business. The rivalry between domestic and foreign firms started long before, and home enterprises grew stronger under the competition pressure.

Thirdly, in recent years, economic globalization and a fresh round of manufacturing transfer left some sectors pressed less urgently by international competition. Changes on the global market also served as a cushion. The relatively stability of China's telecom sector, for example, is due to sluggish global market which left many telecom operators cautious towards investing in China.

The commitments to be fulfilled in future

For most sectors the transition period will end upon 2005. According to China's commitments, the general tariff level will be reduced to 10.1 percent and all non-tariff barriers removed.

On January 1, 2005, China will eliminate auto quota control and cut auto tariffs to 30 percent (and finally to 25 percent in 2006).

In agriculture, the general tariff level for farm produce will be lowered to 15.35 percent by 2005, one of the lowest in world countries.

In service trade, region and client limitations on foreign-funded banks conducting RMB business will be removed on December 11, 2006. Compulsory reinsurance will be cancelled after 2005 and solely foreign-funded insurance broker corporations will be allowed after 2006. In mobile sound and data service, the percentage of foreign fund will reach 49 percent by the end of 2004, and region limitation removed by the end of 2006. In basic telecom services both at home and abroad, region restrict will be cancelled in 2007 with the percentage of foreign shares reaching 49 percent. In sectors of construction design, tourism and transportation, the establishment of enterprises solely owned by foreign funds will be allowed from 2005 to 2007.

Bigger challenges after the transition period

It should be noted that since 2005, some administrative means by the government will fade away, exposing certain sensitive sectors to fiercer competition against imported goods and services. The market environment both at home and abroad will become more complicated and profound impact of WTO accession will gradually surface. We should say that there will be no smaller pressure and challenges will only be more pressing.

China's WTO accession is a course of long-term impact. The three-year stable transition, however, has made some people taken the current situation as normal state after WTO. As a matter of fact, our government lags rather behind in its functions of public service and social administration; key and sensitive industries lack the capability of sustained development, and enterprises are in urgent need to raise their kernel competitiveness.

By People's Daily Online