Under a new leadership regime, China, for about 13years had applied for WTO (World Trade Organization) membership, but their efforts had been futile primarily due to U.S. opposition. The U.S. argued against China, that they still had a few economic and political issues that had to be taken care of prior to China’s entry into the WTO. Some of these issues were related to human rights, tensions between Taiwan and China, objections from labor unions in the U.S., China’s nuclear arsenal, and the use of protectionist policies by China against the U.S.
Many advocates were worried of China becoming a member of the WTO due to concerns about an increasing trade imbalance between the USA and China. Between 1990 and 2002, total trade had rose from $20million to $116billion, however, according to U.S. trade data, the trade deficit with China kept on increasing year-after-year. The U.S. blamed this growing deficit trend towards China’s high tariffs and numerous restrictions on U.S. exports. In addition, many economists believe that the Chinese currency was undervalued (by as much as 40%), which basically gives Chinese goods a price advantage against identical U.S. products.
However, despite these sources of trade friction between China and the USA, some scholars view this friction as a positive sign. With trade frictions emerging and trade policies being implemented and dealt with, China finally becomes a member of the WTO on December 11, 2001. With this, China agrees to lower its average tariff rates from 16.7% in 2000 to 10% in 2005, and also promising to reduce the number of items under import license and quota, from 300 items to zero. Also, by entering the WTO, China agreed to liberalize foreign investment banking, insurance, financial services, wholesale/retail trade, and telecommunications, in order to boost foreign direct... [continues]
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