CHINA: Government Puts Brakes on WTO

Publisher Name: 
Christian Science Monitor

BEIJING -- At midday a fragrant dumpling soup sells briskly as a neatly
dressed man toes the sidewalk in this working class neighborhood of
Beijing. Liu Songmei is an unemployed farmer from Hunan province, here to find work as a carpenter.

Mr. Liu, one of as many as 150 million out-of-work farmers in China, finds
a job about "every other week," he says, "but nothing today." He makes 60
yuan a day ($7.25), and spends half of that on a room shared with several
others. "We have enough to eat, but we aren't saving anything," he says.

After a strong '90s-era push by China's top echelon of reformers to insert
this huge but developing country into the fast lane of the world's economy,
including World Trade Organization membership this year, a quiet but
significant shift toward caution is under way, with a wing of Communist
Party brass reportedly worried about the potential social pressures that
wrenching and wholesale structural changes to China's economy may bring.

China's WTO membership, for example, agreed to by the US Congress last fall
amid fanfare, may not take place this year, analysts say.

Yesterday, China's biggest annual political event, the National People's
Congress - 10 days of giant red flags fluttering in the stiff March
breezes, and Beijing streets choked with black limousines - came to an end.

On the surface of the meeting, all appeared tranquil and even uneventful. A
new "Five Year Plan" for the economy was unveiled to 2,900 officials from
the provinces. Business and trade on the wealthy east coast and in Hong
Kong remain dynamic. The nation's growth rate has leveled off but is strong
at about 7 percent, officials say.

Yet small signals under the surface suggest worry over the mindsets of
ordinary Chinese. There are, for example, restless peasant and working
classes - of which the recent crackdown on the outlawed Falun Gong movement
is part of the story. In the next five years, economic ministers say,
between 40-to-50 million of 800 million farmers will be laid off each year,
as the country moves to modern farming techniques. China signed off on a
WTO agreement that requires it to meet developed world standards on crucial
farm subsidies, but Chinese officials and many Western agriculture experts
now argue this standard must be eased: The developing- country subsidy of
10 percent of output is about double that of the developed-country standard.

There are concerns over laid-off workers from the industrial sector, the
fallout from a transition away from state-run enterprises. In a press
conference March 10, a high ranking minister hinted that about 52 million
industrial workers will lose jobs over the next five years. Already, 10
million are officially redundant, though the exact figure is hard to
reckon. China has some 145 million registered industrial workers. The
government classifies many of the laid-off as not employed but looking, and
not counted as jobless.

Authorities take as progress what they say is a slow but steady public
adjustment to a new economy. "Today, people can accept that state-owned
enterprises can go bankrupt," said State Economic Trade minister Li
Rongrong March 10. "Three years ago people could never accept this."

Yet in a one-party state that next year begins a transition to newly
appointed leaders, including premier and president, some officials are
concerned about leaping into the unknown - even while continuing to
integrate into world markets.

"They are worried about instability, and they should be," says a Western
scholar working in Beijing with the unemployed. Some laid-off factory
workers "go to neighborhood officials saying they have been good comrades
all their lives, but are worried about the future.... What they hear is,
'There are already too many people with your problems. You need to take
care of yourself.' "

Official employment rates range between 3 and 5 percent. But outside
experts say the real figure ranges between 15 and 30 percent.

"I think it is more than 30 percent," says Han Dongfang, a former dissident who publishes the "China Labor Bulletin" out of Hong Kong. "But ... the dangerous thing is a lack of social security."

At the NPC meeting, officials announced a new social security and pension
system. Unlike the old plan, workers would eventually have to pay into the
new safety net - and farmers would largely be left out. The government
estimate for the switch - $5 billion - contrasts with a Bank of China
International figure of $850 billion. Bank officers say that number can be
covered if the state taps the savings of Chinese and also sells assets -
if, the implication is - no one pockets large sums on the way to public till.

The WTO transition is still being absorbed. At levels where reforms must
happen, only recently have bureaucrats come face to face with the small
print, analysts say. The accord requires a great deal of new legal
language, levels of visibility, and foreign involvement.

This week, a press conference was notable for its lack talk about a clear
date for signing the WTO accord. But after 15 years of negotiations,
accession is a "foregone conclusion," said Minister of Foreign Trade and
Economic Cooperation Shi Guangsheng. Last month, Mr. Shi said that October
or November may be opportune.

Outside analysts say it may take longer. "Even if you just look at the
procedural questions, the EU goes through a two month review," argues
Nicholas Lardy of the Brookings Institution. "I question whether it will be
signed in 2001 at all."

Part of the new caution has to do with a leadership reportedly unsure how
to solve its succession next year, facing an unfamiliar US administration
that is talking about high-tech arms sales to Taiwan, and a world economic
slowdown that includes China's two biggest investors, Japan and the US.

While China's police and security networks are too extensive for violent
demonstrations, in northeastern provinces, coal miners, steel workers, and
other heavy industry unemployed have protested. Reports this week have
5,000 cabbies in Lanzhou ringing local government headquarters over higher
taxes. Much of the attraction to the Falun Gong movement is among peasants
and workers who have felt alienated or are jobless.

Another body of workers has simply left home for low-paying jobs in urban
areas, creating a floating set of semi-employed drifters estimated at as
many as 500,000. Official fears of these workers organizing is high.

Analysts say it is significant that though China agreed last week to sign
the UN's International Convention on Economic, Social and Cultural Rights,
it left out of its agreement the right of workers to form trade unions.

"To have an entire body of workers suddenly organizing outside the party.
Well, that's what bothered the leaders about Falun Gong," says one local
Chinese expert. "Imagine a whole class of angry people suddenly organizing.
That would be madness, in our view."

AMP Section Name:Trade Justice