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William Kazer

China's top trade negotiator has hailed the mainland's impending entry into the World Trade Organisation as a victory for developing nations.

It will indeed be a victory on a number of fronts after 14 years of difficult negotiations, but whether all developing countries rejoice when the day arrives is open to question.

Vice-Minister of Foreign Trade and Economic Co-operation Long Yongtu has had to fend off criticism from developing countries that China, as a member in the world trade body, would be able to take advantage of new market opportunities - and leave less on the table for them.

'Some people say that China's accession to the WTO will bring shocks to the markets of developing countries,' said Mr Long during a stop in Shanghai before he left for a round of multilateral talks on the WTO in Geneva.

'I believe this view is mistaken.'

Mistaken or not, there are real concerns. India has long been put out by the sometimes irrational focus of investment attention on China. India also has a big population and key development needs but compared with China it has been left far behind in the race for foreign investment dollars.

China has been the biggest developing country recipient of foreign investment bar none. It attracted US$40.4 billion in foreign investment last year, a decline of 12.8 per cent from the previous year. In the first 10 months of this year, China lured US$31.4 billion in foreign investment, down only 3 per cent from the same period a year ago.

Once it joins the WTO and investors see new opportunities and better investment protection, the figures are very likely to climb.

Mexico is another country that is not entirely thrilled with China's impending entry to the WTO. Mexico is the last hold-out in the bilateral discussions on China's WTO bid. Mexico and China share some similarities in their economic structure, meaning they compete in many areas rather than complement each other. Mexico fears China could make inroads at its expense in the North American market.

'The small teams are looking at the big one that is getting ready for the game,' said economist Wang Lingyi of the Shanghai Academy of Social Sciences. 'They are understandably a little worried. Chinese leaders have to discuss the issue with these countries and reassure them.'

However, there are some good reasons for China's garnering of so much of the investment pie and its growing trade clout. It has a big and increasingly wealthy market with its more than 1.2 billion people. That is something most other developing nations cannot match, with or without the WTO.

Malaysia, for example, may have had a head start in the electronics sector but it is not going to be a real competitor in the years ahead.

Semiconductor powers like NEC, Motorola and a number of Taiwanese companies are all pouring money into China where demand is robust, labour is relatively cheap and the government is offering an array of incentives.

China can also boast that its premier is not Mahathir Mohamad.

China's case that it is a developing nation - and therefore entitled to developing nation status - is a bit less solid. From some perspectives, China is indeed a developing country. Its hinterland is far from developed as income levels are low, jobs are in short supply and infrastructure is poor.

'We have always insisted that China can enter the WTO only with developing country status,' Mr Long said.

However, analysts described this largely as public posturing. China can call itself a developing country but the protocol on accession to the WTO eventually will reflect that the mainland is - in some sectors - an economic power.

China is a hybrid that has aspects of developed and developing countries. It had exports of US$205.1 billion in the January-October period this year, up 32 per cent over a year ago. Its trade surplus with the United States last year reached US$68.7 billion, according to US figures, closing in on Japan's trade surplus with the US.

Its state industry may be suffering structural problems but the nation is able to compete in the commercial satellite market, boasts about 100 car and truck makers, and has managed to make big international stock offerings, particularly in oil and telecommunications.

'As for missiles, they are far from a developing country,' said a diplomat with a former East bloc country.

China will soon add its voice to the WTO community, and its interests in many areas will no doubt coincide with developing states. But it also will have its own priorities and these may not mirror those of the world's poorer states.



WTO entry casts developing shadow