- The Washington Times - Friday, December 20, 2002

BEIJING It reads like a surrealist's shopping list: Viagra, disposable cigarette lighters, rabbit meat, counterfeit "Scooby Doo" digital video discs and dusty bonds dating to the collapse of China's final imperial dynasty.
But these items belong together. Each has played a role in a saga of money and economic change that affects the entire planet China's commerce with other nations during its first year in the World Trade Organization, the rules-making body of modern global commerce.
Beijing marked the first anniversary of its coveted WTO inauguration this month much as it began membership eager to reap the benefits of open markets, wrangling its outdated business traditions into published law, promising it will play by the rules and vehemently objecting to anyone who doesn't.
For foreign companies across the world hungry for the full access to China's market of 1.3 billion people progress can't come quickly enough.
"China has demonstrated a desire to comply with its WTO obligations. But in some instances, its implementation has fallen short," said Charlene Barshefsky, the former U.S. trade representative who led U.S.-Chinese negotiations on China's WTO entry.
Membership in the WTO, a body founded to promote free trade in a dizzying era of globalization, was a cornerstone of China's move from a planned economy to a market-driven system that encourages entrepreneurs to build "socialism with Chinese characteristics."
Long a target of criticism for huge trade surpluses with the United States and other economies, Beijing wanted the protection that comes with the WTO requirement to submit trade disputes to independent judges.
Chinese planners also hope WTO requirements will force reform of coddled state companies, binding them into global rules and bypassing local political bosses intent on protecting their fiefdoms.
Exports and imports are still rising, officials say. Economic growth remains at around 8 percent, and Chinese economists credit WTO membership with stimulating foreign investment by convincing investors that the Chinese marketplace will treat them according to international practices.
"We have won more applause than criticism," Foreign Trade Minister Shi Guangsheng said in a WTO speech Dec. 8, quoted by the party newspaper People's Daily. "China as a responsible new member has won respect."
Yet as it overhauls clunky state firms and grapples with endemic local protectionism, China is watching international commerce rumble across the land.
Millions have been put out of work in heavy industry, migrants are streaming into cities, farmers are jittery about an invasion of cheap foreign food, and the Communist Party is frantic to keep progress moving and retain its monopoly on power.
The government of the world's largest developing economy is caught between challenges wary of creating instability by opening markets too quickly, yet duty-bound to do so by the very organization it lobbied so vigorously to join.
China's first year of membership has been filled with WTO-related events big and small.
The government has promised repeatedly to slap down the thriving counterfeit music and movie industry that so angers Hollywood. It has cited WTO rules in opposing "protectionist" European Union bans on Chinese products including rabbit meat, shrimp and honey.
The American Bondholders Foundation invoked WTO to demand that China pay $89 billion in bonds issued by a government in 1913. Today's communist government denies responsibility for the debts of the Kuomintang, which now governs Taiwan, incurred soon after Sun Yat-sen overthrew the Ch'ing Dynasty. Pfizer Inc. says foreign investors are following Chinese drug companies' attempts to nullify its Chinese patent on the anti-impotence medication Viagra.
The government has roundly denounced new U.S. steel tariffs, and has exhorted the EU not to require child-safety devices on low-priced disposable lighters. China, which manufactures most of those lighters, called such a move "against fair competition."
Perhaps the biggest WTO-related challenge for China's new communist leadership is to make sure that policies made in Beijing are heeded by powerful municipal-level cadres.
At the same time, analysts say, the government must keep moving forward to dissuade big-business lobbies such as the American finance industry from using the WTO to push Beijing into faster, potentially destabilizing reforms.
"People know China's not going to turn into Denmark overnight. But there's a sense that things are headed in the right direction," said Marcus Noland, a senior fellow at the Institute for International Economics in Washington.
"This is sort of a honeymoon," he said. "These guys are doing things, and I think a lot of people recognize that."

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