February
7: China Compass Conference, Navigating U.S.-China
Business Opportunities.
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Beyond
Accession: The
Globalization of China and
Its Potential Impact on the U.S. and US Businesses
February
4, 2003
By
Ketaki
Sood, Larta Research Analyst
Wendy
Hall, Larta Staff Writer
To be launched today for this week's China
Compass Conference, this
new white paper from Larta Research examines China's
economy, which had already been robust and progressive
prior to its 2001 accession into the World Trade Organization
(WTO). With data and analysis of the nation's recent
economic history, this report examines what ways China's
accession will affect the rest of the world, which
industries will witness the most transformation, and
what challenges and opportunities China's accession
creates for the US and US businesses. The paper also
addresses specific opportunities and obstacles for
businesses and entrepreneurs interested in conducting
business in China.
The
WTO Accession
China's
membership in the WTO was expected to accelerate growth
in China, and recent trade data are consistent with
such expectations. "China is globalizing faster
than any other country in the world. That was true
before WTO membership, but it's even truer now,"
says William Overholt, Research Chair of RAND's Center
for Asia Pacific Policy. "What China has discovered
is that WTO accession brought important costs down,
helped create more competition - things that the government
does want. And this is generating tremendous growth."
At least in theory, China's liberalization measures
should lead to more competitive U.S. exports to China.
However, recent data show that U.S. exports to China
increased only marginally since the WTO accession.
It is still early to evaluate the impact of China's
accession on U.S.- China trade, especially given that
China has some time left to open markets more fully
and given the uncertainty caused by America's current
economic downturn. Although the full impact of China's
WTO accession remains to be seen, many analysts feel
the advantages it brings to import costs could benefit
its trading partners. According
to The China Business Review, U.S. service
providers in financial, insurance, and telecommunications
services, as well as distribution-related industries
such as freight forwarding, will witness the most
significant changes from China's WTO accession.
China
Compass Conference Topic Spotlight:
The Continued Economic Transformation of China,
Political Succession for China's Leaders, and
China's Engagement in the World
China is going through its first orderly transition
of leadership in a century. The next generation
of leaders was not educated in the Soviet Union
but came of age during the Cultural Revolution.
Will China's economy stay the course? Will China
meet the challenge of WTO accession? Will the
financial system meet international standards?
Or will economic and social changes prove to be
too disruptive for the government to manage?
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China's economy is quickly advancing
into higher value goods, and foreign companies can
look at growing markets for new opportunities. While
China has been known for producing labor-intensive
goods like textiles and apparel, China today is increasingly
producing advanced telecommunications equipment, electronic
goods, and technology-based products.
