As the 1990s came to a close and the new millennium began, the World Trade Organization (WTO) became the leading international symbol for or against globalization. Yet, ten years before, nobody had ever heard of the WTO, and only academics and senior trade officials, mainly in industrial countries, paid much attention to its predecessor, General Agreement on Tariffs and Trade (GATT). Variety of country-members is testimony to the support the world community has given to the WTO as an agent of globalization.
It has been a long march for China in its quest for WTO membership. China first formally indicated its interest in resuming its original contracting party status with the GATT in July 1986. 1 GATT/WTO is based on a premise of free trade between member nations. Each member nation should have a free-market economy in which the private sector plays a dominant role. China faces a major challenge in transforming its planned economy to a free-market economy to meet this premise. The quest for WTO membership was a painful process, but not a process without many gains.
In fact, under pressure to comply with the WTO rules and standards, China achieved remarkable progress in privatization, trade liberalization, and economic integration with the rest of the world. The quest to become a WTO member was an impetus for China to speed up its ongoing privatization of state-owned enterprises and the establishment of a free-market economy. During the past twenty years, along with its open-door policy and economic reforms, China made sincere efforts to meet the requirements for WTO.
For China this success seemed a crowning achievement, since the United States was by far the most important and powerful of those countries with a say in whether China could join. There was considerable irony in the fact that China, which on many issues had once stood alongside ordinary people and against the power of governments, should now find itself aligned with powerful states against protestors. Quite a few hurdles stood in China’s way to WTO membership, but its efforts were eventually crowned with success in December 2001.
The WTO is premised on the function of a private-market mechanism in the domestic economies of its member countries. The basic idea for WTO is to establish an international economy that is disciplined by the operation of comparative advantage and the “invisible hand” (price), and is governed by the principles of non-discrimination and reciprocity. 2 This incipient globalisation had profound implications for China. Finding out about what was happening outside the country, people began to demand far more in the way of freedoms and outside knowledge and techniques.
Western, especially American, influence became incomparably more widespread than had been the case under Mao Zedong. One result was a rapid decline in the impact of Marxism-Leninism among ordinary people, and a concomitant growth in that of Western liberalism. China is still a Leninist party-state, with or without Chinese characteristics, but during the Cultural Revolution it was a target for factional strife, struggles for power, and for a fierce challenge to its dominance.
3 The introduction of a market oriented economy was, in part, perceived by the reformers as a move to revive and invigorate Party dominance. At the same time the development of a market-orientated economy challenges the Leninist party-state by further undermining the political culture, ushering in new centres of potential political power and raising popular expectations. 4 The rapidity of the reforms, initially in the countryside, weakened Party organisation. Steps have been taken to restore Party hegemony through a campaign to give 'social stability' equal billing with market reforms.
It is, however, equal billing with a difference as expressed in the numerous variations of the slogan 'promote the socialist market economy and maintain social stability'. The first part of the slogan is clear but 'social stability' is not a simple but multi-faceted code referring to the maintenance of public order, upholding 'spiritual civilisation' (a code in itself) but most of all to the embedded status of the Communist Party as a dominant promoter and beneficiary of 'market socialism'. China nonetheless has been systematically moving away from its centrally planned economy toward a market-oriented economy.