WTO Cuts A Wide Swath

Since everyone – including the Standing Committee – is on vacation, there's time to ponder some anticipated effects of WTO membership. Someday China will, in fact, be allowed to join the WTO and, some time after that, it will begin to fulfill a few of its market access commitments. Among other things, that means opportunities for global car giants and for small shipping companies and dangers for the four state banks and hundreds of breweries.

Although the PRC resisted American and European pressure to quickly liberalize the auto sector, it now seems sold on survival of the fittest. The government intends to end its supervision of manufacturing and prices, allowing firms free rein in introducing new models and offering discounts. Another set of companies licking their chops are freight forwarders. The sector is to be thrown completely open to foreign investment while trade is expected to thrive post-WTO.

In contrast, beer-makers are not filled with cheer. The removal of local protective tariffs spells the end for the bulk of the country's 500 breweries, including foreign firms who are generally failing to make money. The main state banks should also be worried. Their measures of capital adequacy do not match those of the Bank for International Settlements. The banks must either significantly boost reserves or face foreign competitors with much higher credit ratings.

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