China Calls Trade Vote a Milestone

With the suspense finally over, China today welcomed the U.S. Senate’s decision to establish permanent normal trade relations between the two nations, a milestone in their diplomatic ties.

“We appreciate the great efforts made by American people of vision from the Democratic Party and the Republican Party,” declared Shi Guangsheng, head of the Ministry of Foreign Trade and Economic Cooperation. Putting Sino-U.S. trade ties permanently on a normal footing “reflects the common desire of the two peoples,” he said.

The Senate’s decisive 83-15 vote Tuesday capped months of debate in the United States and paves the way for greater American access to a vast pool of consumers with China’s entry into the World Trade Organization. Beijing has sought to become a full-fledged global trading partner for more than a decade.

Passage of the trade legislation was seen as a victory for reformers here, such as Premier Zhu Rongji, who have made stronger Sino-U.S. ties and open markets the cornerstone of the Communist government’s domestic and foreign policy.

But analysts warned that freer trade carries risks as well as rewards for Beijing. In particular, foreign competition after China’s accession into the WTO, which is expected later this year, could cost millions of Chinese workers and farmers their jobs, adding to discontent already brewing in cities and the countryside. Local protests over economic issues are becoming commonplace throughout the country.

“How the Chinese Communist Party responds to this challenge will be one of the critical issues of the next decade,” said Joseph Fewsmith, a sinologist at Boston University. “The [trade] agreement is historic and it will accelerate change in China, but those changes could go in any of several directions. Let us hope they go well.”

State media closely followed the trade legislation’s odyssey through Capitol Hill. Hours before the vote was taken, Chinese officials were exhorting senators to approve the bill.

People in Beijing awoke to the news today that the bill had passed by a wide margin and that--once the measure is signed by President Clinton, which is widely expected--trade relations between the two nations will no longer undergo yearly scrutiny by Congress, an exercise many Chinese found irritating.

“Politically speaking, a sensitive spot for the U.S. and China has faded. The two countries will no longer have to dispute that issue,” said Jin Yulin, who works in the computer business. “Instead, they can coordinate their trade relationship.”

In Hong Kong, the vote came as a welcome piece of good news at a time when oil price hikes have cast doubt over the region’s prospects for economic growth.

Hong Kong’s chief executive, Tung Chee-hwa, reiterated the prevailing belief in the business community that WTO membership will bring major benefits to the former British colony, even though the move will erode some of its comparative advantage by opening up other Chinese cities to direct trade ties with the outside world.

“We believe that Hong Kong will stand to benefit substantially from the new business opportunities,” Tung said in a statement after the Senate vote. “We are confident that Hong Kong people will be able to overcome the challenges.”

Many of those who track Hong Kong’s economy believe that the territory is bound to lose a share of China’s world trade after Beijing’s entry into the WTO but that the overall volume it handles will grow sharply as China’s trade soars.

One study produced recently by the investment firm Goldman Sachs predicts that WTO entry will double China’s annual trade to $600 billion by 2005.

“It’s a win-win situation for all--for Beijing, for Taiwan and for Hong Kong,” summed up Guonan Ma, an analyst at Merrill Lynch in Hong Kong. “It is one more political factor that has stabilized.”

Ma said the move will spur trade between Taiwan and mainland China, a link that observers hope will have a positive influence on the often-tense relations across the Taiwan Strait.

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Chu reported from Beijing and Marshall from Hong Kong.