China and the WTO - Research Proposal

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This was another blow for the local markets as the SOEs formed the crux of all Chinese businesses. The privatization of this sector was initiated in 1995 when the government kept the big profit-making SOEs and discarded the smaller SOEs, yet the government was forced to hand over the market share that these big SOEs had after joining WTO and eventually hand the complete control of the SOEs to the State-owned Assets Supervision and Administration Commission (SASAC) to distribute and allocate the shares which resulted in a dramatic drop of the total SOEs form 118,000 (1995) to 34,000 (current). This figure still includes some of the biggest and the core industries like those of energy, basic necessities, cement, etc. And there are many Chinese analysts who still believe that the role of the SOEs and the state can never be completely eliminated.

One of the main criticisms that the Chinese government faced after their inclusion in the WTO was with regards to the undervaluing of Yuan which at the time was valued at $8.3. This resulted in the Chinese markets gaining immense foreign reserves and furthermore allowed the Chinese to make large amounts of imports which was negatively affecting the overall occupational rates and dropping them by 15% on average in both the U.S.A. And Europe. Even though the U.S. critics were adamant on the Yuan and its undervaluing being the reason for the economic deficit that they were going through, many Chinese analysts argued that the Chinese imports were only replacing imports from other Asian markets which is why there was such an obvious increase in their overall percentage of imports.

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Furthermore, they argued that as far as its negative influence on the occupational percentages went, the occupational decreases were happening a long time before the boom of Chinese boom and a majority of the sectors that were facing occupational decreases were ones where the input of the Chinese imports were in the minor percentages.

Another argument given by the Chinese analysts in response to the charge of the undervaluing of the Yuan was that most of the exports that the Chinese markets were gaining profits from were merely manufactured products of their imports and hence increasing or revaluing the Yuan would work in the not a big difference except increasing the overall sales prices of the Chinese goods and services.

Hence it is safe to say that even though the hard work that went into the negotiations for China to be a part of the WTO allowed China and the state to record more growth rates and increase their clientele base; it also posed various challenges and problems and simultaneously made them reevaluate certain aspects of their businesses and allow them to learn different methods to survive and benefit instead of merely depending upon the decisions of the sates and government......

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