Newspaper article The Christian Science Monitor

The Binds of Free Trade

Newspaper article The Christian Science Monitor

The Binds of Free Trade

Article excerpt

It is said that China is the largest sociological and political experiment of the 21st century - the grand petri dish of the world, so to speak. Within China, critics of the World Trade Organization (WTO) have asserted that accession to the WTO will be sublethal to its working class in certain inefficient sectors of the economy because of an onslaught of competition.

To Westerners, China's admission to the WTO is the continuation of the centuries-old dream to conquer the Silk Road. Accession to the WTO means that America and the rest of the world will not have to kowtow in the palace, and everyone will stand on equal footing as tariffs in China, are reduced across the board for all WTO members.

The scenario, if played out correctly, means that Pepsi (or Coca- Cola) will be the carbonated drink du jour in most households in China while Ford and General Motors automobiles will flood the streets.

But what lurks behind this sanguine image is what might conceptually be called the transition misery index. This index can be calculated in many ways, taking into account various factors: infant mortality, healthcare accessibility, cost of food and housing relative to income, life expectancy, inflation, crime, and unemployment. While more than 200 million Chinese have been lifted out of poverty in the past decade under Deng Xiaoping's economic reforms, others may suffer as a result of the transition to WTO. This is to be expected in transitional economies, but the intensity of suffering is worth examining.

China's Ministry of Labor and Social Security estimates 11.74 million people will be unemployed by the end of 2000. This figure does not include the recent government announcements of 200,000 layoffs at China Telecom, 100,000 at China Petrochemical (Sinopec), and another 50,000 at Petrochina.

There is also concern about the political stability of over 25 percent of the world's population that survives with just 9.64 percent of the world's arable land. The continued industrialization of China will mean that factory sprawl will encroach on land used for crops. Currently, many jobs are being slashed in China as inefficient state-owned enterprises are shut down. Even more will be eliminated as foreign enterprises with much-needed know-how and financial backing gradually win over the hearts of consumers in China. (For instance, Carrefour, the French supermarket in Shanghai, has perpetual lines at checkout.)

With the passage of Permanent Normal Trade Relations in the Senate on Sept. 19, the road to WTO is all but assured for China. But the next set of issues China and members of the WTO must face are the social consequences of this massive economic undertaking.

In a strange way, as China's leaders brace for WTO and hum the dirge at many state-owned enterprises (SOEs), they may be ultimately drawn to resolving these dilemmas through a Keynesian, government-oriented economic approach - using monetary and fiscal programs to increase employment. …

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