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Since January 1, 2005 China has entered into the "post-WTO transitional period'' from its WTO entry. So-called the "post-WTO transitional period'' is the period from January 1, 2005 to the date when China opens all its sectors it promised to foreign participation.

"Due to the shielding effect of the transitional period, the related Chinese sectors have gained the precious adaptive phase and debugging period; there is not enough foreign competition influence on major industries in China; there is not yet real impact on China's economy'', said Professor Chu Xiangyin with the University of International Business and Economics (UIBE) in an interview with a People's Daily reporter. He also stressed that it is not to say that we will sleep more sound in our beds. In fact, there have been many challenges since China's WTO entry and there have existed risks in some domains''. He said China should make full use of the last opportunities in the remaining two years of the transitional period to readjust its corresponding measures.


Agricultural products--


Improving international competitiveness
Chu said attention should be paid to the influence on the agricultural development and the market of farm produce due to the import tariff reduction and non-tariff measures on farm produce. China has made its promises to the WTO that it will cancel all agricultural export subsidies; the national support for agriculture can only account for 8.5 per cent of the agricultural production value; the tariff for agricultural products will be reduced to about 15 per cent finally; the import of staple agricultural produce should be allowed to use tariff quota and the quota for wheat is as high as 9.63 million tons, that for corn 7.2 million tons and rice 5.3 million tons while the tariff is only 1 to 10 per cent within the quotas.

China is a country with a large agricultural population and about 70 per cent of Chinese population are peasants with average per-capita growing area being only 0.1 hectares. There have been serious challenges for farming produce market. It is difficult for the production and sales of the staple agricultural produce to compete with that of foreign countries. So it is very important to carry out the policy on agriculture, countryside and farmers, reduce the burden of farmers and improve agricultural productivity in order to boost the international competitiveness for agricultural produce.


Autos--


It must be strict to start auto projects
Paying full attention to the development of auto industry. In recent years, a good momentum has been seen in the development of auto industry. As a result, there have been many foreign brands entering into China's market with a dramatic increase of auto production capacity. In addition, with the improvement of people's consumption level, the rapid domestic demand for autos has been on the rise. There appears boom for auto production and sales. And it is also brisk for imported autos and sales.

But, sober-minded must be remained in developing auto industry. Recently it must be earnestly analyzed and fully estimated the influence brought about by the tariff reduction for imported autos. From a long term of view, there is a surplus in the production of autos as major part of the production has been shifted to China. By 2010, China will likely become the second largest automaker in the world. Attention must be fully paid to the problem on how to develop auto industry if there will be no sound sales environment formed; if it will be impossible to export autos with zero tariff and if all produced autos will rely on sales in the domestic market. From now on, blind investment should be envisaged and it should be strict to start auto projects.


Financial and service industries--


Attaching importance to industrial security
Special attention should be paid to the industrial security brought about by the opening services including financial and commercial retail industries. Although opening the sectors such as its banking and insurance to foreign participation did not bring many troubles to China in the first threes of the transitional period, it cannot be concluded that there will be no problem for financial security.

With powerful foreign banks and insurance firms' entry into China's market in an all-round way and with the repealing of the limitation to management areas and opening renminbi business there will be a rigorous situation ahead for the commercial banks and insurance sector in China. At present it will be bottleneck to refrain Chinese financial sector especially the banking industry, from entering into competition with foreign counterparts, as there are problems for Chinese commercial banks. The problems include higher proportion of dead and bad accounts, low service levels, client resources and shortage of professional talents, which is also the key to the stable transition of banking sector. It is the same for the insurance industry. The influence for the insurance industry will be obvious in the last two years of the transitional period.


Retail sector--


Management concepts should be changed
In the first three years of the transitional period the opening of retail sector has brought reforms and changes to the retail industry in China. At present the development of the retail industry is in good condition. There has been a gradual increase of the retail sales volume and the ratio of the total foreign wholesales and retail sales has not exceeded 10 per cent of the total social sales volume.

However there is a problem that challenges our attention. The total sales volume of Wal-Mart was over 260 billion US dollars in 2003 with a 3-5 per cent increase in 2004 while the sales volume of Hualian, the biggest retail enterprise in China, was less than 96 billion yuan or about 11 billion US dollars in 2004. There is a great gap between domestic and famous retail enterprises in the world and even a greater gap between them in management concepts. It is a most urgent task for Chinese retail enterprises to have management and sales concepts, enlarge business scope and improve service quality.


Chinese government continues to meet its commitments to the international body (links)
In 2005 the transitional period for the important service sectors including the banking, securities, insurance and retail trade will be gradually finished.


On July 1, 2006 auto tariff will be reduced to 25 per cent and the average tariff for auto parts to 10 per cent.


From 2005 on the tariff quota will reach its highest point, of which the tariff quotas for wheat and corn will reach 10.7 and 6 per cent of the domestic output respectively in addition to the reduction of overall tariff level for agricultural produce.


After 2005 regional limitation to insurance industry will be cancelled and the total assets demand for foreign brokerage firms will be reduced and sole foreign-funded brokerage firms will be allowed to establish.


In 2006 the limits to foreign banking ownership, management and set-up, including branches and permit issues will be cancelled and foreign banks will be allowed to provide Chinese clients with renminbi business, namely foreign banks enjoy national treatment.


From 2005 on, the industries including construction, tourism and transportation will be allowed to set up sole foreign-funded enterprises.


In 2007 regional limitation to basic telecommunications will be cancelled and the foreign share will be allowed to reach 49 per cent.