In Beijing, many delighted by House vote on trade bill

Opening market is seen as key for developing economy

May 26, 2000|By Frank Langfitt | Frank Langfitt,SUN FOREIGN STAFF

BEIJING - Zhang Min sees fortunes to be made, now that the U.S. House of Representatives has voted to establish permanent normal trade relations with China.

"I'm very happy," says the 27-year-old Beijing real estate agent anticipating more handsome homes to sell in the capital's growing housing market. "I think big real estate development companies will come to invest in China and I think the building designs will be more advanced."

The issue of normalizing trade with China may have deeply divided the House, but most Chinese were united in their reaction yesterday to the bill's passage. They were delighted.

Despite the economic pain that foreign competition will cause, many here see opening China's market to the world as a necessary step for developing the country's economy. One of Zhang's colleagues, a 50-year-old engineer named Zhang Zhiyong, was pleased the House passed the bill by a healthy margin of 40 votes.

"It shows more and more Americans are supporting and care about China," said Zhang Zhiyong, who is not related to the real estate agent.

The trade bill, which is part of Beijing's bid to enter the World Trade Organization, will end Washington's annual review of trading rights for China. In exchange, U.S. businesses will enjoy significantly reduced Chinese tariffs and be able to compete in what may one day be the world's largest consumer market.

The Senate is expected next month to vote on the bill and pass it. In the wake of House approval on Wednesday, Beijingers saw myriad benefits to the measure and China's expected accession to the WTO, which sets global trading rules.

Some were glad the world's most populous country was finally joining the international economic community. Many thought permanent trade relations would bring more stability to Beijing's roller coaster relationship with Washington.

Still others hoped increased foreign competition would force Chinese companies to become more efficient while giving Chinese people greater access to higher-quality products from overseas.

"It can improve our international status," said Wang, a 40-year-old worker, as she walked out the gates of the Guohua Beijing Heat and Electric Factory yesterday.

Best possible deal

Like many in Beijing's emerging middle class, Wang plans to buy a car but wants the best possible deal. Under the current system, the government slaps tariffs of 80 percent to 100 percent on imported cars. After China enters the WTO, duties would drop to 25 percent by 2006.

"I was thinking of buying a car before China joined the WTO, but now I'm waiting," said Wang, who declined to give her first name.

For all the optimism yesterday on the streets of Beijing, further opening of the Chinese economy will cause more pain for many Chinese workers who are already suffering in moribund, state-owned enterprises and on the nation's farms.

Multinational companies are expected to overwhelm many wheat, rice and cotton growers, causing the loss of 13 million jobs, according to a study by the Development Research Center of the State Council, China's Cabinet. While consumers such as Wang look forward to better deals on Toyota Camrys and other tariff-laden imports, WTO accession will accelerate the impending bankruptcies of many carmakers and force an estimated 410,000 people out of work. Of the 115 auto manufacturers in China, only four can produce more than 100,000 cars a year and many cannot compete with larger, more efficient companies.

Darwinian realism

"Small-scale car manufacturers, whether we join WTO or not, are dying," said Zhai Fan, co-author of the State Council report, invoking a sort of Darwinian realism that would have been unimaginable under the paternalistic policies of Mao Tse-tung.

Job losses will increase pressure on workers at noncompetitive state firms, which have so far been the big losers in China's transition from a command economy to a more market-oriented one. Labor unrest is common in areas where many old-line industries are collapsing.

Earlier this year, the government called in People's Liberation Army soldiers to quell rioting in Yangjiazhanzi, a city in northeast China's rust belt. An angry crowd of 20,000 miners burned cars, fought with police and unleashed their fury on a bankrupt, state-run company that had offered them a tiny severance package.

Chinese officials who oppose WTO accession argue that the Communist Party is ceding control of the economy to outside forces and turning its back on workers to whom it once promised cradle-to-grave care. But some managers of state-owned businesses admit they need foreign competition to spur changes they can't make on their own.

"We're lagging behind in management, administration, price and service," said Zhang Xinguo, 46, manager of the state-owned Beijing City Hardware Co. "It's competition for us, but in the long run it helps us improve."

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