The recently reached agreement between China and the United States on China's accession to the World Trade Organization has again flagged a clear signal for China to accelerate its efforts to tune up its laws and regulations along with WTO principles. So far there still remains a huge gap between WTO principles, which are basically a network of rules and agreements, and current Chinese laws and regulations which are still characterized with obvious marks of governmental control and interference.
Despite China's rapid growth in international trade last year - it became the world's eighth largest international trader with a total volume of US$474.3 billion, differences and contradictions remain obvious between the Chinese legal system and many of the world trade rules.
These differences and contradictions have led Huang Weiping, a prominent economist, to claim at the Shanda-Tiantong Seminar, a regular academic event sponsored by the Shandong University's School of Economics, that the more competitive Chinese enterprises are, the more dangerous they will be after the country joins the WTO.
Stronger Chinese enterprises are more likely to be accused of dumping or violating WTO rules since they will more frequently infringe on the interests of their foreign competitors, said Huang, professor and dean of School of Economics of Renmin University of China.
When a lawsuit appears, it will be painful to see that many of China's laws and regulations cannot provide enough protection for the country's enterprises, because current legal differences between China and the WTO are expected to lead courts to neglect the authority of Chinese laws on which Chinese enterprises are based.
To make things worse, Chinese authorities have paid more attention ton to how to improve domestic enterprises' competitiveness than trying to amend or adjust the law and regulation system.
But without the latter, enterprises can never enjoy truly strong competitiveness, said Huang.
It is reported that China has already started a full-scale revision of its laws and regulations to make them agree with WTO rules, and the National People's Congress (NPC), China's legislature, is speeding up revision of around 30 laws and regulations incompatible with WTO rules.
But the revisions of particular laws are not enough to meet WTO standards and therefore it may still be difficult to safeguard Chinese enterprises properly after accession to the trade organization.
Huang said many Chinese laws are centered on the interests of the State, while the WTO is a legal framework serving the interests of individual economic organizations, especially enterprises.
The unclear ownership status of many Chinese firms also augments difficulty in the revisions because without well-established enterprise and private property ownership, subjects to which many laws apply will become confused.
Meanwhile, in order to protect the interests of certain sectors, such as mining and steel making, some measures the government has adopted, including the closure of smaller mines and steel factories, are against market rules and trade liberalization, subjects which have been increasingly pursued by the WTO in recent years.
"The government's policy making, law adjustment and international negotiations have to be based on the interests of particular enterprises to ensure full legal support for them," Huang said.
Some governmental departments do not positively adjust laws and regulations in accordance with WTO principles because by doing so they may lose much of their power to interfere in the enterprise to acquire interest.
The transparency and predictability of governmental administration, which has been called by Geza Feketekuty, a distinguished professor from the US Monterey Institute for International Studies, a major requirement of the WTO framework, are not sufficient in China, especially at grassroots levels.
Needless to say, these shortfalls will make the governmental protection of Chinese enterprises more difficult after the WTO entry.
Luckily, according to Huang, the State's top leaders are conscious of the urgent need to adapt the country's legal system to WTO principles.
On the other hand, time is another big challenge for post-WTO China.
According to the Chinese Government's promise for entry, there will be a three to five year transition period before the country completely opens its market as required by the WTO and fully adopts laws in accordance with the WTO framework.
"Even if the revision and adjustments took place right now, it has become urgent for us to adjust too many laws and regulations, let alone adapt new laws," Huang said.
(China Daily June 19, 2001)
