By ELAINE KURTENBACH, Associated Press Writer
BEIJING (AP) - For the Chinese, the vote in the U.S. Congress on China's trade status is a stepping stone. The real changes - cheaper imports of everything from movies and shoes to wheat and autos - will come gradually with Beijing's expected entry into the World Trade Organization.
Slowly, China's trading partners have been chipping away at Chinese barriers to imports of foreign goods and services. The proposal to give Beijing permanent low-tariff trade status - being voted on today by the U.S. House of Representatives - is a commitment made by the Clinton administration in a deal made last November on China's WTO entry.
Last week, the 15-nation European Union clinched a WTO agreement with Beijing that will help lower tariffs on 150 major European imports, such as pasta, wine, shoes and ceramics. It also speeds up the opening of China's insurance, banking and telecoms businesses to foreign competition.
WTO membership may cost the jobs of millions of Chinese working in inefficient industries such as agriculture and auto manufacturing. But in the long-run, China's leaders are betting that joining the world trade club will help hasten market-oriented economic reforms and replace antiquated, unprofitable state-run factories with modern, competitive industries.
"Chinese consumers will benefit a lot. They can enjoy more foreign products at cheaper prices. Chinese industrial firms can also benefit from cheaper raw materials and equipment imported from abroad," said Shawn Xu, an economist with the investment house China International Capital Corp.
The agreement Washington and Beijing reached in November broadly opened China's financial services, telecommunications and other long-closed sectors. As part of the deal, Washington promised to get Congress to approve permanent normal trade relations, known as PNTR, for Beijing and end contentious annual reviews that have focused on China's human rights record and other disputes.
China has reached agreements with all but five WTO members and is expected to seek membership regardless of the U.S. vote. Once in WTO, all members get to enjoy China's market-opening concessions. But Beijing has threatened to deny U.S. companies greater access to Chinese markets if Congress votes "no."
While market opening agreements with the EU and the United States call for gradual changes after China becomes a WTO member, they spell major changes for many industries.
In retailing, they lift limits on joint ventures by large department stores and chain stores.
Average import tariffs will fall from 18 percent to between 8 percent and 10 percent. Tariffs on car imports will fall from 80 percent to 100 percent to 25 percent by 2006.
Many limits on the operations of foreign insurers, banks and telecoms in China will be phased out, with foreign partners given greater managerial control in joint ventures.
Quotas will be raised and tariffs lowered for imports of many agricultural products, including dairy products, citrus, meat, wheat, corn and soybeans.
The government will gradually give up its monopolies on imports of crude and processed oil, chemical fertilizers and silk and will eliminate policies preferential to Chinese pharmaceutical, chemical, tobacco and liquor firms.
The impact of all these changes will be a shift away from farming and toward urbanization. Farmers will move into towns and cities, taking jobs in industry and services.
"The problem is structural unemployment - how to train farmers to be factory workers," Xu said.
But the increase in trade will affect China in less tangible ways as well. The China-U.S. trade deal includes conditions that will double to 20 the number of imported films China allows in its theaters each year.
With Hollywood hits looming on the horizon, China's leaders have launched ideological campaigns aimed at instilling communist values and at resisting the inevitable influx of more foreign, generally unwelcome Western influences.
"The economic impact of joining WTO will be nothing compared with the impact on people's values and culture," said Li Xiguang, a professor at elite Qinghua University.
Li said joining WTO will merely accelerate a process of liberalization already well under way. Chinese no longer take their cues from the state-run media or the Communist Party, but from popular culture.
"It's cars. It's computers, films, the Internet. All of these things are not domestic in origin. They are foreign," he said.:
