The following years will be the critical years for the Chinese
government to fulfill its commitments and an important stage for
marketization. Taking advantage of the accession to the WTO, China
is sure to step up its marketization pace for foreign trade and
enhance the degree of marketization in foreign trade.
(Ⅰ) Diversification of Operational Entities in China' s
Foreign Trade
The common practice worldwide is that, when an enterprise is
legally registered, it will obtain the import-export power as well
as the right of domestic trade. To open the power to engage in
foreign trade as committed and to diversify the operational
entities of foreign trade are a must to keep our word to the other
countries and the only way to realize the market economy. In the
following years, China will go on its way to promote the
transformation towards the thorough registration system for power
to engage in import mad export and is expected to reach this goal
within the three-year transition period. In details, all
enterprises that are engaged in self-operated import and export of
commodities o1 technologies (excluding those restricted by the
State under the operation by designated companies) shall not be
confined by other qualification requirements beyond those for
establishment in laws and rules. The present foreign trade system
dominated by solely state-owned companies will gradually transit to
a comprehensive one with state-owned, foreign invested,
incorporated, collective and private businesses participating in.
The import and export, and distribution activities like wholesale
and retail will be never ever so tightly related.
(Ⅱ) Trend of Liberalization of China' s Commodities
Trade and Trade in Services
China is likely to lower its tariffs further. China will
voluntarily reduce the average tariff to 10 percent by 2005. Such
being the ease, 2003 will see more reduction of import tariffs,
with. the arithmetic mean of tariffs dropping down from 12 percent
to 11 percent. The average tariff of agricultural products will go
from 18.1 percent to 16.8 percent, down by 7.2 percent; the average
tariff of industrial products will drop by 9.6 percent from 11.4
percent to 10.3 percent, among which, by July 1, 2006, the average
tariff of automobiles will touch 25 percent and that of components
will be down to 10 percent.
In accordance with the WTO accession documents, China is allowed
to designate specific dealers to operate and manage eight items of
bulk products concerning the national economy and the people's
livelihood, namely, crude oil, product oils, chemical fertilizers,
cereals, cotton, sugar, vegetable oil and tobacco. In addition, the
percentages of non-designated operation items have been specified
based on the present situation of import in China. (Here, the
non-designated operation items refer to goods imported not for
general trading purposes but for businesses such as export
processing and are not subject to handling by designated
companies). The number of enterprises designated to deal in the
aforementioned commodities will increase year by year. After the
three-year transition period from 2002, these protection measures
will be eliminated. State-operated trade will not be taken as the
major measure of China to control import and export.
According to the guidelines in the WTO rules on revoking
quantity restrictions, within the five-year transition period,
China will gradually loosen until abolish the restrictions on
quotas, licenses and specific bidding. Also in this point, China
has made commitment on the quotas of 24 types of products in the
base period mad the yearly increase rates for the transition
period. By 2003, the import quotas will be removed from 31 types of
commodities including motors and cameras; specific import
restrictions on 19 commodities including vessels will be nullified;
the increase rate of import quota of product oils, natural rubbers,
tires and some other products will reach 15 percent. By 2004, China
will abrogate the import quantity restrictions on product oils,
automobile tires and natural rubbers. By 2005, all machinery and
electrical products will be relieved of import quantity
restrictions. To that year, five agricultural products including
cereals (such as wheat, rice and corn), cotton, vegetable oil,
sugar and wool, together with the chemical fertilizers, will be
changed from absolute quota control to tariff quota control.
For being a member of the WTO, China has made the following
commitment for opening the trade in services: foreign service
providers have the right to freely select Chinese partners,
including the partners from other lines; no quantity restrictions
on the major sensitive service lines of China against foreign
investment; in qualification examination, providing up to the
doctrine of due diligence, the foreign projects shall be approved;
it is not allowed to keep foreign investments from the service
lines with the excuse of avoiding repeated construction or needing
experimental runs. Foreign investors are permitted to access to the
service lines of China, such as banking, insurance, distribution,
telecom, transportation, law consultation and accounting. In
respect of the telecom services, China will perform the WTO Basic
Telecom Agreement to change the transition period for abolishing
the regional restrictions on paging and value added telecom
services, mobile communication services and domestic online
services respectively to 3, 5 and 6 years, but the foreign invested
shares, management and control power and international
communications gateways will be still under the control of the
State. As for banking services, China will observe the Agreement on
Financial Services, and, as committed, will gradually remove die
restrictions on customers and regions against foreign investors to
engage in foreign exchange and RMB services within 5 years. In the
point of insurance, within five years after its accession to the
WTO, China will eliminate the restrictions on business scope and
region against foreign insurance companies, and the proportion of
foreign shares in China Life Insurance Company shall not exceed 50
percent. For securities, foreign investors are allowed to buy
shares from securities fund management companies under the premise
that such companies shall be controlled by the CPC. They are only
permitted to deal in underwriting of A Share, underwriting,
sell-operated trading and brokerage of B Share, H Share, treasury
bonds and debentures of any domestic or overseas government or
company, other than trading in A Share. Distribution involves
trading, wholesale, retail, maintenance, transportation, storage
and other auxiliary services. China will relieve foreign invested
enterprises of restrictions on share structure, business scope,
quantity and region step by step within three years with the
exception of a few commodities. After 5 years, except for salt and
tobacco, foreign investors will be allowed to deal in almost all
industrial products. The value added telecom and paging lines are
allowed to absorb 50 percent foreign investments two years after
China' s entry into the WTO); no restriction against foreign banks
in terms of national treatment, apart from those on regions and
customers; as far as Internet and satellite services are concerned,
commitments are respectively made in line with the value added
telecom and basic telecom services.
With respect to retail and distribution services in the year of
2003, the government approves to set up a certain amount of foreign
invested enterprises in the designated cities, allows foreign
investors to take majority of shares therein, and approves these
enterprises to take up retail of newspapers, magazines and books;
as for finance, the?renminbi services will be opened up
gradually; apart from the cities committed to open, namely,
Shanghai, Shenzhen, Tianjin, Dalian, Guangzhou, Zhuhai, Nanjing and
Wuhan, another four cities will be opened, such as Jinan, Fuzhou,
Chengdu and Chongqing; where foreign financial institutions are
allowed to provide standard money services to Chinese enterprises ;
foreign non-life companies are allowed to set up their solely
foreign-funded subsidiaries, without restrictions on the forms of
subsidiaries.
(Ⅲ) Unified, Standard and Transparent Policies on
Foreign Trade
The Foreign Trade Law of the People' s Republic of
China promulgated by the National People's Congress in 1994
specifies the principle of unified foreign trade policies. Now that
China is prepared to amend the principle therein to unify trade
policies within the customs territory, it will continuously
standardize its trade policies until policies for the power to
engage in trade for foreign investments and domestic capitals are
unified; regulations on state-operated trade in conformity with the
WTO rules will be drawn up, standardized pricing system for
state-run trade products and a system for enterprise qualification
recognition will be established to promote transformation of
state-run foreign trade enterprises ; regulations concerning the
percentage, quantity and prerequisites for non-state-run trading
enterprises to deal with products of state-operated trade will be
formulated; supporting systems for foreign economy and trade that
are focused on export credit and guarantee of export credit will be
improved; reforms will be conducted in respect of the import
license procedure and the systems for releasing import quotas and
designated operation ; export formalities will be simplified, and
the import and export registration system for serf-operated
producers and the approval system for foreign trade circulation
enterprises will be implemented, efforts will be made to accelerate
the pace to establish a new foreign trade and economy system
adapting to the multilateral trade mechanism mad regulations and
with full consideration to the present situation of China. In a
word, China will honor its commitment to the WTO in respect of
enhancing the transparency by way of polishing the related
regulations.
(Ⅳ) Legislation and Marketization of Foreign Trade
Administration
The WTO rules are devised on the basis of market economy, which
is usually a law-based economy. Now that China has been
incorporated into the WTO family, it will go on its way to
consolidate the legal system to support its foreign trade and
economy and improve its ability to administrate foreign economy
according to law; more work will be done in respect of arranging,
amending mad formulating laws on foreign economy, especially the
legislation on trade in services and intellectual property rights;
the supervision and inspection over law enforcement on the
management of foreign economy will be tightened up, the majesty of
law is to be maintained by eliminating and rectifying the
non-enforcement or partial enforcement of law in practices in order
to minimize the occurrence of administrative controversies and
trade disputes. Meanwhile, China will continuously adapt its
foreign trade administration to the market economy, improve the
system on duty drawback as well as other systems on trade and
services like finance and export insurance, propel the reforms in
the Renminbi settlement, sale and payment system, expand the range
of convertibility of Renminbi under the current account, consummate
the formation mechanism of Renminbi exchange rates, and enhance the
level and ability in administrating foreign trade by
market-oriented means.
(China.org.cn November 7, 2003)
