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Posted on April 20th, 2012, by

At the domestic level, China’s membership in the WTO basically had a positive impact. In fact, China’s membership allowed the country to maintain the stable economic growth. Firstly, China increased its export opportunities due to the elimination of fiscal barriers imposed on non-members-countries. Secondly, China attracted foreign investments and foreign companies stimulating them to launch their business in China because the membership of the country in the WTO proved the reliability of the country and safety of business in China.

On the other hand, Chinese market was vulnerable to the expansion of foreign companies and products imported from abroad. In this respect, the knowledge-based industry and farming faced particularly serious problems. In such a situation, the Chinese authorities focused their efforts on the accelerating of the development of knowledge-based industry. In addition, China had to increase subsidies to local farmers.

Evaluation of costs and benefits

Thus, China’s membership in WTO has both advantages and disadvantages. On analyzing costs and benefits of China’s membership in the WTO, it should be said that strategically benefits can outweigh costs on the condition that the state will conduct a wise policy preventing misbalancing of the national economy and avoiding excessive state regulation of the national economy. Speaking about benefits, it is primarily necessary to mention larger opportunities to enter new markets, where Chinese products can be sold and where they can have competitive advantage due to the lower price compared to products of developed countries. However, it does not necessarily mean that China will gain international markets. Instead, the membership of China in the WTO is two-fold since along with access to international markets, China opens its own market to foreign products. Hence, China is more likely to lose its position in the domestic market in those industries where it is in a disadvantageous competitive position. On the other hand, it can compensate losses by means of increasing export. Nevertheless, it is important to remember that the competitive potential of Chinese products, their quality and price can be crucial for the future of Chinese economy in the globalized economy.

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