China's economy will face a tough challenge as the country, in accordance with commitments made at its entry into the World Trade Organization (WTO) in late 2001, will greatly cut tariffs and open its market still wider to foreign competition in the coming year.

Currently, China's state-owned banks are stepping up preparations for being listed by introducing overseas strategic investors or partners.

Chinese economists interviewed by Xinhua hold that although opening the market wider to international competition will be a grave test of the nation's economy, there is no reason to be pessimistic.

The past four years show that the impact of China's WTO admission on the economy is better than predicted, said Zhang Yansheng, director of the Foreign Economic Research Department of the Macro Economic Research Institute of the National Development and Reform Commission (NDRC).

Many of the dire predictions about the impact on the economy did not happen, he said.

Besides, Zhang said, the adjustments made by Chinese enterprises and industries in catering to the entry to the global trade body were overestimated.

For example, some industries that seemed in a poor position in terms of competition became more competitive in the international market after China joined the WTO, Zhang said.

Dr. Mei Xinyu, a researcher with the Ministry of Commerce, also noted that the impact was "comprehensive and extensive", but added that it not only brought pressure on some industries and some people, but also helped them gain broader space for development.

"China now is almost fully prepared to open wider," he claims.

Zhang Hanlin, a professor with the University of International Business and Economics, said China's economy has been growing steadily in a more open environment over the past four years.

This showed that the influence of joining the global trade body is more positive than the predictions made before the accession, he said.

As to whether China's key industries, including the auto, banking, insurance, agriculture, service trade and telecommunications sectors, can gain a strong foothold when facing tougher competition from foreign counterparts in the year 2006, the economists acknowledged that there is great pressure.

They suggested Chinese governments at all levels change concepts, further emancipate their minds and transform to service-oriented governments as soon as possible.

They also suggested enterprises and industries properly adjust structure to enhance competition, seriously study the rules of the WT0 and learn how to abide by the rules and how to play within the game rules.

Zhang Yansheng said the impact of opening still wider to foreign countries by various industries and sectors will not be "so great" in the coming new year.

Taking the auto industry as an example, he said China's joining of the WTO has led to the fierce competition which resulted in falling car prices.

The competition not only has helped enhance China's own domestic car brands, such as Cherry, but also obliged transnational auto makers to bring the latest technologies to China, which, to some extent, has helped promote the development of China's auto industry, Zhang said.

He predicted that the impact of China's entry to the WTO on the agriculture, banking and auto sectors will be emerge in the next five to ten years.

Mei called on the government to safeguard the interests of Chinese farmers in a new round of WTO negotiations by appealing to slash developed countries' subsidies of agricultural products to win a fair competitive environment for Chinese farmers.

Meanwhile, he urged the government to increase input in the agricultural industry and in rural areas in order to promote the sector's structural adjustment.

"The year 2006 should not be termed a turning point," said Zhang Hanlin. "China's commitment at its entry to the WTO is a gradual opening of its market.

The sixth WTO ministerial meeting is scheduled from Dec.13 to 18 in Hong Kong.

China hopes the imminent meeting will achieve "substantive progress," said Zhang Xiangchen, director of the Department for WTO Affairs under China's Ministry of Commerce.

Source: Xinhua