As China entered 2003, the country is faced with a number of new realities. All of them appear are encouraging from a business perspective. These include:
- China’s successful accession to the World Trade Organisation (WTO);
- The improved relations with the USA & Europe;
- The prospect of relatively smooth political change at the forthcoming Party congresses and;
- Expected strong economic growth in 2003.
WTO accession is now a done deal and China has entered 2002 with the initial hype over accession finished and the opportunity to start to see how well China will live up to its obligations. Foreign firms are starting to take China more seriously. The main benefits are expected to be:
- The start of the process of liberalising a number of markets to foreign competition. Given the expected downturn in exports resulting from the economic slowdown in the USA and Europe, WTO should provide the boost to FDI inflows that may make up the gap.
- Greater transparency amongst Chinese companies as both outside investors, potential joint venture partners and domestic institutions such as CIRC, the Ministry of Finance and others demand it.
- A knock-on effect for Hong Kong that has already seen an influx of foreign companies establishing regional headquarters. Once again Hong Kong may be able to recapture its role as the ‘bridgehead’ into China – though this may only be a temporary phenomenon – Shanghai is breathing down Hong Kong’s neck.
