Mainland China and the WTO

Will mainland China's proposed entry into the World Trade Organization benefit buyers of ceramics and porcelain? Yes, says Wang Lizheng, a director at the National Bureau of Light Industry.

Will buyers of ceramics and porcelain products benefit from China's entry into WTO? Of course. Firstly, buyers from other WTO member countries will get lower prices because of lower tariffs. Also, they will find a wider choice of products because import quotas on certain goods will no longer apply.

What about buyers from non-WTO countries? All buyers, no matter whether they are from WTO members or non-WTO members, will get a wider range of products and lower prices. This is because WTO membership will bring down production costs for manufacturers in China, and they will be able to pass on these savings to customers.

So prices will fall? Yes. Lower import tariffs will reduce the cost of importing raw materials and equipment. In some cases, tariffs on raw materials will disappear completely. This will benefit the whole light industry sector, which includes household goods, foodstuffs, beverages, and ceramics and porcelain. What's more, the costs of shipping these products will go down.

Will the quality of products improve? Products manufactured in mainland China are already among the best in the world, but yes, they will improve further because more ceramics firms will be encouraged to set up joint ventures here, bringing with them their expertise and marketing know-how. Manufacturers will be forced to improve their products and to phase out products that are no longer viable.

How do you think China's membership of WTO will affect the country's light industry? Membership of the WTO will entitle manufacturers in mainland China to the same treatment as those in developed economies, particularly with regards to lower import tariffs. This kind of reform is what we need. It will help industries internationalize themselves. In a nutshell, WTO membership will help make us more competitive.

But China's light industry sector is already doing well internationally. Why is this? The light industry sector is dominated by consumer goods that are popular overseas. These goods include home electrical appliances, ceramics and various foodstuffs such as beverages and sugar. These things are always in demand. Economic reforms by the government have also helped light industry. In 1998 the import and export value of light industry was $72.16 billion, accounting for 47.6 percent of the whole production value of light industry. And since 1979, when reforms began, light industry has used $40 billion in foreign capital, accounting for 20 percent of the total investment in light industry. According to incomplete statistics, there are 20,000 foreign-funded enterprises in light industry. This helps improve the quality of products.

Overseas manufacturers have successively started ventures in China, while some local companies, especially those in home appliance such as the Haier Group and Wuxi Little Swan, have established factories ceramics.

Is output rising? Definitely. The statistics are impressive. Our output of bicycles, home-use ceramics, leather shoes and home electrical appliances is the highest in the world. Production of detergent, beer and salt is second highest in the world. Machine-made paper and cardboard, sugar, air conditioners and watches are all ranked third in the world in terms of the volume produced in mainland China.

Do you see any downside to China's membership of WTO? The share of the local market enjoyed by local manufacturers might diminish because ceramics firms will find it easier to do business here. This will apply especially to high-end products such as home appliances, imported shows and imported paper. Some of the local products are still inferior in quality, so they will suffer. But there is an upside to this because local manufacturers will be forced to improve their products. They will have to invest in R&D, and they will have to lower costs.

Will the government adopt new policies in the light of China's entry into WTO? We will continue to introduce reforms to the light industry sector in an effort to encourage the use of new technology and foreign investment. We want large enterprises to build their own product development centers and to eliminate old products and equipment. I would like to see more companies granted I/E rights, and more tax rebates on exported products.