Emergence as a Global Economic Power } 687
barriers to trade. China’s decision to join this system had a deep impact on
its role in global trade. As shown earlier in Figure 25-3, China’s exports rose
rapidly after WTO entry, expanding by a yearly average of 16 percent in the
decade before WTO entry compared with average growth of 19 percent in the
decade after entry. Moreover, the post-entry decade included the precipitous
decline in 2009 when the global recession hit. If that year is excluded, the
post-entry annual export growth rate was nearly 22 percent higher than in
the pre-entry decade.^21 Factors other than WTO entry were involved in this
growth, but it was one important factor.
There was strong opposition within China’s CCP elite to both GATT and
WTO entry. According to Li Lanqing, who was the PBSC member from 1993
to 2003 in charge of overseeing the WTO negotiations, in December 1982 the
Ministry of Foreign Economic Relations and Trade (MOFERT) recommended
that China rejoin GATT.^22 China’s top leaders endorsed the MOFERT pro-
posal, stipulating that China would join as a “developing country” with terms
to be negotiated. It took over two years for China to make a formal request
for re-entry into GATT. That came only in July 1986. Negotiations then began
and would continue for thirteen years.
The question of GATT and WTO entry was closely linked to the
market-based reform of China’s State Owned Enterprises (SOEs). The indus-
trial ministries, already under growing competitive pressure from China’s
burgeoning private sector and foreign-invested joint ventures, were fearful
of increased competition by foreign firms, especially large multinational
firms with strong capital resources, prestige brands, and modern technology.
China’s industrial ministries and the enterprises they controlled had domi-
nated the pre-1978 economy and were still immensely powerful in the 1980s.
As noted in an earlier chapter, China’s post-1978 opening and reform process
had avoided direct challenges to these powerful vested interests. Now GATT/
WTO entry presented a strong challenge to them, perhaps threatening their
economic survival. Opponents of GATT/WTO entry advanced a number
of arguments. Socialist ideology was one: state-owned firms were “social-
ist,” or at least a “more advanced form of socialism” than privately owned
firms, let alone foreign privately owned firms. Allowing foreign multina-
tionals free access to China’s markets would allow those firms to dominate,
possibly even monopolize those markets by eliminating China’s state-owned
enterprises—who were still China’s main suppliers of many heavy indus-
trial goods. If that happened, opponents of WTO entry warned, foreigners
would then be in a position to return China to the painful pre-1949 status
of a “neo-colony,” or so said opponents of GATT/WTO entry. Li Peng, who
became premier in March 1988 and who had a long association with China’s
big industrial ministries and enterprises, was a key skeptic of WTO entry.^23
A debate between economic nationalists and economic liberals developed
in the 1990s as foreign investment by large multinational corporations (MNC)