Mainland economist's criticism of China's WTO entry

Saul Thomas stthomas at SPAMmidway.uchicago.edu
Sat Jun 3 14:23:07 MDT 2000


http://www.chinaonline.com/issues/wto/currentnews/secure/c00052556.asp

'We Are Not Ready for WTO'

Interview for ChinaOnline By Lijia and Calum MacLeod

(25 May 2000) The U.S. Congress vote on permanent normal trade relations
(PNTR) capped months of stormy public debate over trade relations with
China. On the other side of the Pacific, Chinese domestic media have
stifled dissenting opinions ever since Communist Party leaders fully
committed the PRC to World Trade Organization entry.

Amid the cheers at China's quickening progress toward accession, Dr Han
Deqiang has sounded a lonely voice of opposition.

In his book "Collision," Han highlights the negative impact of WTO on
China. Fearful of increased unemployment and economic dependence on foreign
companies, Han is critical of American "hegemony" and double standards.

Since its publication in January this year, "Collision" has attracted
increasing attention from concerned officials and academics across China.
The first print run of 10,000 copies has been snapped up by bookstores
nationwide where it remains the most popular title on the WTO. As Han
himself boasts, "Any foreigner who wishes to understand China's future
development should read my book. I understand competition in China better
than Adam Smith!"

After gaining a doctor's degree in world economics from prestigious
People's University, the 33-year-old academic now teaches at the Economic
Management Institute under the Beijing Aviation and Aeronautical University.

ChinaOnline: How did the idea of writing such a controversial book come about?

Han: I was appalled by the mainstream media's over-enthusiasm for WTO. It
can mislead the general audience who don't really understand what's going
on. All the articles in the press talk about how Chinese will have more
choices of better quality goods at cheaper prices.

After my article on WTO and its negative impact aroused some interest
[Guangming Daily, December 1998], I was invited to write the book by a
publishing company. But when they saw the final draft, very different from
the mainstream view, they got cold feet. After plenty of trouble, and some
soft tuning, another publisher released the book.

COL: The cover of "Collision" shows a red stop sign to WTO; do you oppose WTO?

Han: After the book came out, many people accused me of opposing WTO. But I
argue how can I possibly oppose WTO because I have no idea of the detailed
content of the deal signed by China and the U.S.! The cover design, not my
work, is probably the publisher's trick to cause some impact. In the book,
I did not talk about whether China should join WTO or not but how China, as
a weak economy, should face the challenges and competition.

I want to tell people: open your eyes, there is another side of the coin!
We have to ask about the negative impact WTO can bring, as well as the
positive. American textile workers don't want Chinese goods, as they worry
they would lose their jobs. Why should we be so open to the U.S.? WTO can
bring lots of pain to our society.

COL: But China also stands to benefit from WTO entry.

Han: China will benefit, but not as much as we may hope. The
over-enthusiasm in the media has raised people's expectations such that
everyone wishes we could join WTO immediately. But the media forgets one
important fact, that consumers are also producers. Yes, as a consumer, you
can benefit from competition, enjoying cheaper cars, computers, whatever.
But on the other hand, you may be a worker from an ill-equipped enterprise.
So you have to face the pressure of low salary and even unemployment.

I remember Newsweek and Gallup conducted a survey together last May which
showed that 58 percent of Americans do not want cheap foreign goods,
because they decrease their job opportunities. America's media is dominated
by producers, but in China, it is mainly the voice of consumers.

COL: Why are Chinese so keen on WTO?

Han: Most ordinary people do not really understand WTO. Some of the
so-called social elite don't care about the interests of the ordinary
people. In most cases, they are fooled by "market romanticism," believing
that the market can automatically solve everything. It certainly won't
solve poverty at the bottom of the society where I'm from. My parents are
ordinary workers and my maternal grandparents were farmers. I speak for the
interests of such people.

COL: What's wrong with market competition?

Han: We are simply not strong enough and we are not ready for WTO.
Outstanding enterprises like Hai'er, the fridge maker from Shandong, may
not be able to compete in a global environment. Hai'er is still a "little
brother" in world trade. Some academics who admire competition may kill the
growing domestic competition by bringing in foreign monopolies. I fully
expected PNTR to be passed: it is entirely in the interests of the U.S.A.

COL: What can be done to minimize the negative impact of WTO?

Han: We need trade protection. Internally we should open up the market as
much as possible; externally we should exercise protection as much as
possible. The whole point about the WTO is free trade, but in fact, it is a
tool used by strong countries to disarm weak countries. America is the most
hypocritical as it never cares about the interests of weak countries. When
it demands other countries open their markets, it tightly seals off its own
market by using anti-dumping and other means.

When Americans negotiate with China, they want China to open its telecoms
and financial sectors, but on the other hand, they desperately try to
protect their own textile industry. It does not make sense to Chinese.
Textiles is America's low end industry. They want to protect their backward
industry, but do not allow us to protect our high-end market. It is not
reasonable. Such double standards!

In the '80s, China's economy grew really fast because we combined opening
up and protection. The difficult position state-owned enterprises face
today, large numbers of laid-off workers and even bankruptcy, was the
result of foreign investment and enterprises dominating the Chinese market.
We did not pay enough attention to protection.

COL: The Chinese government considers WTO entry a "win-win" situation. What
is your view?

Han: China and the U.S. used the term when they signed the WTO deal. But
how can it be? The banana war shows that America and Europe fight over even
a tiny bit of interest. I can imagine how happy Americans were when China
made large concessions. We have to be calculating too.

For example, everyone thinks that WTO will bring more job opportunities. I
once talked with someone senior from Motorola, who said "You don't seem
very friendly towards international corporations like us. Motorola created
18,000 jobs in China. Wouldn't it be fair to say we have made a
contribution?" I said true, both my mobile and pager are made by Motorola,
but can't you also see the negative side? Some company in China lost the
opportunity to create 18,000 jobs. China's telecom industry needs to
upgrade from fixed line to mobiles, but now we've lost the opportunity as
the mobile market is dominated by Motorola and other foreign giants.

COL: What other sectors in China will experience major impact?

Han: In the short term, it will be China's under-developed finance sector;
but in the long run, it will be agriculture. When urban Chinese start to
enjoy America's cheap wheat, corn and beef, nearly 900 million Chinese
farmers will suffer bitterly. Our tiny, family-based farming units stand
absolutely no chance of competing with large, modern and well-equipped
American farms.

The problem is that we have so little land and so many people. Once China
enters WTO, there will be a great deal more flow of migration to the urban
area. They threaten the urban workers as they are willing to take low pay.
When they cannot secure a job in the city, yet have no land to go back to
at home, there is a danger of social unrest. Throughout history, it has
always been the rebellious farmers who overthrew the dynasties. I can see
that happening.

COL: Will WTO bring China any other positive factors, such as democracy and
the rule of law?

Han: As for the rule of law required by multinational companies, yes, it
will improve. But joining WTO does not necessarily bring democracy and the
rule of law required by ordinary people. There are 133 WTO members - look
at some of the African countries, the corruption there is much worse than
in China.

COL: You talk about American hegemony, what has it to do with WTO?

Han: After China's entry to WTO, American economic hegemony could easily
control China. We may lose some of our independence. That is, independent
economic growth, like letting the whole of China become a workshop for IBM.

What will probably happen after China enters WTO is that China becomes
another Latin America. It is in the States' backyard, yet it is not so
prosperous. And the nature of its economy is still dependent. Look at
Brazil, where the automotive industry comprises mostly U.S. plants, and
unemployment is so high. That's something I don't want to see in China.

COL: You come across in the book as being very patriotic.

Han: You can say I am nationalistic or patriotic. I just want to earn some
space for our nation's survival, and protect the rice bowls of the Chinese
people. This is different from patriotism in the U.S.A which is very
aggressive: they are already very strong and want to go to other countries
to take away other people's rice bowls.

COL: Are you anti-American?

Han: I am against the hawks in America, not the doves. And I can see a lot
of hawks.







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