>Date: Thu, 25 May 2000 10:48:51 -0700 >From: Green Left Parramatta <[EMAIL PROTECTED]> >The following article appears in the latest >issue of Green Left Weekly (http://www.greenleft.org.au), >Australia's radical newspaper. > >***************************************************** > >CHINA: Sino-US trade deal will cement capitalist restoration > >BY EVA CHENG > >Despite the Chinese Communist Party's push for the reintroduction >of capitalist relations of production in China, the triumph of >capitalism there is not yet certain. However, if US President >Bill Clinton's November deal with Beijing for the US to grant >permanent ``normal trade relations'' (NTR) for China wins the >approval of the two houses of parliament -- the Congress vote is >slated for this week (starting May 22) -- the floodgate would be >opened wide to a tide of mandatory changes that could decisively >roll back the central gains of the 1949 Chinese Revolution. > >The imperialist powers' increasing ability to pressure China and >sway its course originated in a 1978 CCP decision to ``open >China's door'', essentially to foreign investment, which was >previously banned, as well as greater foreign trade. > >Whatever Beijing's motives for this decision, its implementation >and the associated increasing privatisation have seriously >undermined China's planned economy. > >What remains of the state sector has been so marginalised that >few people remain convinced that those entities which Beijing >still labelled as state firms actually form part of a coherent >planned sector geared to serve social needs. > >That erosion of China's socialist economy will deepen if the NTR >deal is pushed through because under it Beijing would surrender >even more crucial controls of the economy, especially on foreign >trade and domestic distribution. The deal ensures that any gains >will go to US capital such that more economic decisions in China >will be dictated by private profits, essentially to the benefit >of US-controlled multinationals. > >Horrific concessions > >Even a quick scan of the key terms of the NTR makes horrifying >reading. These are, at present, concessions for US capital, but >once China joins the World Trade Organisation (WTO), which is >likely within months, the extension of similar concessions to the >other WTO members (135 at present) is almost guaranteed. > >The agreement covers virtually all sectors. A crucial plank is >the ending of the state monopoly, mostly within three years, on >the importing, distributing and exporting of most goods -- >industrial, agricultural and transport, even in the sensitive >areas of telecommunications, wholesale, maintenance and repair. > >In agriculture, the average tariffs for US priority produce >(including pork, beef and poultry) will be slashed from 31.5% to >14.5% by January 2004 or earlier. As well, the imports of bulk >commodities of strategic importance (such as wheat, corn, rice, >barley, soybean oil and cotton) will be relaxed, and all export >subsidies will be banned. > >In industrial products, the key tariff reductions include an >across the board average cut to 9.4% by 2005 (from 24.6% in >1997), a cut to 7.1% on US priority goods, a cut to zero on >computers, telecommunications equipment, semiconductors, computer >equipment and other high technology products, a cut to 25% by >2006 (from 80-100%) for cars, with most reductions loaded up >front, and cuts to 10% by 2006 for car parts, to 5% (from 12-18%) >for wood, to 7.5% (from 15-25%) for paper and to 0-6.5% for the >vast majority of chemicals. > >J > >In addition, all restrictions on the quantity of imports will be >eliminated progressively within five years (just two years for US >priority products, such as fiber optic cable). > >For all major service categories, restrictions on foreign >ownership have been significantly relaxed (allowing full control >in some cases), to be implementation mostly within a few years. >The new privileges will be extended to all existing firms in this >sector. > >For banks and insurance firms, in particular, imperialist >capital's long battle to secure the right to sell services to the >Chinese population (in hitherto sensitive areas such as local >currency transactions with Chinese firms and group, and health >and pension insurance products) is largely won. > >The dramatic concessions in telecommunications, a hitherto highly >restricted area, will have significant social implications. For >example, China's key telecommunications corridor of Beijing, >Shanghai and Guangzhou, which captures 75% of all domestic >traffic, will open immediately in all telecommunications >services, including the internet. From a complete ban on foreign >ownership in any telecommunications establishments, a 49% stake >will be allowed across the board within a few years (with the cap >raised to 50% in value-added paging services within two years). > >Wholly US-owned firms will also be allowed to run rental, >leasing, air courier, freight forwarding, storage and >warehousing, advertising, technical testing and analysis, >packaging services and hotels within three to four years. > >The list goes on. Its scope is wide-reaching, with specific and >detailed schedules for implementation and punishment for >non-compliance (visit <www.uschina.org> for details). The terms >are set to sweep what little is left of China's state firms off >their feet, leaving little room for pretence that they could >still function as part of a coherent socialist economy. > >Due to past colonial or semi-colonial subjugation, the lower >productivity level of a Third World country such as China makes >it nearly impossible for its economic entities to compete >effectively with their counterparts from imperialist countries. >The removal of protection from First World competition will >devastate them. > >State sector under siege > >A White House summary emphasises that the Sino-US permanent NTR >agreement ``will ensure that state-owned and state-invested >enterprises will make purchases and sales based solely on >commercial considerations, such as price, quality, availability >and marketability''. Will any room be left for social concerns? > >``China has also agreed that it will not influence these >commercial decisions (either directly or indirectly) except in a >WTO consistent manner ... purchases of goods and services [by >these firms] do not constitute `government procurement' and thus >are subject to WTO rules.'' > >With all these generous concessions, unimaginable until a year >ago, what is China getting in return? Increased exports to US? >Perhaps. But as part of the deal, the US will be able to prevent >any significant such rises. It will retain for 15 years the right >to ``retaliate'' (by imposing extra duties) against ``dumping'' by >China, which will be found guilty if its production costs are >lower than those of a third country chosen by the US as a >comparison. > >The US can retaliate for another 12 years if the increased >imports of Chinese goods have caused, or threaten to cause, >``market disruption to a US industry''. > >Perhaps China can benefit from greater transfer of US technology? >Unlikely. Until now, China has been able to set as a condition >for admitting foreign investment or import licenses requirements >such as transfer of technology and research capability, mandatory >offsets or a prescribed local content input. But these conditions >will be banned under the NTR deal. > >Clinton explained to Congress in a January 24 letter, ``Americans >will, for the first time, have a means ... to combat such >measures as forced technology transfer ... As a result, we will >be able to export to China from home, rather than seeing >companies forced to set up factories in China in order to sell >products there.'' > >Clinton added, ``It is important to understand the one-way nature >of the concessions ... China has agreed to grant the US >significant new access to its market, while we have agreed simply >to maintain the market access policies we already apply to China >by granting permanent NTR.'' > >For China, the benefits arising from an NTR -- entitlement to >much lower tariffs for exporting its goods to the US -- will now >be secured rather than open to scrutiny by the Congress once a >year, as has been the case since 1980. > >There is little doubt that the US market is important for China. >About a quarter of China's international trade was deals with the >US (US$85.5 billion out of US$324 billion in 1998). Moreover, >China's trade surpluses, crucial especially to its foreign >currency reserves, would have been turned into significant >deficits if the US market was gone. China's trade surplus with >the US in 1998, for example, was US$57 billion (US$69 billion in >March), while its overall surplus with the world was only US$44 >billion. > >So, secure access to the US market is valuable, but is it worth >such a high price? After all, China has been getting the >temporary NTR (called ``most favoured nation'' until 1998) for the >last 20 years. > >Locking China in > >There are two other possible reasons why Beijing might have been >lured to this deal. Based on alleged US evidence that China sold >ballistic missiles to Pakistan in 1992, Washington is said to be >considering punishing China with economic sanctions. A decision >was said to be due in late May-early June (Far Eastern Economic >Review, May 18), but the US could have used inaction on the >sanctions as a bargaining chip in the trade deal. > >Secondly, the trade pact and China's entry to the WTO can be a >powerful framework within which to lock China into the path of >capitalist restoration. The privatisation of state firms has met >considerable domestic resistance -- from sections of the CCP >whose interests would be endangered and from the affected >workers. The rulers in Beijing, headed by Jiang Zemin, might >appreciate the help that will be delivered by the WTO/NTR >commitments to speed up state sector dismantling. > >Whether or not these factors were part of Beijing's calculations >are a matter of speculation, but there is little doubt that under >the NTR pact, the jobs and living standard of hundreds of >millions of people will come under further attack. The opening of >agriculture is expected to have a particularly devastating effect >on China's enormous rural population, as well as the country's >food security. > >In its November 16 edition, the Beijing Youth Daily estimated >that within seven years of China joining the WTO, 14.5% (500,000) >of jobs in China's car industry will disappear, as will 3.6% (10 >million) of agricultural jobs. > >The paper also predicted rises of 52% and 24% respectively in >clothing and textile jobs, but these gains are questionable given >that the imperialist countries can easily retaliate (and they >have done so) using anti-dumping rules in the WTO. > >Washington knows very well that the trade deal can boost China's >capitalist restoration. Clinton said in his January 24 letter: >``This agreement obligates China to deepen its market reforms, >empowering leaders who want their country to move further and >faster toward economic freedom. It will expose China to global >economic competition and thereby bring China under ever more >pressure to privatize its state-owned industry and accelerate a >process that is removing the government from vast areas of >China's economic life.'' > >US trade representative Charlene Barshefsky was less subtle. In a >March 10 address to the National Conference of Editorial Writers, >she likened the trade deal to attempts of imperialist powers to >force open the China market between the 1700s and the early >1900s. She added, ``This [deal] is so fundamental in its fabric >because the agreement attaches itself to economic life in China, >not in selected treaty ports or enclaves, but economic life in >China''. > > > > __________________________________ KOMINFORM P.O. 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