Globalization and World Trade Organization
Globalization and World Trade Organization
Often perceived as the strongest instrument of globalization and supporter of economic liberalism, the other facet of the World Trade Organization brings its existence as an adamant global regime. For the concerned reason, Debi Barker and Jerry Mander have called WTO as a form of ‘Invisible Government’ in one of their publications for the International Forum on Globalization (IFG). China and Globalization: Behind China’s ready reaction to globalization with full potential of leading the global economy, thinkers consider an aspiration to supplant the existing super power of the world.
But for China, globalization is a double edged sword since it brings forth both the threats and favours for world’s fastest growing economy. According to Peter Drysdale, it is because of China’s access to the global market that it has reached the first rank among the developing countries of Asia. Exposure to foreign market free of trade barriers has provided with a number of opportunities to enhance the business circle of Chinese companies. In a matter of two decades starting from 1978 to 1997, China doubled its status in terms of its capital gains by elevating to the tenth position from the twentieth rank in the world’s economy.
This fact suggests that China’s excel in the international trade does not completely depend on its entrance in the WTO. In fact the country had embarked its way towards economic pre-eminence long before joining WTO. This means that China’s success though boomed by WTO had its very beginning with the economic globalization. Attitudes of Chinese towards Globalization: Just like any other existing phenomenon in the scene of human existence, globalization cannot be confined in a single frame of thought and any rigid point of view merely makes it a matter of perception rather than rationality.
With both the negative and positive impacts of globalization for China standing clear, there are three types of attitudes existing among people regarding the relentless process of globalization. According to Charles Andrews, there people advocate and favour one of the three stands namely, Pro-globalization, Anti-globalization and Reformist Approach. 1: Pro-Globalization: The first group of people hold a positive view of globalization for China by measuring the country’s success in terms of strengthening economic position in the global market and increasing cognizance of the world about China.
Lin Yifu, a professor of economics at the University of Beijing, is among such people who vision no challenge of globalization to China. Pro-globalists involve a group of liberal minded people who condones the risks of globalization in favour the opportunities it has provided. 2: Anti-Globalization: Contrary to pro-globalization, Anti-globalization rejects every bright angle of increasing globalization. It is because integration is a two way process. When China permeates foreign countries, these countries are equally permitted to invade China’s domestic market.
As many fruits and cereals are cheaper in the global market as compared to that of China’s, when the exporters of these goods invade China they leave the country men (whose livelihood depends on the agriculture) at the edge of starvation Apart from such risks, the anti-globalists also take an account of translational terrorism by cross-border criminal activities and the proliferation of weapons. Certain events of recent past also favour such allegations against globalization.
It s because of the cross border criminal activities and stalking that events like 9/11 trampled one of the most lucrative economic centres of the world. Anti-globalists belong to various walks of life with their opposition to globalization in terms of their field. For instance, many linguists across the globe talk about linguistic genocide and the overwhelming role of English as a lingua franca which is causing the death of many regional languages. In short, for the group of people who are propelled to anti-globalization, ‘globalization is nothing but a trap.
Jumping into this trap would crush the whole domestic industry, agriculture, and service sectors. ’ 3: Reformist Approach: The reformists hold a balanced point of view towards globalization. With an over all positive attitude towards globalization, they believe that while the advantages of globalization are long term, the short term threats of globalization for China cannot be ignored. For them, at one hand globalization means increased financial gains, growth of domestic industry by competition with foreign companies and aggrandizing compatibility of China with the global community.
At the other hand, they also bring under consideration the issues like growing unemployment as a result of declining industries facing foreign competitions and by widening the gap between classes by further lowering down the farmers and other such people to a still lower status. The threat to the farmer’s livelihood is clear in China that has over-emphasized the manufacture of non-agricultural products in the wake of the last few years. Consequently, innumerable farmers of China were left with their decline resulting from unemployment.
China and World Trade Organization: “The progressive integration of China into the world trading system- spurred by its membership of WTO in 2001- has provided China with secure, open and predictable export markets. ” According to the economists, behind the rapid rise of China in the global economy lies one key factor: the entrance of China in the World Trade Organization. The economic and financial analysts of global market base this opinion on the foundation that the major boom of China occurred after 2001 (the time when China joined WTO).
In the words of David Dollar, the World Bank country director for China, “Since China joined the WTO, its exports have grown at an average rate of 29 percent per year. ” It was in December 2001 that China (the sixth largest economy with a population of 1. 3 billion at that time) joined the World Trade Organization. Previously China had remained one of the twenty three contracting countries of the General Agreement on Tariffs and Trade (GATT). Impacts of WTO membership on China’s Economy: After its membership of WTO, China’s trade rate increased rapidly from 44% to 72% in 2006.
It was after a foresight into the future that China compromised on a number of WTO policies in order to enter into the WTO. These were the conditions that apparently conflicted with China’s economy. According to Gregory C. Chow of Princeton University, three most salient conditions for China included: 1. Declining the tariff rates on the import of goods from foreign countries. 2. Being conducive in the practice of free trade by letting the foreign companies sell their products directly in the domestic market of China.
3. Establishment of improved telecommunication and finance industry for the sake of increased competition. Contrary to the analysts’ expectations, both China’s macro economy and micro economy did not suffer a set back after its entrance into the WTO since the net results proved to be favourable thereby compensating the scanty amount of losses. With a rapid growth of China’s exports, its increasing imports do not appear to be a threat for the country’s economy. Impacts of WTO membership on China:
China’s acceptance to become the member of the World Trade Organization was not merely a matter of flourishing its economy but a reason for a series of the country’s aims. According to Wayne M. Morrison, China saw a potential of playing a major role in trade laws of WTO and indirectly practice an economic hegemony. In the contemporary world with flourishing business and finance, the economic stability is often seen as a measuring stick to mark the countries’ over all power.
So, China’s increasing economic strength does not only suggest its financial stability but its potential to become the super power in future. Morrison also believes that another major goal of China behind the membership is to maintain the status of Most Favored Nation and permanent normal trade relations. Even if the World Trade Organization holds a stringent policy for equal treatment of all nations, the bigger nations with their dominating presence somehow benefit as compared to the under developed countries.
Previously, these privileges were dominantly celebrated by the U. S. Impact of WTO membership on China Banking Industry: It is the overwhelming effect of WTO membership that it has left not a single institution of the country untouched. With almost seven years of WTO membership and business people facing free trade, China’s financial sector is now open to foreign banks. This has exposed the customers to a number of innovative and improved management mechanisms and services.
In the words of Wang Zhaoxing of the China Banking Regulatory Commission, “The introduction of competition and strategic investors will be conducive to improving innovation, management and profitability of domestic banks. ” With considerable involvement of foreign banks into China, China’s leading banks including the Bank of China, China Construction Bank and the Industrial and Commercial Bank of China have emerged as trusted names in the international banking. Although appearing as a threat for smaller banks, such a scenario is highly favourable for a Chinese customer because in either way, they would get better services.
University/College: University of California
Type of paper: Thesis/Dissertation Chapter
Date: 21 December 2016
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