Cover Story
China’s 20 Years at the WTO
China’s 20 Years at the WTO   <br/>中國入世20年

China’s 20 Years at the WTO   <br/>中國入世20年

(Left) Chinese Foreign Trade and Economic Cooperation Minister Shi Guangsheng signs the WTO accession documents during a ceremony in Doha, Qatar, on 11 November 2001.
(Right) Shi and WTO Head Mike Moore, along with Qatari Finance, Economy and Trade Minister Sheikh Yussef Hussein Kamal, share a toast during the signing ceremony. (AFP PHOTOS)

China’s 20 Years at the WTO   <br/>中國入世20年

(Left) Chief Executive Tung Chee-hwa speaks at the Chamber’s Hong Kong Business Summit in December 2000.
(Right) Vice Premier Zhu Rongji meets with HKGCC members in the late 1990s during our missions to Beijing.

China’s 20 Years at the WTO   <br/>中國入世20年

Vice Minister of the Ministry of Commerce An Min and the HKSAR Financial Secretary Antony Leung sign the Closer Economic Partnership Arrangement (CEPA) on 29 June, 2003.

Twenty years ago, after a 15-year application process, China was finally admitted to the World Trade Organization (WTO). While the nation’s economy had been opening up since 1978, membership of the WTO has undoubtedly fuelled its astonishing growth over the past two decades. 

While some jurisdictions had reservations at the time about China joining the organization, Hong Kong was among those that recognized the huge benefits that were likely to emerge.

“I see extraordinary opportunities for Hong Kong and our businesses after China’s accession into WTO,” said Chief Executive Tung Chee-hwa, speaking at the Chamber’s Hong Kong Business Summit in December 2000. 

“Across the board, in the financial, IT, telecommunications, tourism and professional services sectors, Hong Kong is now well positioned to take full advantage of the vista of new opportunities which will flow.” 

 

HKGCC’s role

China’s years-long preparations to join the WTO also meant a great deal of activity for HKGCC. Long before the WTO agreement was signed, we were busy lobbying for China’s membership, holding discussions with Central Government representatives, and helping to train Mainland officials. This was in addition to extensive work to prepare Hong Kong businesses for the changes ahead.

During the 1990s, the Chamber held a series of meetings with senior officials, in Beijing and in Hong Kong, to share the thoughts of the Hong Kong business community on the Mainland’s reform process. Many of these meetings were with the Ministry of Foreign Trade and Economic Co-operation (MOFTEC), which was handling China’s WTO application. 

HKGCC at that time typically arranged three annual missions to Beijing – under the General Committee, the China Committee and the HKCSI group. 

As HKCSI was the policy think-tank of the Chamber, it took the lead in WTO-related activities and, in 1995, formed an “Expert Group” with representatives from various sectors. This Expert Group held meetings with Mainland officials, organized training sessions on both sides of the border, and carried out in-depth research.

A key meeting of the Expert Group took place in April 1996, when the Chamber invited MOFTEC officials to Hong Kong. MOFTEC’s Director An Min led the delegation along with four members of China’s WTO negotiation team. The key purpose of this half-day meeting was to exchange views on the reforms that Beijing was carrying out ahead of joining the WTO, in particular tariff reductions and elimination of non-tariff barriers, the opening of trading rights, transparency of laws and implementation procedures and liberalisation of the services sector.

They also discussed the likely benefits for Hong Kong businesses.

“It is the Expert Group’s belief that continuous liberalisation in China will be the key ingredient to boost the efficiency and competitiveness of local industries by lowering costs of production while improving quality, and to advance the physical, social and human infrastructures so as to promote long-term economic growth,” our report on this meeting said. 

“As the economic development in China has been the backbone of Hong Kong’s future growth, the Chamber Expert Group continuously supports China’s accession to the WTO.”

At the meeting, HKGCC representatives put forward detailed proposals on a wide range of topics, such as modernizing the customs infrastructure by developing electronic documentation, and allowing greater participation of foreign management in airport-related projects. 

Another topic discussed was the complaints procedures in the legal system. We suggested that, to improve foreigners’ familiarity with the system, a handbook outlining procedures for filing complaints and the speed of the process should be published in both Chinese and English.

Following this in-depth and constructive dialogue, the MOFTEC officials also had the opportunity to see some of the sights in Hong Kong, including a visit to Happy Valley Racecourse as guests of the Chamber.  

Chamber representatives also held discussions with other high-ranking Chinese officials as the WTO preparations continued. Among these was Vice Premier Zhu Rongji, who met with HKGCC members in the late 1990s during our missions to Beijing. Zhu was a major driver of China’s economic reforms and its progress towards the WTO. It was Zhu that travelled to the United States in 1999 to meet President Bill Clinton to assuage U.S. concerns about its readiness for WTO accession.

HKGCC also worked to address U.S. reluctance by putting our global network into action. We encouraged our members to contact their U.S. business partners, and ask them to connect with local politicians to help them understand how China joining the WTO would benefit U.S. businesses.

Besides holding policy meetings, HKCSI also organized a number of practical training sessions to share Hong Kong’s expertise with Chinese officials. One of these was a three-day seminar in Nanjing in November 1998, where 120 participants from across Mainland China explored the impact of liberalization on services, especially in the retail, wholesale and logistics industries.

While the Chamber was extremely busy throughout this period ahead of China’s WTO accession, it is worth noting that much of this activity was carried out behind the scenes by many hardworking HKGCC members from a wide variety of sectors.

 

Informing Hong Kong businesses

The more public side of the Chamber’s work around China and the WTO was informing Hong Kong businesses about the changes, and help them find the opportunities that were opening up.  

Chief among these was our report: “China’s Entry into the WTO and the Impact on Hong Kong Businesses,” first published in January 2000. The extensive research was carried out from May 1999 to January 2000 by nine working groups. In the report, we summarized the likely outcomes:

“There is no doubt that the reduction in tariffs, the liberalization of service industries, and the increasing transparency and rules-based commerce brought about by China’s WTO accession – along with a general rise in Chinese living standards due to the anticipated economic growth – will benefit Hong Kong.” 

The report also reflected some of the worries of the time about China’s business environment, such as market inefficiency, lack of qualified staff, and cumbersome procedures for transactions. While we expressed some concern that Hong Kong’s gateway function could diminish, we foresaw that international firms would continue to use the city as the entry point to China.

“New players, especially SMEs from abroad, can find know-how and expertise in Hong Kong to help them do business in the China market that will continue to be very diverse and complex.” 

We also anticipated that, with more Chinese companies going global, this would give Hong Kong a new middleman role.  “Hong Kong professional firms can expand their business in China,” the report stated. “Mainland enterprises will become their potential customers.” 

Besides this major report – which was updated for subsequent editions and sold thousands of copies – the Chamber also organized a range of events to inform members about the impact and opportunities for different sectors. Speaking at one of these workshops in November 2001, Marshall Byres, COO at Ernst & Young, likened the number of international companies heading for China to the California Gold Rush. 

“There is gold over there. There is no question about that,” he said. “It is a huge country – the largest emerging market that has ever been seen. And if we, sitting in Hong Kong, don’t put ourselves out to get a bit of it, then we will have been very silly.”  

 

Impact on Hong Kong

Perhaps the most notable impact on Hong Kong is that China’s accession to the WTO directly paved the way for the Closer Economic Partnership Agreement (CEPA) between the two economies.

Indeed, HKGCC first suggested such an arrangement in our “China’s Entry into the WTO” report: the following year, the HKSAR Government made a formal proposal to Beijing on the topic. The Chamber shared the business community’s suggestions in 13 separate papers, and the CEPA agreement was signed in June 2003.

“The Chamber is very pleased that many of our ideas have found their way into the agreement,” we said at the time. “From zero tariff, to lowering barriers for retail and banking, to early liberalization for distribution, to allowing our professionals to practice in China, to further liberalization for exhibitions, for example. These were all submitted by us to the Government during this long period of negotiation.”

Members involved in the Chamber’s WTO work included our CEO George Leung. At that time, Leung was an economist at HSBC, and shared his expertise with HKGCC in our Banking Expert Group that researched the impact of China joining the WTO.

He recalled that Hong Kong was one of many jurisdictions around the world lobbying for China to be accepted, and that the business community here was particularly keen to see China’s accession finally take place.

“Of course, fellow Chamber members at that time were enthusiastic about China joining the WTO,” Leung said, “as they could see how Hong Kong businesses would benefit.”

The reduction in tariffs lead to a seismic change in the global supply chain. With China in the WTO, all member countries could access not just the lower costs but also the huge scale and unrivalled skillset of Chinese manufacturing, and many of them moved production to China. 

 “The process of globalization really got under way after the year 2000,” Leung said. “If China hadn’t joined the WTO, it would not have been able to become the world’s factory, and Hong Kong would not have been able to enjoy the benefits of the nation’s growth.”

Looking back to the events of 20 years ago, there is no doubt that China’s membership of the WTO was a huge landmark in the nation’s development. It also conferred many advantages on Hong Kong as the bridge between the Mainland and the rest of the world for businesses around the world. 

It is clear that Hong Kong’s fortunes will continue to grow alongside Mainland China’s as the nation’s opening-up process continues.  After getting the Covid-19 outbreak under control relatively quickly, China’s economy rapidly returned to growth. Here in Hong Kong, right now we are awaiting the reopening of the physical border. This will enable us to get back to business with our Mainland partners and get back on the path to prosperity, for the next 20 years, and beyond.

 

 

China’s Rapid Growth Since Joining WTO

China’s GDP grew from US$1.3 trillion in 2001 to US$14.7 trillion in 2020.

The country’s total trade grew from US$500 billion in 2001 to US$4.6 trillion in 2019.

Trade in goods between the U.S. and China increased from less than US$100 billion in 1999 to US$558 billion in 2019. 

In 2001, China was the sixth largest exporter of goods in the world. In 2009, it became the largest, and in 2014 overtook the E.U. In the 1970s, China’s share of global trade had been less than 1%. 

From 1990 to 2015, the share of the Chinese population living in extreme poverty declined from 67% to under 1%.

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