The importance of the World Trade Organisation (WTO) for international free trade today has enticed China to join the WTO in December 2001. The significance of WTO membership for China cannot be underestimated, inevitably speeding up much-needed economic reform in the country. The gradual transition from a planned- to a market-economy is expected to continue in the future. The severity of the impacts for the economy will depend on how successful China is in providing policies that will assist the nation in the major adjustment problems that it faces in the future.
The expected, actual, and needed implications for China’s state-owned enterprises (SOEs) resulting from WTO membership will be investigated in detail; in the process, the significance of SOEs to the Chinese economy will be highlighted. SOEs are mostly ill- prepared for a post-WTO China, and the dismal state of these companies has already led to the decline of market share in the past decade. For the future, the retreat of the state is likely to continue. The main implications for SOEs from China’s WTO membership are seen in the areas of competitiveness, corporate governance, privatisation, mergers and acquisitions, property rights, unemployment, and attracting and retaining qualified personnel.
This dissertation offers one of the most detailed insights into the challenges facing China’s SOEs and the implications of China’s WTO membership for these companies, while also highlighting the areas that require future attention. The understanding of the role and meaning of SOEs for the Chinese economy is of immense importance for foreign investors wanting to invest in the country, already cooperating with China’s SOEs, or looking into the possibility of such.
Table of Contents
1 INTRODUCTION
1.1 AIM & OBJECTIVES
1.2 OVERALL RESEARCH APPROACH
1.3 STRUCTURE OF THE DISSERTATION
2 THE WTO & FREE TRADE
2.1 CHAPTER INTRODUCTION
2.2 THE WTO
2.2.1 UNDERSTANDING THE WTO
2.2.2 THE STRUCTURE & WORKING OF THE WTO
2.2.3 SIGNIFICANCE OF JOINING THE WTO
2.3 CHAPTER CONCLUSION
3 CHINA & THE WTO
3.1 CHAPTER INTRODUCTION
3.2 CHINA’S LONG MARCH TO WTO MEMBERSHIP
3.2.1 PROLONGED DIFFICULTIES
3.2.2 FINAL ACCESSION
3.3 CHAPTER CONCLUSION
4 METHODOLOGY
4.1 CHAPTER INTRODUCTION
4.2 OVERALL RESEARCH APPROACH
4.2.1 OBJECTIVITY, VALIDITY & TRIANGULATION
4.2.2 CHINESE STATISTICAL DATA
4.3 SECONDARY RESEARCH
4.3.1 LIBRARIES
4.3.2 ELECTRONIC DATABASES
4.3.3 NEWSPAPERS & PERIODICALS
4.3.4 INTERNET
4.3.5 SEARCH TERMS
4.4 PRIMARY RESEARCH
4.4.1 CASE STUDIES
4.4.2 QUESTIONNAIRES
4.4.3 INTERVIEWS
4.5 CHAPTER CONCLUSION
5 MACRO-ECONOMIC ASPECTS & CHINA’S WTO MEMBERSHIP
5.1 CHAPTER INTRODUCTION
5.2 MACRO-ECONOMIC ASPECTS
5.2.1 POSITIVE IMPACTS
5.2.2 NEGATIVE IMPACTS
5.3 MACRO-ECONOMIC IMPLICATIONS
5.3.1 TARIFF & QUOTA REDUCTIONS
5.3.2 INCREASING COMPETITION
5.3.3 ECONOMIC REFORM, OWNERSHIP & MARKET SHARE
5.4 CHAPTER CONCLUSION
6 CHINA’S SOE & WTO MEMBERSHIP
6.1 CHAPTER INTRODUCTION
6.2 CHINA’S SOES
6.2.1 SOES INTRODUCED
6.2.2 MAIN PROBLEMS FACED BY CHINA’S SOES
6.2.3 PRE-WTO STATUS QUO & DEVELOPMENT OF CHINA'S SOES
6.2.4 MAIN PRE-WTO ECONOMIC REFORMS
6.3 IMPLICATIONS FOR CHINA’S SOES
6.3.1 COMPETITIVENESS & FREE COMPETITION
6.3.2 CORPORATE GOVERNANCE
6.3.3 PRIVATISATION
6.3.4 COOPERATION, CONSOLIDATION & ACQUISITIONS
6.3.5 PROPERTY RIGHTS
6.3.6 DOWNSIZING & UNEMPLOYMENT
6.3.7 ATTRACTING & RETAINING QUALIFIED WORKERS
6.4 EXCURSION: AGRICULTURE, CHINA & THE WTO
6.4.1 THE CHINESE POINT OF VIEW
6.4.2 THE AMERICAN POINT OF VIEW
6.4.3 EXPECTED CALCULATED EFFECT
6.4.4 AGRICULTURAL REFORM
6.5 FUTURE OUTLOOK
6.5.1 SOES: POSSIBLE FUTURE DEVELOPMENTS
6.5.2 NOT ALL GLOOM
6.6 CHAPTER CONCLUSION
7 CONCLUDING REMARKS
7.1 CONTRIBUTION & SIGNIFICANCE OF THE DISSERTATION
7.2 AREAS OF FURTHER RESEARCH & LIMITATIONS
7.3 OVERALL CONCLUSION
Research Objectives and Themes
This dissertation investigates the economic implications of China’s WTO membership, focusing specifically on the challenges and necessary adaptations for Chinese state-owned enterprises (SOEs). It addresses how these enterprises, often characterized by uncompetitiveness and reliance on government support, must respond to increased market competition and international standards to survive in a post-WTO economic environment.
- Economic impacts of WTO membership on China's transition to a market economy.
- Strategic and operational challenges facing state-owned enterprises (SOEs).
- The influence of foreign direct investment and international market competition.
- Institutional reforms regarding corporate governance, privatization, and property rights.
- The role of the Chinese government in balancing social stability with economic restructuring.
Excerpt from the Book
6.2.2 Main Problems Faced by China’s SOEs
It is typically agreed upon by observers that SOEs present the Achilles Heel of the Chinese economic performance (for instance, Broadman 2001), which has been outperforming most other developing nations in terms of growth for over two decades.
While the term SOEs often leaves the impression that these companies are of significant size, both in terms of output and in terms of employment, studies (for instance, Research Group 1997), show that almost the opposite is the case. While it is certainly true that a few dominant players in visible industries are overly observable, on the whole, China’s SOE sector is dominated by smaller companies.
The automobile industry, for instance, has long seen far too many small producers for weak market demand due to inflated prices that the average Chinese consumer cannot afford to pay. In the beginning of the 1990s, there were 125 producers with an average annual production of only 6000 automobiles (Xia 1993). In 1996, almost every Chinese province (refer to the map of China in Appendix three) had its own automotive producers, and each province practiced local protectionism (see below) to block manufacturers of other provinces from entering their local market (Research Group 1997). Only three producers, namely Shanghai Auto, First Auto, and Second Auto, have the capacity to produce about 100,000 each per annum (Zhao, Tong & Qiao 2002). In comparison, Toyota in Japan produces about 5m vehicles a year, or about 50 times as much as China’s top three automobile companies combined.
Summary of Chapters
1 INTRODUCTION: Outlines the research scope, objectives, and the overall structure of the dissertation regarding China's transition in the global trade environment.
2 THE WTO & FREE TRADE: Provides an overview of the World Trade Organization, its institutional framework, and the significance of its agreements for global trade.
3 CHINA & THE WTO: Details the historical struggle and political, economic, and legal difficulties China faced during its 15-year path to WTO accession.
4 METHODOLOGY: Explains the research approach, emphasizing the use of secondary data and justifying the preference for qualitative research over primary data collection.
5 MACRO-ECONOMIC ASPECTS & CHINA’S WTO MEMBERSHIP: Discusses the broader economic implications for China, covering tariff reductions, increased competition, and shifts in market ownership.
6 CHINA’S SOE & WTO MEMBERSHIP: Examines the micro-economic challenges facing state-owned enterprises, including corporate governance, privatization, and labor issues in a post-WTO context.
7 CONCLUDING REMARKS: Synthesizes the findings of the research, highlights the dissertation's contribution, and suggests directions for future study.
Keywords
China, WTO, World Trade Organization, State-Owned Enterprises, SOE, Economic Reform, Market Economy, Privatization, International Trade, Corporate Governance, Competitiveness, Foreign Direct Investment, FDI, Social Stability, Industrial Reform.
Frequently Asked Questions
What is the central focus of this dissertation?
The work primarily examines the economic effects of China’s accession to the World Trade Organization (WTO) on its state-owned enterprises (SOEs).
What are the core thematic areas discussed?
Key themes include corporate governance, privatization, market competition, property rights, labor downsizing, and the broader macro-economic transition toward a market-based economy.
What is the primary research question or objective?
The main objective is to identify and analyze the expected and actual implications of WTO membership on the SOE sector and to highlight the areas where these companies require urgent reform.
Which research methodology was utilized?
The research relies primarily on secondary qualitative data, including journals, books, industry reports, and electronic databases, supplemented by a focused case study on the agricultural sector.
What does the main body of the work cover?
It provides an introduction to the WTO, details China's historical path to accession, analyzes macro-economic impacts, and dives into micro-economic challenges faced by SOEs, such as structural inefficiencies and overcapacities.
How can this work be characterized by its keywords?
The work is defined by the intersection of state-led economic transition, international trade law, industrial policy, and the survival strategies of state-owned entities in a competitive global market.
How does the automobile industry serve as an example in this research?
The automotive industry is used to illustrate the negative impacts of local protectionism, overcapacity, and small-scale production, which have rendered many domestic firms inefficient.
Why does the author conclude that corporate governance is a major hurdle?
The author argues that without meaningful separation between the state as a regulator and the state as an owner, SOEs lack the commercial motivation to improve efficiency or accountability, making them susceptible to continued financial losses.
- Quote paper
- Ben Beiske (Author), 2003, Post-WTO economic effects on state-owned enterprises in China, Munich, GRIN Verlag, https://www.grin.com/document/17800
