The margin belied the fierce lobbying which took place on both sides. And the victory was due in no small measure to the efforts of the Clinton administration and the business community in the U.S.. The Hong Kong General Chamber of Commerce played a role by urging its members to write to their U.S. business partners asking them to contact their congressmen about the benefits of PNTR passage.

All this lobbying should not have been necessary, since failure for Congress to pass PNTR would not stop China from getting into the WTO. Non-passage would only deny American companies the concessions made by China to the U.S. last November, since those concessions will only be granted by China with reciprocal PNTR. The realisation of many congressmen of the counter-productiveness of a "no" vote produced the final result.

The last major hurdle between China and WTO entry was actually the European Union. But the EU concluded its negotiations with China on May 19, obtaining some commitments from China in addition to those obtained by the U.S. previously. What remain are just a handful of countries that are now wrapping up negotiations with China. When that is over and when Geneva completes the review of all the commitments and procedures, China will most likely finally enter the WTO sometime this fall.

Now everyone in China, around the world, and in Hong Kong is looking at the new business environment in China after China enters the WTO. The Chamber members' analysis of the impact on Hong Kong was concluded some months ago and published in a report that has now sold almost 1,000 copies (order form). In the next issue, we will publish the summary of a Chamber study on China's WTO entry's impact on China.

Opportunities for Hong Kong

The Chamber WTO report was generally optimistic about the opportunities for Hong Kong while warning of challenges to, and preparations necessary by, Hong Kong businessmen. The Chamber believes that after China enters the WTO, Hong Kong will become a 'logistics hub,' a 'financial hub,' and a 'digital hub' between China and the world.

Logistics Hub
Hong Kong will be a logistics hub because it will continue to serve as the conduit for many international companies doing business inside China or Chinese companies doing business outside China. Many smaller international companies with little or no experience in China will find China to be a very complex market with vast regional differences and varied local interpretations of government policies. They would benefit from having a Hong Kong company lead the way. Similarly, mainland enterprises which need to compete in and out of China against foreign companies need the 'soft' international level skills possessed by Hong Kong in management, in accounting, in legal affair, and in public relations, for example.

Furthermore, trading companies here which can help international companies design, source, package, market, and ship while using e-commerce will find even more business. The shipping volume in southern China ports, including Hong Kong, will rise as the trade volume rises both ways. In short, if traders can add value, re-exports will still go through here.

Financial Hub
Hong Kong will be a financial hub because of the predicted huge rise in foreign direct investments into China after WTO entry. Much of that money will flow through Hong Kong, benefiting the financial industry here. In addition, Chinese enterprises that need to raise money naturally turn to our stock markets or venture capital firms here. For trading, contracting through Hong Kong will continue to be the preference. Multinational financial companies will expand their China operations base in Hong Kong.

Digital Hub
Hong Kong will be a digital hub because of the predicted explosion in telecommunications and Internet business in China. Hong Kong, with telecommunications liberalisation and market savvy, can apply information technology to business better than any other city. Much of the boom in the Internet industry in Hong Kong is predicated on the opening of that sector in China. Finally, the high-technology imports in the information arena will allow Hong Kong to develop market applications from state-of-the-art technology.