Applying GATT to marketizing economies: The dilemma of WTO accession and reform of China's state-owned enterprises (SOEs)

Journal of International Economic Law

Volumn 2, Issue 1, 1999, Pages 113-153

  Blumental, David M ^a  

^a NONE   (United States)

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EID: 0033414233     PISSN: 13693034     EISSN: None     Source Type: Journal    
DOI: 10.1093/jiel/2.1.113     Document Type: Article

References (224)

1. See Jiang Zemin's Report at the 15th Congress of the Chinese Communist Party, 'Hold High the Great Banner of Deng Xiaoping Theory for a Comprehensive Advancement of the Cause of Building Socialism with Chinese Characteristics into the 21st Century'. Beijing Rev., 6 October 1997 (1 of 6 instalments).
2. See Erik Eckholm, 'New China Leader Promises Reforms for Every Sector', N.Y. Times, 20 March 1998, at A1.
3. According to the Third National Industrial Census conducted by the State Statistical Bureau, there are currently 340,000 SOEs. They account for 34 percent of total industrial output and 57 percent of total fixed asset investment. Their debt ratio is 80 percent and total debt of those SOEs that are in arrears is RMB900 billion (US$108.5 billion). See 'A Major Test for State Enterprise Reform, Inside China Mainland' (Institute of Current China Studies, Taiwan), January 1998, at 41.
4. In the summer of 1997, more than 500,000 workers in Hunan, Fujian and Jiangxi provinces protested when SOEs distributed IOUs instead of wages. See Gregory Fossedal, 'Enlist the Masses to Solve China's Dilemma', Asian Wall St. J., 26 February 1998, at 10. More recently, in Heilongjiang, a northeastern industrial province, unpaid miners, workers, and pensioners have blocked railways and roads in protest at continued economic hardships. See id., also 'Unpaid Miners Blocking Rail Lines', S. China Morning Post, 10 March 1998, at 8. Since 1997 there have been a number of reports concerning unemployment and latent social unrest. There was even speculation that disgruntled workers were responsible for a recent explosion on a bus in Wuhan, an industrial city in central China.
5. In the summer of 1997, more than 500,000 workers in Hunan, Fujian and Jiangxi provinces protested when SOEs distributed IOUs instead of wages. See Gregory Fossedal, 'Enlist the Masses to Solve China's Dilemma', Asian Wall St. J., 26 February 1998, at 10. More recently, in Heilongjiang, a northeastern industrial province, unpaid miners, workers, and pensioners have blocked railways and roads in protest at continued economic hardships. See id., also 'Unpaid Miners Blocking Rail Lines', S. China Morning Post, 10 March 1998, at 8. Since 1997 there have been a number of reports concerning unemployment and latent social unrest. There was even speculation that disgruntled workers were responsible for a recent explosion on a bus in Wuhan, an industrial city in central China.
6. Note: In China, in theory the Party formulates general policy, which the government implements through legislating and enforcing laws and regulations, etc. The supreme Party organ is the Standing Committee of the Politburo. In addition to their respective government posts, Zhu Rongji, Jiang Zemin and Li Peng are the leading members of the Politburo Standing Committee.
7. See Erik Eckholm, 'New China Leader Promises Reforms for Every Sector', N.Y. Times, 20 March 1998, at A1; also, Michael S. Serrill, 'Can This Man Fix China', Time, 16 March 1998, at 38-39; Xu Xing, 'Modernizing SOEs: Easier Said Than Done', Open Magazine (Kaifang), October 1997, at 29-31. Zhu Rongji was elected Premier at the Ninth Session of the National People's Congress in March 1998. Zhu was formerly Vice Premier in charge of economy, where he engineered the overheated economy's 'soft landing'. Touted by the international media and hated by officials in the localities, Zhu is widely known as China's 'economic czar' or 'laoban' (the 'Boss').
8. See Erik Eckholm, 'New China Leader Promises Reforms for Every Sector', N.Y. Times, 20 March 1998, at A1; also, Michael S. Serrill, 'Can This Man Fix China', Time, 16 March 1998, at 38-39; Xu Xing, 'Modernizing SOEs: Easier Said Than Done', Open Magazine (Kaifang), October 1997, at 29-31. Zhu Rongji was elected Premier at the Ninth Session of the National People's Congress in March 1998. Zhu was formerly Vice Premier in charge of economy, where he engineered the overheated economy's 'soft landing'. Touted by the international media and hated by officials in the localities, Zhu is widely known as China's 'economic czar' or 'laoban' (the 'Boss').
9. See Erik Eckholm, 'New China Leader Promises Reforms for Every Sector', N.Y. Times, 20 March 1998, at A1; also, Michael S. Serrill, 'Can This Man Fix China', Time, 16 March 1998, at 38-39; Xu Xing, 'Modernizing SOEs: Easier Said Than Done', Open Magazine (Kaifang), October 1997, at 29-31. Zhu Rongji was elected Premier at the Ninth Session of the National People's Congress in March 1998. Zhu was formerly Vice Premier in charge of economy, where he engineered the overheated economy's 'soft landing'. Touted by the international media and hated by officials in the localities, Zhu is widely known as China's 'economic czar' or 'laoban' (the 'Boss').
10. See Frederick M. Abbott, 'China's Accession to the WTO', ASIL Insight, January 1998, at 1. The other two pillars are the United Nations and the International Monetary Fund.
11. EU Vice President Sir Leon Brittan has from time to time acted as a mediator of sorts between China and the WTO Working Party and US. See, e.g., 'L'Europe Propose Un Sommet Annuel avec la Chine', Le Figaro, 18 February 1998 at II B (reporting offer of EU Vice President Sir Leon Brittan during meeting with Chinese Foreign Trade Minister, Wu Yi, on further opening of trade and investment in Beijing); also, 'Sir Leon Plays the Role of Knight in Soft Armour', S. China Morning Post, 18 February 1998, at 4; and 'WTO Expected to Make Breakthrough in China's Accession', Xinhua Eng. Newswire, 10 January 1998, available on Westlaw (WL 2782319).
12. EU Vice President Sir Leon Brittan has from time to time acted as a mediator of sorts between China and the WTO Working Party and US. See, e.g., 'L'Europe Propose Un Sommet Annuel avec la Chine', Le Figaro, 18 February 1998 at II B (reporting offer of EU Vice President Sir Leon Brittan during meeting with Chinese Foreign Trade Minister, Wu Yi, on further opening of trade and investment in Beijing); also, 'Sir Leon Plays the Role of Knight in Soft Armour', S. China Morning Post, 18 February 1998, at 4; and 'WTO Expected to Make Breakthrough in China's Accession', Xinhua Eng. Newswire, 10 January 1998, available on Westlaw (WL 2782319).
13. EU Vice President Sir Leon Brittan has from time to time acted as a mediator of sorts between China and the WTO Working Party and US. See, e.g., 'L'Europe Propose Un Sommet Annuel avec la Chine', Le Figaro, 18 February 1998 at II B (reporting offer of EU Vice President Sir Leon Brittan during meeting with Chinese Foreign Trade Minister, Wu Yi, on further opening of trade and investment in Beijing); also, 'Sir Leon Plays the Role of Knight in Soft Armour', S. China Morning Post, 18 February 1998, at 4; and 'WTO Expected to Make Breakthrough in China's Accession', Xinhua Eng. Newswire, 10 January 1998, available on Westlaw (WL 2782319).
14. China's total GDP ranks second in the world at $2.323 trillion (1990 figures). East Asia Analytical Unit, Australia Dep't. of Foreign Affairs and Trade, 'China Embraces the Market', at 46, Table 1.4 (1997).
15. China was one of the 23 original Contracting Parties to the GATT in 1948. In 1950, following its retreat to Taiwan, the Chinese government withdrew from the GATT system. Because the PRC holds that Taiwan is an inseparable part of its sovereign territory, and never recognized the Nationalist government's withdrawal, it initially framed its request to join the GATT as 're-admission'. For a discussion of this issue, see generally Ya Qin, 'China and GATT: Accession Instead of Resumption', 27 J. World Trade 77 (1993).
16. See interview with Assistant Minister of Foreign Trade and Economic Cooperation, Long Yongtu, Renmin Ribao (People's Daily), 20 December 1994, at 2 (stating that China's re-entry to GATT required US 'political sincerity').
17. A. Neil Tait and Kui-Wai Li, 'Trade Regimes and China's Accession to the World Trade Organization', J. World Trade L. 93, 96.
18. Charlene Barshevsky, US Trade Representative, Testimony at House Ways & Means Trade Subcommittee Hearing Regarding Renewal of MFN Status for China, 17 June 1997.
19. See David Wessel, 'Big Discrepancy Exists between Data from US and China on Trade Deficit', Wall St. Journal, 22 January 1998, at A2. Tabulating differences cause considerable discrepancy between official Chinese and US government statistics. According to Chinese government statistics, the trade deficit was only US$10 billion in 1996. China points both to discrepancies in methods of calculation - the US figures include all trade that passes through Hong Kong, and to politically-motivated US government restrictions that limit many US high tech exports to China. 'On Sino-US Trade Balance: State Council Information Office', Beijing Rev., 7 April 1997, available on Westlaw (WL 10062747).
20. See David Wessel, 'Big Discrepancy Exists between Data from US and China on Trade Deficit', Wall St. Journal, 22 January 1998, at A2. Tabulating differences cause considerable discrepancy between official Chinese and US government statistics. According to Chinese government statistics, the trade deficit was only US$10 billion in 1996. China points both to discrepancies in methods of calculation - the US figures include all trade that passes through Hong Kong, and to politically-motivated US government restrictions that limit many US high tech exports to China. 'On Sino-US Trade Balance: State Council Information Office', Beijing Rev., 7 April 1997, available on Westlaw (WL 10062747).
21. See 'Daley Sees Political Peril in US Trade Deficit with China', Asia Pulse, 1 October 1998. 1998 WL 19975625.
22. 'China's Economy in 1995-97', Central Intelligence Agency, Directorate of Intelligence, December 1997, APLA 97-10008, at 28 (citing official US and Chinese statistics).
23. WTO Statistics. Also published in Renmin Ribao (People's Daily), 23 January 1998, available in Westlaw (WL 2785339).
24. US Commerce Secretary William Daley told his Chinese counterparts in no uncertain terms, 'There must be greater access for US exports . . . [O]ur export performance in China is not due to any loss of US competitiveness. Market access is the issue for China's entry in the WTO'. Lorien Holland, Agence Fr.-Presse, 7 October 1997, available on Westlaw (WL 13409023). Some US commentators argue that the trade imbalance is a serious long-term problem and will continue to grow. See Gregory J. Mastel and Andrew Szamosszegi, 'China's Growing Trade Imbalance', The Int'l Economy, May/June 1997.
25. US Commerce Secretary William Daley told his Chinese counterparts in no uncertain terms, 'There must be greater access for US exports . . . [O]ur export performance in China is not due to any loss of US competitiveness. Market access is the issue for China's entry in the WTO'. Lorien Holland, Agence Fr.-Presse, 7 October 1997, available on Westlaw (WL 13409023). Some US commentators argue that the trade imbalance is a serious long-term problem and will continue to grow. See Gregory J. Mastel and Andrew Szamosszegi, 'China's Growing Trade Imbalance', The Int'l Economy, May/June 1997.
26. John H. Jackson, World Trading System 45.
27. See generally A. Neil Tait and Kui-Wai Li, 'Trade Regimes and China's Accession to the World Trade Organization', J. World Trade L. 93. Also note, upon China's accession to the WTO, all bilateral agreements concluded with the US will apply to all WTO members by virtue of GATT art. I (most-favored nation treatment).
28. John J. Jackson, World Trading System 45.
29. See generally A. Neil Tait and Kui-Wai Li, 'Trade Regimes and China's Accession to the World Trade Organization', J. World Trade L. 93.
30. See Statement and Testimony of Ambassador Charlene Barshevsky, USTR, Before House Committee on Ways and Means, Trade Subcommittee, 17 June 1997.
31. See 'China Entry to WTO Critical to US Trade Relations', Asia Pulse, 30 January 1998, available in Westlaw (WL 2946727); also 'Japan Efforts in Asia "Woefully Inadequate"', Agence Fr.-Presse, 29 January 1998, available in Westlaw (WL 2211056); 'China's Assurances on Reform Please US', Asian Wall St. J. at 6, 26 January 1998.
32. See 'China Entry to WTO Critical to US Trade Relations', Asia Pulse, 30 January 1998, available in Westlaw (WL 2946727); also 'Japan Efforts in Asia "Woefully Inadequate"', Agence Fr.-Presse, 29 January 1998, available in Westlaw (WL 2211056); 'China's Assurances on Reform Please US', Asian Wall St. J. at 6, 26 January 1998.
33. See 'China Entry to WTO Critical to US Trade Relations', Asia Pulse, 30 January 1998, available in Westlaw (WL 2946727); also 'Japan Efforts in Asia "Woefully Inadequate"', Agence Fr.-Presse, 29 January 1998, available in Westlaw (WL 2211056); 'China's Assurances on Reform Please US', Asian Wall St. J. at 6, 26 January 1998.
34. Lorien Holland, Agence Fr.-Presse, 7 October 1997, available on Westlaw (WL 13409023).
35. Agence Fr.-Presse, 6 October 1997, available on Westlaw (WL 13408137).
36. See, e.g., 'Grassley Seeks USDA Commitments to New Markets for Iowa Agriculture, Family Farmers', Government Press Release, Fed. Doc. Clearing Hse., 29 January 1998, available in Westlaw WL7321334. (urging a tough agreement with China for WTO accession and opening of markets to US pork exports). See also, Testimony of Ambassador Charlene Barshevsky, USTR, above note 13.
37. See 'Reforms Help Bring WTO Entry Closer', S. China Morning Post, 7 February 1998 (quoting WTO Deputy Director-General Kim Chul-su, '[T]he process [of China's accession to WTO] has entered its final phase').
38. According to official Chinese figures, approximately 50 percent of SOEs operated at a loss during the first half of 1995. In the first 3 quarters of 1997, 47 percent incurred losses. See 'Demand Crunch', Far Eastern Econ. Rev., 13 November 1997, at 62. Slowing turnover, rising inventories and excess capacity in certain industries have also decreased SOE performance. See 'China's Economy in 1995-97', above note 16, at 6.
39. According to official Chinese figures, approximately 50 percent of SOEs operated at a loss during the first half of 1995. In the first 3 quarters of 1997, 47 percent incurred losses. See 'Demand Crunch', Far Eastern Econ. Rev., 13 November 1997, at 62. Slowing turnover, rising inventories and excess capacity in certain industries have also decreased SOE performance. See 'China's Economy in 1995-97', above note 16, at 6.
40. Harvard economist Janos Kornai describes the socialist planned economy as one where firms have only 'soft budget constraints'. The life or death of the firm does not depend on profitability, efficiency and solvency. The measure of successful operations is merely fulfilling the plan. See generally J. Kornai, Economics of Shortage (2 vols.) (1980). See also Donald Clarke, 'What's Law Got to Do with It? Legal Institutions and Economic Reform in China', 10 UCLA Pac. Basin L.J. 1, 8-10 (1991).
41. Harvard economist Janos Kornai describes the socialist planned economy as one where firms have only 'soft budget constraints'. The life or death of the firm does not depend on profitability, efficiency and solvency. The measure of successful operations is merely fulfilling the plan. See generally J. Kornai, Economics of Shortage (2 vols.) (1980). See also Donald Clarke, 'What's Law Got to Do with It? Legal Institutions and Economic Reform in China', 10 UCLA Pac. Basin L.J. 1, 8-10 (1991).
42. Liaoning, a province in the heavily industrialized northeast, is home to roughly 10 percent of China's large-and medium-sized SOES. 42 percent of these are in the red with average debt ratios of 75 percent. See S. China Morning Post, 25 November 1997, at 10. 1997 WL 13272208.
43. In late September 1997, following the 15th Party Congress, at a special meeting of the Party Central Committee and State Council leaders, in a lengthy report on SOE reform, Zhu Rongji stated, 'State enterprise reform has been going on for 13 or 14 years now, and is now at the point where lack of forward progress entails retreat, and collapse'. Luo Bing, Zhu Rongji Tan Guoyou Qiye Gaige Wenti (Zhu Rongji Discusses SOE Reform), Zheng Ming (Hong Kong), November 1997, at 25-26.
44. See The Chinese Economy, below note 36, at 11.
45. See 'A Major Test for State Enterprise Reform', above note 3, at 41.
46. Official Chinese economic indicators, cited in China's Economy in 1995-97, above note 16, at 6.
47. See 'The Chinese Economy: Fighting Inflation, Deepening Reforms', World Bank Group, 1996, at 15.
48. The official China Daily reported that a recent government survey of 2,430 Chinese families in 53 cities found that public acceptance of government reforms was down apparently due to increasing unemployment and SOE layoffs. It warned that handling of groups disadvantaged by the reform process would be important to maintaining social stability. See S. China Morning Post, 2 February 1998, at 8.
49. At the East Asia Economic Summit in Hong Kong, Wang Zhongyu, minister of the State Economic and Trade Commission, in charge of SOE reform, stated that the most pressing issue of reform was to set up a social security system to replace that formerly provided to workers by SOEs directly. S. China Morning Post, 14 October 1997, at 1. 1997 WL 13267435. See also 'China's Economy in 1995-97', above note 16, at 10.
50. At the East Asia Economic Summit in Hong Kong, Wang Zhongyu, minister of the State Economic and Trade Commission, in charge of SOE reform, stated that the most pressing issue of reform was to set up a social security system to replace that formerly provided to workers by SOEs directly. S. China Morning Post, 14 October 1997, at 1. 1997 WL 13267435. See also 'China's Economy in 1995-97', above note 16, at 10.
51. See Joseph Kahn, 'Welfare Wanes: Holes in China's Safety Net Open Way for Providers', Asian Wall St. J., 2 February 1998, at 1. Eighteen cities have implemented trial programs providing only minimum protection. See Peng Weixiang, 'Building the Last Line of Defense for Social Security', China L.Q., 15 September 1996, at 54-55.
52. See Joseph Kahn, 'Welfare Wanes: Holes in China's Safety Net Open Way for Providers', Asian Wall St. J., 2 February 1998, at 1. Eighteen cities have implemented trial programs providing only minimum protection. See Peng Weixiang, 'Building the Last Line of Defense for Social Security', China L.Q., 15 September 1996, at 54-55.
53. See Erik Eckholm, 'New China Leader Promises Reforms for Every Sector', above note 2. Note long-term loans to consumers to secure home mortgages are theoretically available to individuals in China. But in practice, tight bank credit and poor mechanisms for credit risk assessment and managing security interests present considerable obstacles to the use of consumer credit to solve the housing subsidy problem. See also 'Demand Crunch', Far East. Econ. Rev., 15 January 1998, at 47 (quoting middle-aged Chinese worker, Bao Li, complaining about 40 percent hike in subsidized rents).
54. See Erik Eckholm, 'New China Leader Promises Reforms for Every Sector', above note 2. Note long-term loans to consumers to secure home mortgages are theoretically available to individuals in China. But in practice, tight bank credit and poor mechanisms for credit risk assessment and managing security interests present considerable obstacles to the use of consumer credit to solve the housing subsidy problem. See also 'Demand Crunch', Far East. Econ. Rev., 15 January 1998, at 47 (quoting middle-aged Chinese worker, Bao Li, complaining about 40 percent hike in subsidized rents).
55. See Elisabeth Rosenthal, 'Poverty Spreads and Deepens in China's Cities', N.Y. Times News Serv., 4 October 1998. WL-NYT 1998 9827606803 (reporting that Chinese researchers estimate 12-22 million urban residents now live in 'absolute poverty', and 90 percent of these are laid-off workers).
56. Redundant workers at flagship steel conglomerate, Capital Iron and Steelworks, have not been receiving their subsistence wages. Its subsidiary, Tegang Specialty Steel, has reportedly laid off over 35 percent of its workforce. See S. China Morning Post, 2 December 1997, at 6. China News Digest reported the results of a survey by the New York-based Human Rights in China which suggested that 38 percent of workers in Sichuan province were furloughed indefinitely. Of these, 73 percent did not received promised welfare, China News Digest, 30 January 1998. See, e.g., Jasper Becker, 'Unpaid Miners Blocking Rail Lines', S. China Morning Post, 10 March 1998, at 8 (reporting on social unrest and worker protests in northeast China).
57. Redundant workers at flagship steel conglomerate, Capital Iron and Steelworks, have not been receiving their subsistence wages. Its subsidiary, Tegang Specialty Steel, has reportedly laid off over 35 percent of its workforce. See S. China Morning Post, 2 December 1997, at 6. China News Digest reported the results of a survey by the New York-based Human Rights in China which suggested that 38 percent of workers in Sichuan province were furloughed indefinitely. Of these, 73 percent did not received promised welfare, China News Digest, 30 January 1998. See, e.g., Jasper Becker, 'Unpaid Miners Blocking Rail Lines', S. China Morning Post, 10 March 1998, at 8 (reporting on social unrest and worker protests in northeast China).
58. Redundant workers at flagship steel conglomerate, Capital Iron and Steelworks, have not been receiving their subsistence wages. Its subsidiary, Tegang Specialty Steel, has reportedly laid off over 35 percent of its workforce. See S. China Morning Post, 2 December 1997, at 6. China News Digest reported the results of a survey by the New York-based Human Rights in China which suggested that 38 percent of workers in Sichuan province were furloughed indefinitely. Of these, 73 percent did not received promised welfare, China News Digest, 30 January 1998. See, e.g., Jasper Becker, 'Unpaid Miners Blocking Rail Lines', S. China Morning Post, 10 March 1998, at 8 (reporting on social unrest and worker protests in northeast China).
59. See Daniel Kwan, 'Insurance Fund Increased to Assist Jobless', S. China Morning Post, 9 March 1998, at 8, (citing remarks by Minister Li Boyong at NPC Session); see also 'Job Outlook Is Gloomy in China', Asian Wall St. J., 2 April 1998, at 4, (citing official statistics showing 2.5 workers competing for each available job in 1998).
60. See Daniel Kwan, 'Insurance Fund Increased to Assist Jobless', S. China Morning Post, 9 March 1998, at 8, (citing remarks by Minister Li Boyong at NPC Session); see also 'Job Outlook Is Gloomy in China', Asian Wall St. J., 2 April 1998, at 4, (citing official statistics showing 2.5 workers competing for each available job in 1998).
61. The official Renmin Ribao (People's Daily) reported 10 percent unemployment in the northeast rust belt, 17 November 1997. The World Bank estimates 11 percent urban unemployment. 'Reforms Near Vital Juncture', S. China Morning Post, 7 September 1997, at 2.
62. The official Renmin Ribao (People's Daily) reported 10 percent unemployment in the northeast rust belt, 17 November 1997. The World Bank estimates 11 percent urban unemployment. 'Reforms Near Vital Juncture', S. China Morning Post, 7 September 1997, at 2.
63. See Vivian Pik-Kwan Chan, '10 Million Jobs to Go in State Firms. Re-employment a Priority to Ensure Stability, Says Minister', S. China Morning Post, 10 February 1998, at 7 (citing interview between Li and the official Xinhua News Agency).
64. Xinhua News Agency, 25 February 1998, available on Westlaw, Allnewsplus Library.
65. See 'China Outlines Textile Industry Reforms', Asian Wall St. J., 19 December 1997, at 7.
66. The State Council and other relevant ministries have recently promulgated a number of circulars, notices and regulations addressing this problem. See, e.g., State Council Supplementary Notice on the Acquisition of Enterprises, the Declaration of Bankruptcy and the Re-employment of Staff and Workers of State-owned Enterprises for Trial Implementation in Several Cities (Guofa [1997] No. 10); Notice Regarding Further Improvement of the Work of the Re-employment of Workers (Laobu fa [1997] No. 166); Notice on Establishing Re-employment Service Centers (Laobu fa [1997] No. 252) (requiring all provinces to set up re-employment funds and service centers); Notice Regarding Distribution of the 'Investigative Report on Shanghai's Experience Implementing Re-employment Projects' (Guojingmaoqi [1997] No. 549) (urging local governments to apply Shanghai's successful approach to local conditions). Available in Chinese and in translation on file with author and on China Law Website 〈http://www.qis.net/chinalaw〉, visited September 1998.
67. State Statistics Bureau spokesman, Ye Zhen, cited in 'China 98: Danger Ahead', Far Eastern Econ. Rev., 15 January 1998, at 46.
68. See 'Bleak Outlook for 30 Million Jobless', S. China Morning Post, 26 November 1997, at 8.
69. See Ian Johnson, 'Deploying Migrants: China Fights to Contain Emergence of Megacities', Asian Wall St. J., 12 December 1997, at 1 (reporting on new city built 320 kms from Beijing to divert the flow of excess migrant labor to the capital).
70. See Daniel Kwan, 'Economist Predicts 28% Jobless Figure by 2000', S. China Morning Post, 16 March 1998, at 7, (citing interview with economist Feng Lanrui estimating 28 percent unemployment by 2000, including rural migrants, published in Guangzhou newspaper, Nanfang Weekly).
71. See generally Greg Mastel, 'A China the World Could Bank On', Wash. Post, 29 December 1997 at p. A17; also 'China's Economy in 1995-97', above note 16, at 15-16.
72. See generally Greg Mastel, 'A China the World Could Bank On', Wash. Post, 29 December 1997 at p. A17; also 'China's Economy in 1995-97', above note 16, at 15-16.
73. Nicholas Lardy, an economist at the Brookings Institute, puts the figure at US$600 billion. See 'Freer Rein Presents a Challenge for China's State Companies', Boston Globe, 9 November 1997, at 1. Thomas G. Rawski, an economist specializing in Chinese affairs, asserts, 'China's four big banks have tiny capital, derisory reserves and mountains of uncollectable debt. All four would fail any formal test of solvency'. Thomas G. Rawski, 'Is China Next?', Asian Wall St. J., 23 January 1998, at 8.
74. Nicholas Lardy, an economist at the Brookings Institute, puts the figure at US$600 billion. See 'Freer Rein Presents a Challenge for China's State Companies', Boston Globe, 9 November 1997, at 1. Thomas G. Rawski, an economist specializing in Chinese affairs, asserts, 'China's four big banks have tiny capital, derisory reserves and mountains of uncollectable debt. All four would fail any formal test of solvency'. Thomas G. Rawski, 'Is China Next?', Asian Wall St. J., 23 January 1998, at 8.
75. See, e.g., 'Commercial Banks to be Allowed to Set Rates on Loans', China Daily, 23 February 1998; also 'China's Economy in 1995-97', above note 16, at 15-16.
76. See, e.g., 'Commercial Banks to be Allowed to Set Rates on Loans', China Daily, 23 February 1998; also 'China's Economy in 1995-97', above note 16, at 15-16.
77. China has tried to shift some of the burden back to the state. Banks have issued bonds to the Ministry of Finance. But PBOC Deputy Governor Chen Yuan has admitted that this is largely an accounting entry, not a substantive reform. See Seth Faison, 'China to Prime Economic Pump with Mammoth Building Outlay', N.Y. Times, 6 March 1998, at A1; also 'China Plans $32.5b Bond for Banks', Wash. Post, 1 March 1998, at 1.
78. China has tried to shift some of the burden back to the state. Banks have issued bonds to the Ministry of Finance. But PBOC Deputy Governor Chen Yuan has admitted that this is largely an accounting entry, not a substantive reform. See Seth Faison, 'China to Prime Economic Pump with Mammoth Building Outlay', N.Y. Times, 6 March 1998, at A1; also 'China Plans $32.5b Bond for Banks', Wash. Post, 1 March 1998, at 1.
79. If policy-lending by state-owned banks is taken into account, the true budget deficit may be as high as 6 percent of GDP, according to Oxford Analytica, a research group based in Oxford, UK. See generally Asia Pacific Daily Briefs at www.oxford-analytica.com. Per World Bank figures, in 1994, budgetary and implicit financial subsidies equalled 5 percent of China's GDP, while SOE aggregate net financing was 7.8 percent of GDP. The Chinese Economy, above note 36, at 17.
80. If policy-lending by state-owned banks is taken into account, the true budget deficit may be as high as 6 percent of GDP, according to Oxford Analytica, a research group based in Oxford, UK. See generally Asia Pacific Daily Briefs at www.oxford-analytica.com. Per World Bank figures, in 1994, budgetary and implicit financial subsidies equalled 5 percent of China's GDP, while SOE aggregate net financing was 7.8 percent of GDP. The Chinese Economy, above note 36, at 17.
81. See China's Economy in 1995-97, above note 16, at 15-16; Nicholas Lardy, 'China Chooses Growth Today, Reckoning Later', Asian Wall St. J., 30 September 1998, at 10; and S. China Morning Post, 23 October 1997, at 1.
82. See China's Economy in 1995-97, above note 16, at 15-16; Nicholas Lardy, 'China Chooses Growth Today, Reckoning Later', Asian Wall St. J., 30 September 1998, at 10; and S. China Morning Post, 23 October 1997, at 1.
83. See China's Economy in 1995-97, above note 16, at 15-16; Nicholas Lardy, 'China Chooses Growth Today, Reckoning Later', Asian Wall St. J., 30 September 1998, at 10; and S. China Morning Post, 23 October 1997, at 1.
84. 'Triangular' debt refers to trading transactions between three or more enterprises which are not settled. This debt causes major cash flow problems for SOEs, pushing many into insolvency. According to the Asian Development Bank, nation-wide SOE's outstanding liabilities increased from RMB100 billion in 1988 to over RMB700 billion in April 1995. See Final Report of the Asian Development Bank on State Enterprise Insolvency Reform in the People's Republic of China, TA No. 2271 C PRC, March 1996, 132-135. Huge outstanding accounts receivable in basic industries like coal mining evidence the serious fiscal problems industrial SOEs are facing just paying for production inputs. See Jasper Becker, 'Unpaid Miners Blocking Rail Lines', S. China Morning Post, 10 March 1998, at 8 (reporting that most Chinese state-owned coal mines show a profit on the books, but many customers do not pay).
85. 'Triangular' debt refers to trading transactions between three or more enterprises which are not settled. This debt causes major cash flow problems for SOEs, pushing many into insolvency. According to the Asian Development Bank, nation-wide SOE's outstanding liabilities increased from RMB100 billion in 1988 to over RMB700 billion in April 1995. See Final Report of the Asian Development Bank on State Enterprise Insolvency Reform in the People's Republic of China, TA No. 2271 C PRC, March 1996, 132-135. Huge outstanding accounts receivable in basic industries like coal mining evidence the serious fiscal problems industrial SOEs are facing just paying for production inputs. See Jasper Becker, 'Unpaid Miners Blocking Rail Lines', S. China Morning Post, 10 March 1998, at 8 (reporting that most Chinese state-owned coal mines show a profit on the books, but many customers do not pay).
86. See S. China Morning Post, 23 October 1997, at 1.
87. The popular nation-wide urban 'democracy' movement in the spring of 1989 focused on complaints that the government was not doing enough to combat soaring inflation and official corruption. Urban subsidies were not keeping pace with double digit inflation and struggling SOEs were forced to lay off thousands of workers. The critical turning point for the Party in dealing with the unrest was the advent of the Independent Workers' Union (Gongzilian) headed by worker-turned-star dissident Han Dongfang. Workers' participation made Deng Xiaoping and other leaders fear they could lose control; that was when they mobilized the army. See Richard Baum, 'The Road to Tian'anmen: Chinese Politics in the 1980s', in The Politics of China: 1949-1989 (Roderick MacFarquhar, ed) (1993), at 456 (noting that the 'decisive catalyst' of the Tian'anmen Massacre was the 'rapid rise of a militant, autonomous workers' movement . . . proclaiming solidarity with the students in opposition to the regime, bringing ever closer to reality Deng's recurrent Polish nightmare'). See also Gary H. Jefferson and Thomas G. Rawski, 'Enterprise Reform in Chinese Industry', 8 J. Econ. Persp. 47, 52 (1994).
88. The popular nation-wide urban 'democracy' movement in the spring of 1989 focused on complaints that the government was not doing enough to combat soaring inflation and official corruption. Urban subsidies were not keeping pace with double digit inflation and struggling SOEs were forced to lay off thousands of workers. The critical turning point for the Party in dealing with the unrest was the advent of the Independent Workers' Union (Gongzilian) headed by worker-turned-star dissident Han Dongfang. Workers' participation made Deng Xiaoping and other leaders fear they could lose control; that was when they mobilized the army. See Richard Baum, 'The Road to Tian'anmen: Chinese Politics in the 1980s', in The Politics of China: 1949-1989 (Roderick MacFarquhar, ed) (1993), at 456 (noting that the 'decisive catalyst' of the Tian'anmen Massacre was the 'rapid rise of a militant, autonomous workers' movement . . . proclaiming solidarity with the students in opposition to the regime, bringing ever closer to reality Deng's recurrent Polish nightmare'). See also Gary H. Jefferson and Thomas G. Rawski, 'Enterprise Reform in Chinese Industry', 8 J. Econ. Persp. 47, 52 (1994).
89. Of the current triumvirate, Li Peng, dubbed the 'Butcher of Beijing' and other expletives by his many detractors, is the only one with a direct connection to Tian'anmen 1989. Zhu Rongji and Jiang Zemin, are by no means lightweights, however. Zhu has rejected the suggestion that the official verdict on 4 June 1989 events be overturned; and his reform platform notably contains no provision for democratic political change. Jiang is likewise no democrat. See, generally, The Politics of China, above note 61.
90. The Party under Jiang's leadership has also consolidated the means to exercise this force. After a publicized address by Jiang Zemin to People's Armed Police (PAP), the paramilitary force charged with maintaining domestic stability, earlier in 1997, the 15th Party Congress decided to double its ranks to 1.2 million. Notably, however, the PAP has purchased riot control equipment which might allow them to control civil unrest with fewer casualties. See Gregory Fossedal, 'Enlist the Masses To Solve China's Dilemma', above note 4; also Bruce Gilley, 'Opening the Gates to Tian'anmen', Asian Wall St. J., 13 November 1997, at 10.
91. The Party under Jiang's leadership has also consolidated the means to exercise this force. After a publicized address by Jiang Zemin to People's Armed Police (PAP), the paramilitary force charged with maintaining domestic stability, earlier in 1997, the 15th Party Congress decided to double its ranks to 1.2 million. Notably, however, the PAP has purchased riot control equipment which might allow them to control civil unrest with fewer casualties. See Gregory Fossedal, 'Enlist the Masses To Solve China's Dilemma', above note 4; also Bruce Gilley, 'Opening the Gates to Tian'anmen', Asian Wall St. J., 13 November 1997, at 10.
92. See, e.g., Report at the 15th Congress of the Chinese Communist Party, above note 1; also 'Premier Li Signals Caution on Reforms', S. China Morning Post, 5 February 1998, at 7.
93. See, e.g., Report at the 15th Congress of the Chinese Communist Party, above note 1; also 'Premier Li Signals Caution on Reforms', S. China Morning Post, 5 February 1998, at 7.
94. Report at the 15th Congress of the Chinese Communist Party, above note 1.
95. 'Zhu Optimistic as Reforms Pay Economic Dividends', S. China Morning Post, 23 September 1997, at 2.
96. See Erik Eckholm, 'New China Leader Promises Reforms for Every Sector', N.Y. Times, 20 March 1998, at A1; also, Xu Xing, 'A Major Test for State Enterprise Reform', above note 3; and Zheng Ming (Hong Kong), November 1997, at 25-26 (reporting on conference of Chinese economic leaders discussing SOE reform).
97. See Erik Eckholm, 'New China Leader Promises Reforms for Every Sector', N.Y. Times, 20 March 1998, at A1; also, Xu Xing, 'A Major Test for State Enterprise Reform', above note 3; and Zheng Ming (Hong Kong), November 1997, at 25-26 (reporting on conference of Chinese economic leaders discussing SOE reform).
98. See Erik Eckholm, 'New China Leader Promises Reforms for Every Sector', N.Y. Times, 20 March 1998, at A1; also, Xu Xing, 'A Major Test for State Enterprise Reform', above note 3; and Zheng Ming (Hong Kong), November 1997, at 25-26 (reporting on conference of Chinese economic leaders discussing SOE reform).
99. See 'China's Assurances on Reform Please US', Asian Wall St. J., 26 January 1998, at 6.
100. 'Zhu Optimistic as Reforms Pay Economic Dividends', S. China Morning Post, 23 September 1997, at 2.
101. Id.
102. See 'Beijing in Offer on Services', Fin. Times, 18 February 1998, at 7.
103. See 'Wary Jiang Pledges More Open Market', S. China Morning Post, 10 March 1998, at 7.
104. See, e.g., Greg Mastel, 'Clinton-Jiang Summit, Round Two', Journal of Commerce, 3 December 1997; also, Xu Xing, 'China's Unemployment Problem and Solutions', Open Magazine (Kaifang), November 1997, at 32-33; Xu Xing, 'Modernizing SOEs: Easier Said Than Done', Open Magazine (Kaifang), October 1997, at 29-31.
105. See, e.g., Greg Mastel, 'Clinton-Jiang Summit, Round Two', Journal of Commerce, 3 December 1997; also, Xu Xing, 'China's Unemployment Problem and Solutions', Open Magazine (Kaifang), November 1997, at 32-33; Xu Xing, 'Modernizing SOEs: Easier Said Than Done', Open Magazine (Kaifang), October 1997, at 29-31.
106. See, e.g., Greg Mastel, 'Clinton-Jiang Summit, Round Two', Journal of Commerce, 3 December 1997; also, Xu Xing, 'China's Unemployment Problem and Solutions', Open Magazine (Kaifang), November 1997, at 32-33; Xu Xing, 'Modernizing SOEs: Easier Said Than Done', Open Magazine (Kaifang), October 1997, at 29-31.
107. Shi Guangsheng, newly promoted Minister of Foreign Trade and Economic Cooperation, has stated, however, that China will decrease its overall trade surplus in 1998. See, 'Trade: Big Push to Lower Surplus', S. China Morning Post, 10 March 1998, at 4.
108. At the World Economic Forum held in Davos, Switzerland, in February 1998, Chinese Vice Premier Li Lanqing assured business and political leaders that China would not devalue the Renminbi in the wake of the Asian financial crisis. Many, including WTO Director-General Ruggiero regard China's stability and WTO entry as crucial to Asia's recovery. See 'China Pledges on Yuan', AFP, 2 February 1998, available in Westlaw (WL2212886); 'China WTO Entry a Stabilizing Factor in Asia Crisis: Ruggiero', AFP, 1 February 1998, available in Westlaw (WL2212050); see also 'Vice Premier Pledges Infrastructure Program', S. China Morning Post, 2 February 1998, at 1.
109. At the World Economic Forum held in Davos, Switzerland, in February 1998, Chinese Vice Premier Li Lanqing assured business and political leaders that China would not devalue the Renminbi in the wake of the Asian financial crisis. Many, including WTO Director-General Ruggiero regard China's stability and WTO entry as crucial to Asia's recovery. See 'China Pledges on Yuan', AFP, 2 February 1998, available in Westlaw (WL2212886); 'China WTO Entry a Stabilizing Factor in Asia Crisis: Ruggiero', AFP, 1 February 1998, available in Westlaw (WL2212050); see also 'Vice Premier Pledges Infrastructure Program', S. China Morning Post, 2 February 1998, at 1.
110. At the World Economic Forum held in Davos, Switzerland, in February 1998, Chinese Vice Premier Li Lanqing assured business and political leaders that China would not devalue the Renminbi in the wake of the Asian financial crisis. Many, including WTO Director-General Ruggiero regard China's stability and WTO entry as crucial to Asia's recovery. See 'China Pledges on Yuan', AFP, 2 February 1998, available in Westlaw (WL2212886); 'China WTO Entry a Stabilizing Factor in Asia Crisis: Ruggiero', AFP, 1 February 1998, available in Westlaw (WL2212050); see also 'Vice Premier Pledges Infrastructure Program', S. China Morning Post, 2 February 1998, at 1.
111. See, e.g., Stanley Lubman, 'Making China a Nation of Laws, Not Whims', L.A. Times, 6 September 1998, at M2.
112. See WTO Singapore Ministerial Declaration, adopted on 13 December 1996.
113. See Jeffrey L. Gertler, 'The Process of China's Accession to the World Trade Organization', in China in the World Trading System: Defining the Principles of Engagement (Frederick M. Abbott, ed), (1998), at 67-68. Mr Gertler is Senior Counselor, Legal Affairs Division and Secretary, Working Party on the Accession of China, World Trade Organization.
114. The 'Bretton Woods system' takes its name from the series of conferences held at Bretton Woods, New Hampshire, beginning in 1944 that developed the institutions and agreements that have regulated international economic, financial and development activity since. They comprise the IMF, the World Bank (formerly the International Bank for Reconstruction and Development), and GATT. See generally Legal Problems of International Economic Relations, below note 82, at 278-288.
115. A tariff or binding is an import tax which is calculated ad valorem or at a flat rate.
116. Such Understandings have an uncertain legal status and are not independent agreements under GATT. Nevertheless, they express general aims and intent. See John H. Jackson, 'Restructuring the GATT System', 26-29, reprinted in Legal Problems of International Economic Relations, below note 82, 315-318.
117. Such Understandings have an uncertain legal status and are not independent agreements under GATT. Nevertheless, they express general aims and intent. See John H. Jackson, 'Restructuring the GATT System', 26-29, reprinted in Legal Problems of International Economic Relations, below note 82, 315-318.
118. 'Agreement Establishing the World Trade Organization', reproduced in John H. Jackson, William J. Davey, and Alan O. Sykes, Jr (eds), Legal Problems of International Economic Relations, Documentary Supplement, 3d ed. (1995).
119. See id, art. XII. Exceptions are interpretation of WTO agreements and permission to waive certain requirements both of which require a 3/4 vote. Amendments may be passed by a 2/3 vote, but are not binding on dissenting member states unless passed by a 3/4 vote.
120. For fuller discussion of this topic, see generally The WTO as an International Organization, Anne O. Krueger, ed. (1998).
121. See 'China and the World Trading System', speech delivered by WTO Director-General Renato Ruggiero at Beijing University, 21 April 1997. 〈www.wto.org/wto/press/〉, visited March 1998.
122. See, e.g., 'L'Europe Propose Un Sommet Annuel avec la Chine', Le Figaro, 18 February 1998, at II B (reporting offer of EU Vice President Sir Leon Brittan during meeting with Chinese Foreign Trade Minister Wu Yi on further opening of trade and investment in Beijing); also, 'Sir Leon Plays the Role of Knight in Soft Armour', S. China Morning Post, 18 February 1998, at 4.
123. See, e.g., 'L'Europe Propose Un Sommet Annuel avec la Chine', Le Figaro, 18 February 1998, at II B (reporting offer of EU Vice President Sir Leon Brittan during meeting with Chinese Foreign Trade Minister Wu Yi on further opening of trade and investment in Beijing); also, 'Sir Leon Plays the Role of Knight in Soft Armour', S. China Morning Post, 18 February 1998, at 4.
124. GATT 1947, as amended, Art. I, para. 1. (emphasis added).
125. 19 U.S.C. §2432, the Jackson-Vanik Amendment to the US Trade Act of 1974, granting of MFN treatment to countries that do not comply with that section's freedom of emigration requirements is conditioned on an annual Presidential waiver, which is subject to Congressional disapproval. Congress' annual debate concerning renewal traditionally surrounds human rights issues, not emigration strictly. GATT Article I, however, requires unconditional MFN.
126. GATT Art. III, para. 4. (emphasis added).
127. See id., para. 1, 2. Article III provides a limited exception for government purchases of products to be used for government purposes.
128. See DSB Appellate Body Report: Japan - Taxes on Alcohol. The DSB found that Japan's higher tax rate for imported liquor was a violation of national treatment.
129. GATT Art. III, para. 8 (b).
130. Italian Discrimination Against Imported Agricultural Machinery, BISD 7S/60 (1959).
131. See 'Zhongguo Nengyuan Zhengce' ('China's Energy Policy'), Qiushi (Seeking Truth), May 1997. Li Peng completed the end of his second term as Premier in March 1998, and was subsequently elected Chairman of the NPC Standing Committee, China's highest legislative post.
132. See Matt Forney and Nigel Holloway, 'In Two Minds', Far Eastern Econ. Rev., 19 June 1997, at 66.
133. GATT Ad Art. III, & 1 states that by virtue of the final paragraph of Article XXIV, the contracting party must take 'reasonable measures' to ensure that regional and local governments and authorities within its territory observe GATT provisions. Where local taxation is inconsistent with the letter and the spirit of Article III, and abrupt action would cause 'serious adminstrative and financial difficulties' the contracting party may eliminate the taxes gradually. This assumes that the central government can, in fact, eliminate GATT-inconsistent local protectionism, which is not evident in China's case.
134. GATT, Art. XX, chapeau, (d). See also, United States Section 337 of the Tariff Act of 1930. BISD 36S/345 (1989).
135. For example, a Contracting Party may use import restrictions to guarantee sufficient foreign exchange reserves to maintain its external financial position. However, the Understanding on Balance of Payments requires WTO members to use balance of payments measures that are the least trade-disruptive and as temporary as possible.
136. GATT, Art. XIII.
137. See Matt Forney and Nigel Holloway, 'In Two Minds', Far Eastern Econ. Rev., 19 June 1997, at 66.
138. GATT, Art. XXIII, & 1.
139. See United States - Taxes on Petroleum and Certain Imported Substances, BISD 34S/136 (1988).
140. WTO Dispute Settlement Understanding, Art. 26, & 1(b) reproduced in Jackson, Davey, and Sykes, Legal Problems of International Economic Relations, Documentary Supplement.
141. See, generally, EEC - Payments and Subsidies Paid to Processors and Producers of Oilseeds, BISD 37S/86 (1991).
142. See Special Report, Inside US Trade, 15 July 1994, at S-5 (outlining the Clinton Administration's 'economies in transition' proposal).
143. See Robert H. Lantz, 'The Search for Consistency: Treatment of Nonmarket Economies in Transition under United States Antidumping and Countervailing Duty Laws', 10 Am. U. J. Int'l L. & Pol'y 993, 1030-1040 (1995); see also Susan H. Kuhbach, 'L'Etat, Ce N'est Pas Moi', in The Commerce Department Speaks 1992: Developments in Import Administration; Export and Investment Abroad, at 169 (PLI Corp. Law & Practice Course Handbook Series No. 789, 1992), available in Westlaw, JLR database (describing the Commerce Department's position regarding investigations of trade from nonmarket economy countries).
144. See Robert H. Lantz, 'The Search for Consistency: Treatment of Nonmarket Economies in Transition under United States Antidumping and Countervailing Duty Laws', 10 Am. U. J. Int'l L. & Pol'y 993, 1030-1040 (1995); see also Susan H. Kuhbach, 'L'Etat, Ce N'est Pas Moi', in The Commerce Department Speaks 1992: Developments in Import Administration; Export and Investment Abroad, at 169 (PLI Corp. Law & Practice Course Handbook Series No. 789, 1992), available in Westlaw, JLR database (describing the Commerce Department's position regarding investigations of trade from nonmarket economy countries).
145. See Lantz, 'The Search for Consistency', at 1030-1040.
146. The MIT Dictionary of Modern Economics 413 (David W. Pearce ed., 4th ed. 1986).
147. See Thomas Yunlong Man, 'National Legal Restructuring in Accordance with International Norms: GATT/WTO and China's Foreign Trade Reform', 4 Ind. J. Global Legal Stud. 471 (1997); Bing Wang, 'China's New Foreign Trade Law: Analysis and Implications for China's GATT Bid', 28 J. Marshall L. Rev. 495 (1995); and Jianming Shen, 'China's New Antidumping and Countervailing Duty Regulation and Its Consistency with WTO Norms', 15 Berk. J. Int'l L. 295 (1997).
148. See Thomas Yunlong Man, 'National Legal Restructuring in Accordance with International Norms: GATT/WTO and China's Foreign Trade Reform', 4 Ind. J. Global Legal Stud. 471 (1997); Bing Wang, 'China's New Foreign Trade Law: Analysis and Implications for China's GATT Bid', 28 J. Marshall L. Rev. 495 (1995); and Jianming Shen, 'China's New Antidumping and Countervailing Duty Regulation and Its Consistency with WTO Norms', 15 Berk. J. Int'l L. 295 (1997).
149. See Thomas Yunlong Man, 'National Legal Restructuring in Accordance with International Norms: GATT/WTO and China's Foreign Trade Reform', 4 Ind. J. Global Legal Stud. 471 (1997); Bing Wang, 'China's New Foreign Trade Law: Analysis and Implications for China's GATT Bid', 28 J. Marshall L. Rev. 495 (1995); and Jianming Shen, 'China's New Antidumping and Countervailing Duty Regulation and Its Consistency with WTO Norms', 15 Berk. J. Int'l L. 295 (1997).
150. 1994 Understanding on Article XVII.
151. Significantly, Article XVII does not contain a national treatment requirement.
152. See, e.g., John H. Jackson, 'State Trading and Nonmarket Economies', 23 Int'l Law. 891 (1989); also, 'Eliza R. Patterson, Improving GATT Rules for Nonmarket Economies', 20 J. World Trade L. 185 (1986).
153. See, e.g., John H. Jackson, 'State Trading and Nonmarket Economies', 23 Int'l Law. 891 (1989); also, 'Eliza R. Patterson, Improving GATT Rules for Nonmarket Economies', 20 J. World Trade L. 185 (1986).
154. Per capita income of the residents of Guangzhou, capital of the rapidly developing Guangdong province, for the first time exceeded 10,000 yuan (about $1,204) in 1997, more than double the national average level of 1996. In 1996, the national per capita urban income was 4,377 yuan. Xinhua Business Weekly, 9 March 1998.
155. Target for 1998, according to new Minister of MOFTEC Shi Guangsheng. 'Big Push to Lower Trade Surplus', S. China Morning Post, 10 March 1998, at 4.
156. GATT, Art. XIX.
157. The Uruguay Round Agreement on Safeguards defines 'serious injury' as 'significant overall impairment of domestic industry'. A threat of serious injury must be 'clearly imminent'.
158. Trade Act of 1974 §202(c)(1)(A) (emphasis added).
159. See Final Report of the Asian Development Bank on State Enterprise Insolvency Reform in the People's Republic of China, TA No. 2271 C PRC, March 1996 (detailing widespread underemployed labor (chenyu laodongli) and the legal, social welfare, and financial dimensions of SOE insolvency, bankruptcy and restructuring) (on file with author).
160. See discussion on China's political dilemma, Introduction above.
161. By comparison, §201 of the US Trade Act of 1974 does not require the increased quantities of imports be due to unforeseen development and GATT concession; defines causation more precisely; and offers a much broader remedy, not merely withdrawal or suspension of GATT concessions.
162. Agreement on Safeguards, Article 5.
163. Id. An exception may be permitted based on clear justification that a different level is necessary to prevent or remedy serious injury.
164. Id., Article 7.
165. Id., Article 11.
166. See Special Report, Inside US Trade, 27 January 1995, at S-2 (reprinting confidential draft protocol proposing unlimited safeguards measures); also John
167. See Special Report, Inside US Trade, 27 January 1995, at S-2 (reprinting confidential draft protocol proposing unlimited safeguards measures); also John H. Jackson, 'State Trading and Nonmarket Economies', above note 112, at 899 (proposing a two-track safeguard system as an 'interface mechanism' to guide China's transition and integration). China remains firmly opposed to any special safeguards for the US and others in excess of those explicitly permitted under GATT Art. XIX.
168. The US counterpart, the Generalized System of Preferences, 1974 Trade Act §501 et seq., designates criteria for beneficiaries.
169. GATT, Art. XVIII, para. 4.
170. 'Safeguards shall not be applied against a product originating in a developing country Member as long as its share of imports of the product concerned in the importing Member does not exceed 3 per cent'. Uruguay Round Agreement on Safeguards, Art. 9, para. 1; developing country members may extend its own application of safeguard measures for 10 years. Id., Art. 9, para. 2.
171. See Gregory J. Mastel, 'China and the WTO: Economy at the Crossroads', 30-34. (Mastel argues against granting China developing country status for WTO accession purposes.)
172. See WTO Singapore Ministerial Declaration, adopted on 13 December 1996: We the Ministers, have met in Singapore . . . in particular to . . . address the challenges of an evolving world economy . . . We believe that the scope and pace of change in the international economy . . . and the increasing integration of economies offer unprecedented opportunities for improved growth, job creation, and development. These developments . . . pose challenges to the trading system. We commit ourselves to address these challenges.
173. John Jackson, the leading scholar in international economic relations, has noted, [I]t is important for China to be a member of the WTO. . . . You can't really leave out that great part of the world and hope that you will have an institution that can fulfill its several different purposes . . . to prevent war, to preserve the peace, and to continue a reasonable degree of stability and peaceful operation of the world.
174. John Jackson, 'The Institutional Ramifications of China's Accession to the WTO', in Abbott, above note 78, at 76.
175. The US trade deficit reached its highest level in 9 years in 1997, driven up in the last quarter of the year primarily by a surge in Asian exports the US following mass currency devaluation there. Richard W. Stevenson, 'Trade Deficit for '97 Is Biggest in Nine Years', N.Y. Times, 20 February 1998, available on Westlaw at 1998 WL-NYT 9805003602.
176. Alleged Chinese government involvement in improper political contributions to President Clinton's 1996 re-election campaign may also have contributed to this malaise vis-à-vis China. Also see generally Jeff Gerth, 'US Business Role in Policy on China Is under Question - Aid to Military Is Feared', N.Y. Times, 13 April 1998, at A1.
177. Thomas J. Duesterberg, 'China's Not WTO Material', below note 137. Mr Duesterberg was former Assistant Secretary of Commerce for international economic policy (1989-93).
178. See Gregory J. Mastel, 'Clinton-Jiang Summit, Round Two', Journal of Commerce, 3 December 1997; 'China's WTO Bid: Transition Key Question', Dow Jones Int'l News Serv., 23 April 1997, available on Westlaw, in Allnewsplus database. See, e.g., Gregory J. Mastel, 'The More Important Debate', Wash. Post, 24 June 1997, A15; Gregory J. Mastel, 'Is WTO Ready for China?', 8 May 1997, Far East. Econ. Rev., 29. See, generally, Gregory J. Mastel, 'The Rise of the Chinese Economy: The Middle Kingdom Emerges' (1997); Gregory J. Mastel, 'China and the WTO: Economy at the Crossroads', Economic Strategic Institute (Wash., DC) (1994).
179. See Gregory J. Mastel, 'Clinton-Jiang Summit, Round Two', Journal of Commerce, 3 December 1997; 'China's WTO Bid: Transition Key Question', Dow Jones Int'l News Serv., 23 April 1997, available on Westlaw, in Allnewsplus database. See, e.g., Gregory J. Mastel, 'The More Important Debate', Wash. Post, 24 June 1997, A15; Gregory J. Mastel, 'Is WTO Ready for China?', 8 May 1997, Far East. Econ. Rev., 29. See, generally, Gregory J. Mastel, 'The Rise of the Chinese Economy: The Middle Kingdom Emerges' (1997); Gregory J. Mastel, 'China and the WTO: Economy at the Crossroads', Economic Strategic Institute (Wash., DC) (1994).
180. See Gregory J. Mastel, 'Clinton-Jiang Summit, Round Two', Journal of Commerce, 3 December 1997; 'China's WTO Bid: Transition Key Question', Dow Jones Int'l News Serv., 23 April 1997, available on Westlaw, in Allnewsplus database. See, e.g., Gregory J. Mastel, 'The More Important Debate', Wash. Post, 24 June 1997, A15; Gregory J. Mastel, 'Is WTO Ready for China?', 8 May 1997, Far East. Econ. Rev., 29. See, generally, Gregory J. Mastel, 'The Rise of the Chinese Economy: The Middle Kingdom Emerges' (1997); Gregory J. Mastel, 'China and the WTO: Economy at the Crossroads', Economic Strategic Institute (Wash., DC) (1994).
181. See Gregory J. Mastel, 'Clinton-Jiang Summit, Round Two', Journal of Commerce, 3 December 1997; 'China's WTO Bid: Transition Key Question', Dow Jones Int'l News Serv., 23 April 1997, available on Westlaw, in Allnewsplus database. See, e.g., Gregory J. Mastel, 'The More Important Debate', Wash. Post, 24 June 1997, A15; Gregory J. Mastel, 'Is WTO Ready for China?', 8 May 1997, Far East. Econ. Rev., 29. See, generally, Gregory J. Mastel, 'The Rise of the Chinese Economy: The Middle Kingdom Emerges' (1997); Gregory J. Mastel, 'China and the WTO: Economy at the Crossroads', Economic Strategic Institute (Wash., DC) (1994).
182. See Gregory J. Mastel, 'Clinton-Jiang Summit, Round Two', Journal of Commerce, 3 December 1997; 'China's WTO Bid: Transition Key Question', Dow Jones Int'l News Serv., 23 April 1997, available on Westlaw, in Allnewsplus database. See, e.g., Gregory J. Mastel, 'The More Important Debate', Wash. Post, 24 June 1997, A15; Gregory J. Mastel, 'Is WTO Ready for China?', 8 May 1997, Far East. Econ. Rev., 29. See, generally, Gregory J. Mastel, 'The Rise of the Chinese Economy: The Middle Kingdom Emerges' (1997); Gregory J. Mastel, 'China and the WTO: Economy at the Crossroads', Economic Strategic Institute (Wash., DC) (1994).
183. See Gregory J. Mastel, 'Clinton-Jiang Summit, Round Two', Journal of Commerce, 3 December 1997; 'China's WTO Bid: Transition Key Question', Dow Jones Int'l News Serv., 23 April 1997, available on Westlaw, in Allnewsplus database. See, e.g., Gregory J. Mastel, 'The More Important Debate', Wash. Post, 24 June 1997, A15; Gregory J. Mastel, 'Is WTO Ready for China?', 8 May 1997, Far East. Econ. Rev., 29. See, generally, Gregory J. Mastel, 'The Rise of the Chinese Economy: The Middle Kingdom Emerges' (1997); Gregory J. Mastel, 'China and the WTO: Economy at the Crossroads', Economic Strategic Institute (Wash., DC) (1994).
184. Id.
185. See Thomas J. Duesterberg, 'China's Not WTO Material', Wall. St. J., 23 April 1997, A18.
186. See 'China's WTO Bid: Transition Key Question', above note 135.
187. See 'Clinton-Jiang Summit, Round Two; China's WTO Bid: Transition Key Question', above note _. Mastel cites a statement by former NPC Chairman Qiao Shi that the persistence of the rule of man has impeded the rule of law in China. While this is not entirely untrue, Mastel underestimates the degree to which legal reform since 1978 has changed China. Furthermore, he ignores the specific historical background to the Cultural Revolution during which Mao reigned supreme as emperor to which Qiao was alluding. And he also fails to recognize the statement as Qiao's skillful use of the prestige of law and his position as China's chief legislator to make political barbs against his archrivals, Premier Li Peng and President Jiang Zemin.
188. Gregory J. Mastel, 'Is the WTO Ready for China?', above note 135.
189. See Robert S. Ross, 'Enter the Dragon (China and international trade)', Foreign Pol'y, 18. 1 September 1996 ('Chinese isolation from the WTO and the resulting Chinese resentment of the major trading powers will likely enhance Beijing's proclivity to pursue mercantilist policies for national power rather than merely short-term protectionist policies for economic development.'); see also Robert S. Ross, 'Beijing as a Conservative Power (Chinese foreign relations)', 76 n. 2 Foreign Affairs 33, 13 March 1997.
190. See Robert S. Ross, 'Enter the Dragon (China and international trade)', Foreign Pol'y, 18. 1 September 1996 ('Chinese isolation from the WTO and the resulting Chinese resentment of the major trading powers will likely enhance Beijing's proclivity to pursue mercantilist policies for national power rather than merely short-term protectionist policies for economic development.'); see also Robert S. Ross, 'Beijing as a Conservative Power (Chinese foreign relations)', 76 n. 2 Foreign Affairs 33, 13 March 1997.
191. Former Secretary of State Henry Kissinger has also identified this debilitating trend in Sino-US relations, and has argued that the periodic recurrence of such crises is 'nearly guaranteed if each side's perception of the other remains unchanged'. See Henry Kissinger, 'The Stakes with China', Wash. Post, 31 March 1996, at C07.
192. This concern for a fragile sense of national identity has manifested itself at intervals throughout the reform process in campaigns to stop 'spiritual pollution' (jingshen wuran), 'bourgeois liberalization' (zichan jieji ziyouhua), codewords for 'all-out Westernization' (quanpan xihua). In contrast to the periods of retrenchment (shou), these campaigns were motivated by political considerations, not economic indicators.
193. Kissinger argues US policy should seek common interests with the PRC, not forcibly to change it. See Kissinger, 'The Stakes with China', above note 142.
194. Much of China's obstructionism may be tit-for-tat retaliation against the US. An example is the on-going dispute concerning China's refusal to purchase American wheat because of a fungus called TCK smut. The US claim it is harmless, but China insists it is harmful. China is one of the world's biggest wheat importers and until 1997 had been the biggest purchaser of American wheat. See Lynne O'Donnell, 'Wheat Ban Seen as a Problem for China's WTO Hopes', Reuters Wire Service, 9 October 1997.
195. See Erik Eckholm, 'New China Leader Promises Reforms for Every Sector', N.Y. Times, 20 March 1998, at A1; also Xu Xing, 'Modernizing SOEs: Easier Said Than Done', Open Magazine (Kaifang), October 1997, at 29-31. 'Iron rice bowl' refers to the traditional job and benefit security enjoyed by cadres and workers alike under the socialist system.
196. See Erik Eckholm, 'New China Leader Promises Reforms for Every Sector', N.Y. Times, 20 March 1998, at A1; also Xu Xing, 'Modernizing SOEs: Easier Said Than Done', Open Magazine (Kaifang), October 1997, at 29-31. 'Iron rice bowl' refers to the traditional job and benefit security enjoyed by cadres and workers alike under the socialist system.
197. Per capita income of the residents of Guangzhou, capital of the rapidly developing Guangdong province, for the first time exceeded 10,000 yuan (about $1,204) in 1997, more than double the national average level of 1996. In 1996, the national per capita urban income was 4,377 yuan. Xinhua Business Weekly, 9 March 1998.
198. Target for 1998, according to new Minister of MOFTEC Shi Guangsheng. 'Big Push to Lower Trade Surplus', S. China Morning Post, 10 March 1998, at 4.
199. China's total GDP ranks second in the world. 1990 figures. East Asia Analytical Unit, Australia Dep't. of Foreign Affairs and Trade, 'China Embraces the Market', at 46, Table 1.4. (1997).
200. 'China and the World Trading System', speech delivered by WTO Director-General Renato Ruggiero at Beijing University, 21 April 1997. 〈www.wto.org/wto/press/〉
201. Compare Gregory J. Mastel, 'Dealing with State-Owned Firms', The Journal of Commerce, 28 April 1997 (arguing for provisional accession with special [unlimited] safeguards for SOE products). See also Gregory J. Mastel, 'China and the WTO: Economy at the Crossroads', at 3, 39-42.
202. Compare Gregory J. Mastel, 'Dealing with State-Owned Firms', The Journal of Commerce, 28 April 1997 (arguing for provisional accession with special [unlimited] safeguards for SOE products). See also Gregory J. Mastel, 'China and the WTO: Economy at the Crossroads', at 3, 39-42.
203. See Harold Jacobson and Michel Oksenberg, 'China's Participation in the IMF, World Bank & GATT' (1990), ch. 6.
204. See Robert O. Keohane, After Hegemony: Cooperation and Discord in the World Political Economy, 90-100.
205. John Jackson has noted that disputes involving China arising out of non-violation nullification of states' WTO benefits may pose particularly difficult issues and cause DSB credibility problems. See John Jackson, 'The Institutional Ramifications of China's Accession to the WTO', in Abbott, above note 78, 78-79.
206. WTO Appellate Body Reports do not directly address whether annual review of a WTO member's US MFN status under the Jackson-Vanik Amendment (19 USC. §2432) violates WTO commitments under GATT Article I. See Abbott, 'China's Accession to the WTO', ASIL Insight, January 1998, at 3-4. We can well imagine, however, that China, if admitted, would make a strong case that Jackson-Vanik does violate GATT.
207. See James Feinerman, 'Chinese Participation in the International Legal Order: Rogue Elephant or Team Player?' in China's Legal Reforms, 186-191 (Stanley B. Lubman, ed).
208. Premier Zhu, visiting Britain for the Asia-Europe Economic Summit in April 1998, announced the approval of a British insurance company to set up operations in China. Speaking to reporters, Zhu said, 'Now that we have approved the first, others will certainly follow'. See Fin. Times, 6 April 1998, at abstracts 25; also Agence Fr.-Presse, 5 April 1998, at 1998 WL2255474; and Wall St. J., 30 April 1998, at R11.
209. Premier Zhu, visiting Britain for the Asia-Europe Economic Summit in April 1998, announced the approval of a British insurance company to set up operations in China. Speaking to reporters, Zhu said, 'Now that we have approved the first, others will certainly follow'. See Fin. Times, 6 April 1998, at abstracts 25; also Agence Fr.-Presse, 5 April 1998, at 1998 WL2255474; and Wall St. J., 30 April 1998, at R11.
210. Premier Zhu, visiting Britain for the Asia-Europe Economic Summit in April 1998, announced the approval of a British insurance company to set up operations in China. Speaking to reporters, Zhu said, 'Now that we have approved the first, others will certainly follow'. See Fin. Times, 6 April 1998, at abstracts 25; also Agence Fr.-Presse, 5 April 1998, at 1998 WL2255474; and Wall St. J., 30 April 1998, at R11.
211. China is also important to the political and military stability in the region, an area of considerable concern to the US.
212. See Gary Hufbauer, 'China as an Economic Actor on the World Stage: An Overview', in Abbott, China in the World Trading System: Defining the Principles of Engagement, at 48.
213. Ruggiero, 'China and the World Trading System', above note 150 at 3.
214. See Jeffrey Garten, 'Rogue Elephant Rampant?', Fin. Times, 21 October 1997, at 18.
215. See Jacobson and Oksenberg, at 11.
216. See id., at 107-108.
217. An editorial in a major newspaper in North Carolina, home state of influential Senator Jesse Helms, a vocal opponent of China, claimed: 'American trade with China provides money and technology to the Chinese war machine'. The editorial suggested collusion between 'China's rulers and their American business allies' in getting China into WTO. Richard A. Stimson, 'China Is No Developing Nation in World Trade', 13 January 1998, Greensboro News & Rec. (NC), at A6.
218. See Frederick M. Abbott, 'China's Accession to the WTO', ASIL Insight, January 1998, at 1.
219. Robert Ross argues that Chinese participation is crucial to a stable post-Cold War international order, and that '[e]ngagement must mean more than simply offering China the opportunity to follow the rules. It requires . . . negotiating solutions . . . and . . . multilateral collaboration with Chinese interests'. Beijing as a Conservative Power, above note 141.
220. Henry Kissinger has argued for a balance between US human rights and other policy aims vis-à-vis China. He notes that the US 'has achieved such a balance with Russia, which has inflicted incomparably greater casualties on Chechnya . . . than China did at Tiananmen Square'. Henry Kissinger, The Stakes with China', above note 142.
221. See, e.g., Stanley B. Lubman, 'There's No Rushing China's Slow March to a Rule of Law', L.A. Times, 19 October 1997, at M2.
222. See World Bank, 'China: Foreign Trade Reform', Washington 1994, at 20. Note comparable figures for the US are 16 percent. See also George D. Holliday, 'China and the World Trade Organization', in China's Economic Future: Challenges to US Policy, at 461.
223. See World Bank, 'China: Foreign Trade Reform', Washington 1994, at 20. Note comparable figures for the US are 16 percent. See also George D. Holliday, 'China and the World Trade Organization', in China's Economic Future: Challenges to US Policy, at 461.
224. See Luo Rongqu, 'Political Choice in a Changing World Climate: A Chinese Perspective Toward the Sino-US Relationship', 150 Beijing Univ. J. (Philosophy and Social Sciences Edition) 1, 3-4 (1992). Many Chinese scholars have framed the conflict arising out of China's growing prominence in the international political arena as a cultural conflict. See, e.g., He Xin, Dongfang Fuxing (Rebirth of the East).