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China's economy will be disrupted in the short term, but in the long run, it can benefit immensely from its WTO entry, said Subbaraman.
Rising numbers of bankruptcies and displaced workers are likely, as increased trade competition after the WTO forces a reallocation of resources away from protected and less competitive industries to sectors where China has more of a comparative advantage, he said.
According to the International Monetary Fund, WTO accession will subtract 0.3 per cent from China's real GDP growth in the first year.
Subbaraman said potential losers from the accession include the highly protected agricultural, telecommunications and banking sectors and some of the more capital-intensive ones such as the auto industry.
Besides short-term adjustment costs, WTO accession will have a profound effect on the composition of China's balance of payments, he said.
The reduction in trade barriers will lead to a substantial increase in merchandise imports but only a modest rise in exports.
Furthermore, WTO entry will help spur the development of the legal and regulatory framework and accelerate reform in the bank and enterprise sectors, thus creating demand for foreign services -financial, accounting, management consultancy and legal-to support restructuring.
As a result, the current account surplus of US$20.5 billion in 2000 is likely to deteriorate and could sink into a small deficit by 2003, Subbaraman said in his report.
However, the deterioration in China's current account should be more than offset by an improvement in the capital account, noted Paul Sheard, chief economist for Lehman Brothers Asia.
The liberalization of China's services sector should attract stronger FDI (foreign direct investment) inflows, while measures to strengthen the rule of law and to broaden and deepen the bond and equity markets should help deter portfolio capital flight.
"On our estimates, actual FDI will soar from US$46.8 billion today to around US$65 billion by the end of 2003," he said, adding that China's overall balance of payments surplus is expected to increase steadily in the coming years.
"This means that the tendency for the RMB will be to appreciate once China begins to move toward a more flexible exchange rate regime," he said.
In the long run, WTO entry is expected to add around 1.3 per cent per annum to China's GDP growth, he added.
"We are optimistic that China will achieve an average 6 per cent growth over the next two decades," he said at the press conference.
Notes
disrupt vt.to throw into confusion or disorder干扰，扰乱：使陷入混乱，使杂乱无章
in the short term从眼前的观点看
in the long run:in the final analysis or outcome从长远看，从最终结果来看
WTO entry加入世界贸易组织
entry n.the act or an instance of entering进入：进入的行为或状态
bankruptcy n.破产，无偿付能力
displaced worker下岗工人
reallocation of resources资源重新配置
reallocation n.重新分配，重新划拨
less competitive industry竞争力较弱的行业
comparative advantage比较利益；比较优势
International Monetary Fund国际货币基金（组织）
WTO accession=WTO entry加入世界贸易组织
subtract vt.to take away; deduct拿走；扣除
potential a.潜在的, 可能的
capital-intensive sector资本密集型部门（行业）
balance of payments国际收支
reduction n.减少, 缩减量
trade barriers贸易壁垒
spur v.鞭策, 刺激,
legal and regulatory framework法律法规框架
framework n.构架, 框架, 结构
accelerate v.加速, 促进
management consultancy管理咨询
restructuring结构调整
current account surplus经常帐户盈余
deteriorate v.(使)恶化
sink into deficit变为赤字
sink into:to pass into a specified condition渐渐进入：渐渐进入某种特定状态
liberalization n.自由主义化, 使宽大
FDI (foreign direct investment)国外直接投资
to strengthen the rule of law加强法制
to broaden and deepen the bond and equity markets深化债券股票市场
deter portfolio capital flight阻止投资资本外逃
deter v.阻止
portfolio n.a group of investments一组投资
soar v.剧增
appreciate v.升值
flexible exchange rate regime浮动汇率制
optimistic a.乐观的
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