In seeking integration into the world's trading system at this time, China will have to give practical legal expression to a recognition that the World Trade Organization's scope was significantly expanded in the Uruguay Round so that the trading regimes of Members are now very much more open. In succeeding to the General Agreement on Trade and Tariffs, the WTO has gone well beyond border measures such as import duties, and now reaches into areas of domestic policy to require the opening of distribution channels and the dismantling of state-owned monopolies, as well as allowing access, for example, to foreign financial institutions and telecommunications service providers (Houben 1999:3).
The shift from a trade regime involving the exchange of goods to a rules-based regime concerned with access to markets by competitive service providers will ineluctably make greater demands on domestic legal regimes. Indeed, in its commitment to “transparency, ” contemporary trade law has bought extensively into administrative law principles, especially those prevalent in the US (Ostry 1998:1- 19). This raises the immediate prospect that without significant changes to China's system of administrative law, a mis-match between international commitments and domestic public law will go far to undermine China's accession to the WTO. This will be especially so if, as reported, the US puts in place a special monitoring plan for China (Wall Street Journal, May 3, 2000).
While trade law has moved to a transparent, legalized basis (Ostry 1997), China's economy is still one based on relationships. As Shuhe Li and Shaomin Li, two economists at the City University of Hong Kong, have noted, in advanced economies companies do business within a rules-based system. This means that business is generally conducted in a publicly verifiable manner by way of contracts under laws that are widely known and consistently enforced. In an economy based on relationships, business transactions are made on the strength, not of contracts, but of personal agreements which are neither verifiable nor enforceable in the public sphere. A rules-based system needs a high and costly level of public order; a relations-based system needs only minimal public order. Instead of incurring the high fixed costs involved in setting up a rules-based system, China has taken the cheaper route of relationship-based development. (The Economist 2000:7). While this