Why is china's entry into the wto important for multinational companies

hi there,

on december 11, 2001, china officially became the 143rd member of the

world trade organization (wto) in the culmination of a negotiation

process which began in 1986. economists have long been debating the

global effects of china's accession to the wto, and as china becomes

fully integrated into the organization over the next several years,

the accuracy of their predictions will be tested.

one of the biggest residual effects of china's entry to the wto,

according to economists, will be the relocation of manufacturing and

distribution centers to china. due to its cheap labor, cheap

industrial land, and educated workforce, china is an ideal production

centre for businesses based in outside countries. this will likely

result in a twofold impact – more jobs will be available in china,

while countries like india, which have historically offered cheap

labor, will suffer. taiwan and malaysia's technology industries are

already suffering as companies like dell computers move production to

china, and while foreign investment soars in china, other asian

countries suffer. in addition, mexico and the caribbean will lose

thousands of garment manufacturing jobs as the u.s. lifts restraints

on chinese textile imports.

while the impact on southeast asia may be negative, the western world

may benefit. while some suggest china's open borders will result in

increased competition and a decreased employment rate for the western

world, western countries will benefit from access to china's highly

developed electronics and industry sectors. with duties and quotas

slashed, and restrictions lifted, multinationals will benefit by

setting up distribution centers without the need for chinese

middlemen. in addition, it's expected that china will import massive

amounts of food products, machinery and vehicles from the u.s., japan,

hong kong, taiwan, singapore and south korea, thus providing

significant boosts to these countries' economies.

in conclusion, it seems that while western countries may benefit from

china's accession to the wto, there's the potential that asian and

south american countries may feel the pinch of free trade as china

moves to a global economy.

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