Five Years after WTO Accession

China has been a member of WTO for five years on December 11th,
2006. In the past five years, China was successful in developing
its economy, which also brought about an opening market,
compliance with new regulations and rules, and a new
transparency. People in China significantly changed their
concepts in the aspects of finding a job, the market economy,
abiding by law and protecting intellectual property rights.
People and companies in other countries also benefited from
China’s changes in spite of some dissatisfaction.
      According to a report of the National Bureau of Statistics
of China, the GDP per capita of China was less than US$1 000 in
2001, and reached US$1 700 in 2005. Cumulative FDI over the past
five years exceeded US$300 billion, which helped China to
develop the opening economy rapidly and to upgrade its
industrial structure, as well as creating a large number of job
opportunities. A continuous decrease of import tariffs and
increase of production efficiencies directly decreased the
prices of daily consumer goods such as TV sets, refrigerators,
washing machines, digital cameras, autos, etc, which benefited
ordinary people a lot.
      New car sales amounted to around 800 000 units in 2001,
most of which were bought by companies and organizations instead
of individuals.  The number is expected to reach 3.8 million in
2006, which is mainly driven up by independent consumers. Cars,
travel, education, communications and housing are becoming the
new highlights of consumption with the continuous improvement
of personal purchasing power.
      No one likes to buy goods whose price has increased, but
there are  some things people must buy even if the price is
increasing – for example, natural gas. At least one gas
supplier thinks that the price of natural gas in China will no
doubt increase by the end of 2006, increasing by 8% - 10%. At
the end of 2005, the National Development and Reform Commission
raised the ex-factory prices of natural gas by around 10% to
follow the price level of other energies. In China, the price
of natural gas is presently controlled by the central government
rather than by supply/demand in the market. It is forecast that
it will take three years for China to let the market control the
price of natural gas. The present price increase is also needed
to compensate for the high price of imported liquefied natural
gas that will enter the market of Guangdong and Fujian provinces
in southern China.
      A manager from PetroChina comments that the current low
price has caused excessive consumption of natural gas. The
annual growth of consumption for natural gas is around 25% in
recent years - growth which is mainly driven by the power
generation and chemical fertilizer manufacture sectors. Local
fertilizer manufacturers are asking for a price increase. Cost
chains may finally be moderated by the central government which
hopes not to destroy the profits of the farmers who make up 80%
of the total population.

Zhong Weike
December 14th, 2006