LP6.2 Assignment: Research Paper Rough Draft August 7, 2016

LP6.2 Assignment: Research Paper Rough Draft August 7, 2016 LP6.2 Assignment: Research Paper Rough Draft August 7, 2016

Based on Brahm, (2002) China became a member of world trade organization on 11 December 2001. Its admission was due to the required important changes to the Chinese economy and lengthy process of negotiation. This showed the deeper integration of china into the world economy. Before it joined the world trade organization its economy was managed by the communist. The steps of changes were very cumbersome which conflicted with the previous strategy.

Their admission was an important multilateral achievement which indicated a transparence commitment to the multilateral. According to Clarke (2008), this was an important event in china’s integration with the global economy. The far-reaching and the most important consequences was the transformation of china’s financial sector. China agreed to harsh conditions than other countries which are developing upon joining the world trade organization. Later the foreign investment was allowed; wholesale, distribution ended and restriction on retail and the service sector was liberalized.

Insurance and telecommunication, banking and financial services were all opened up for foreign investment. It also had to deal with particular linked to intellectual property and to transparency which the accession to world trade organization underlined. Based on Fung (2006) China understood that opening up the banking sector could reinforce its financial sector. Still after they had been promoted and directed by the state, their bank managers had no important skill for transformation of their banks on their own.

Given its trade interest and concerns and bilateral economic on china’s effecting on the international trade system, United States played a major role in china’s deals to engage in world trade organization and it took 15 years to complete its membership. China was motivated by several reasons to join the organization and these were; increase competition in the internal market, integration into the worldwide community to proceed to supply sustained economic growth, international supply and international networks to take advantage of the factor of competitive of low labor, as one of the U.S. PNTR forerunner deal, removing of the yearly MFN review by the U.S. Congress and entry of foreign technologies and firms into their internal market (Lin, 2003).

The multinational and U.S have taken advantage of china’s low cost labor and have invested heavily in manufacturing operations which have been contributing to china’s imports of intermediate materials and goods and the export of readymade products in the processing trade. Its related efforts to open up its economy and accession to world trade organization have strengthened the opportunities in its internal marketplace (Columbus, 1998).

Conclusion

For the past ten years, the economic growth of china has been good. Its accession to world trade organization in its trade data has positive contribution to its growth especially in the export and manufacturing sectors. It has attracted several foreign investors and have several enterprises established in their country.

Paper For Above instruction

China's accession to the World Trade Organization (WTO) in December 2001 marked a significant turning point in its economic development and integration into the global economy. This decision was driven by China’s strategic efforts to reform its domestic economic policies in compliance with international standards, which required a series of complex negotiations and substantial structural changes. The process of joining the WTO indicated China's commitment to transparency and to opening its economy, which had previously been centrally managed under a communist regime that prioritized state control over economic activities. This transition was crucial in transforming China’s economic landscape from a largely isolated, state-controlled economy to one embraced by global trade norms and practices.

The implications of China’s WTO membership have been broad and profound. A key area of transformation has been the financial sector. Under WTO obligations, China agreed to liberalize its financial markets, allowing for increased foreign participation in sectors such as banking, insurance, telecommunications, and other financial services. Prior to accession, these sectors were heavily restricted and tightly controlled by the state. Post-accession, restrictions on retail and freight distribution, along with limitations on foreign investments, were progressively eased (Clarke, 2008). Chinese banks, which were predominantly state-owned and operated under strict government guidance, had to improve their management capacity and adopt international standards to compete effectively in the global market.

Importantly, the liberalization of the banking and financial sectors helped reinforce China’s financial infrastructure, facilitating domestic financial reforms and fostering improved access to international capital markets. Nevertheless, the transition faced challenges, such as the lack of management expertise among many Chinese financial institutions, which initially limited their ability to operate independently and efficiently under a competitive environment. Despite these hurdles, WTO accession laid the groundwork for ongoing reforms aimed at modernizing China's financial sector and integrating it more fully into the global economy.

China’s motivation for joining the WTO was multifaceted. Primarily, it sought to stimulate domestic competition, improve productivity, and sustain economic growth. By opening its markets to foreign firms and technologies, China aimed to modernize its industries, bring in advanced management practices, and boost innovation (Lin, 2003). Additionally, WTO membership provided China with opportunities to leverage its large labor force for export-led growth; the country became integral to global supply chains, particularly in manufacturing. Multinational corporations benefited from China’s low-cost labor, investing heavily in manufacturing plants that contributed to significant growth in exports of consumer goods and intermediate products (Fung et al., 2006). This integration into international markets not only increased China’s export capacity but also attracted foreign direct investment (FDI), which played a pivotal role in developing China’s industrial capacity and infrastructure.

Furthermore, the U.S. played a major role in encouraging China’s WTO accession. Recognizing China's growing importance as an economic power, the United States prioritized engagement with China, seeking to incorporate it into the global trading system under rules that promote fair competition and protect intellectual property rights. The trade relationship was underpinned by negotiations that spanned over a decade and a half, reflecting the complex nuances of aligning Chinese economic practices with WTO standards (Columbus, 1998). One of the key motivations for China’s accession was to advance its economic reforms, improve market access for foreign firms, and facilitate technological transfer—factors deemed essential for long-term sustainable growth.

The consequences of China’s WTO membership extend to various sectors of the economy. Chinese exports surged as tariffs and non-tariff barriers were reduced, allowing foreign goods and services easier access to the Chinese market. This opened up enormous opportunities for foreign enterprises but also increased competitive pressure on domestic companies, compelling them to modernize and upgrade their capabilities. Additionally, WTO membership stimulated ongoing reforms in China’s legal framework to better protect intellectual property rights, enforce contracts, and ensure fair trade practices. Although challenges remain—such as issues related to market access, state subsidies, and regulatory transparency—the overall economic impact has been positive, fostering sustained growth and economic diversification (Brahm, 2002).

In conclusion, China’s accession to the WTO has been instrumental in shaping its recent economic trajectory. Over the past two decades, China has experienced remarkable growth in exports and manufacturing, driven by increased foreign investment and integration into global trade networks. The reforms initiated in tandem with WTO commitments have modernized China’s economic institutions and increased its competitiveness on the world stage. While obstacles remain, the gains from WTO membership are evident in China's expanded market access, improved regulatory environment, and strengthened economic resilience. As China continues to evolve within the global economy, WTO membership will remain a cornerstone of its growth strategy, fostering innovation, stability, and integration into the international trading system.

References

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