China and the WTO

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Why China Wants In

Membership in the World Trade Organization lends China stature in the international community that it doesn't have now. Despite its one billion people and its seat on the U.N. Security Council, China still feels it doesn't get the respect from the West that it deserves. A voice in matters of global trade would probably change that.

But it's hardly a matter of simple vanity. After years of double-digit economic growth, China has been hit hard by the Asian economic crisis, and this year saw its inflow of foreign capital decrease for the first time in memory. There's a reason China made so many market-opening concessions to try to win a deal with Washington this year (and sent its most business-friendly ambassador, Zhu Rongji, to try to win it): It badly needs the West's investment dollars. "WTO membership will give China better access to world capital markets," says TIME senior economics reporter Bernard Baumohl. "And it will make China a more reliable place for foreigners to invest."

And with Western businesses and Western money will come Western experts intent on making sure China (and its investors) gets the most out of every dollar. China's economy is riddled with inefficient state-run industries and debt-addled banks; it has considerable oil reserves but not the wherewithal to pump it efficiently. Without importing capital, both financial and intellectual, China knows it will never rise beyond "future" superpower and realize its almost limitless potential.

What's In It For U.S.?

President Clinton perhaps makes too much of "engaging" China, as if he were doing it a favor. In fact, U.S. businesses stand to make a killing if China gains entry -- which is why they kicked up such a fuss after Clinton let Premier Zhu go home empty-handed. One billion people is a lot of wallets, and China's already-sizable middle class will only expand as its economy digests all that foreign capital. The prospect of peddling American products -- everything from insurance and banking services to software and Hollywood movies -- to Chinese consumers has U.S. business drooling. All that ties in rather neatly with Clinton's more politically oriented motives: to make China a more democratic, more open and more peaceful society than it is today. Increased business and trade cooperation, as well as increased prosperity for Chinese, may ensure that the world's next superpower turns out more like America than like the Soviet Union.

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