As China becomes more dominant in the global economy and an increasingly important market for American-based IT companies seeking a share of the new global pie, this is clearly bad news. It is curious how the Chinese are getting to be such a major force in our lives and the world economy. And as they do, appear to be tightening the noose on things like "freedom of speech" that most Americans and American corporations hold so dear.
A little over five years ago China announced its plan to become a full-fledged partner in the world's trading system (WTO), and agreed to a series of important commitments all designed to open and liberalize its regime, and to integrate China into the world economy. In the process, it offered the U.S. and other trading nations a more predicable environment for trade and foreign investment in China in accordance with WTO rules and member expectations. The WTO is truly the only global organization with tough -- and importantly -- enforceable rules of trade between nations.
While China's entry in the WTO, for the first time in its history, promises unfettered access to the huge and growing China market, no one should expect sweeping or dramatic changes immediately-- certainly, it appears, not in the information sector of goods and services. And only over time -- in the market for manufactured goods or more traditional telecom services -- will anyone be sure that full and unrestricted access to this huge market has occurred.
While all import quotas were eliminated almost immediately, the time and condition of market access still depends upon the particular product or service, the industry sector, the geography and the year of proposed entry. For example, tariffs on information technology goods and services are being reduced gradually, over a period of many years. With regard to services, foreign suppliers are allowed to offer so-called valued-added services like electronic mail, voice mail, database retrieval and paging services but most must do so by having a strong local Chinese partner, as majority foreign ownership of telecom or information industry goods and services is still a distant dream.
To be sure, China wants to be able to control how foreign service providers enter the market and where. For example, during the first two years of operation such new ventures were limited to doing business in Beijing, Shanghai, and Guangzhou.
Key to success of all the agreements is the extent to which both local and national taxes are applied uniformly to both domestic and foreign businesses and how much China sticks to its agreement not to enforce export performance, local content and other requirements as a condition of importation or investment.
Within weeks after the WTO agreement was signed, however, and the champagne glasses emptied in Qatar where the WTO announced China's entry into membership, then Vice Minister Wu Bangguo, held a weekend conference to tell over 50 state-owned giants from sectors such as petrochemicals and telecommunications, that China won't abandon its strategy of backing favorite companies. He hinted that it would continue to subsidize state-owned companies, and help them raise capital on overseas stock markets.
How well and how fast China responds to its WTO promises remains to be seen. Of great concern to many observers is China's attitude toward the press and the restrictions it has placed on the use of the Internet.
China has a long history of limiting free expression and periodically calls a meeting of top editors and media professionals from around the nation to warn them against political reporting. Clearly unsettling to free press advocates, China listed seven categories of content that are strictly off-limits for media companies to cover; from disclosing "state secrets," -- however that may be defined -- to spreading rumors, false news or news which "interferes with the work of the party or government."
China also has developed policies inhibiting Internet use, banning access to foreign sites, and punishing transgressors. Over the years China shut down over 2,000 Internet cafes and ordered an additional 6,000 to suspend operation because the cafes evaded tough content laws or "breached public security." That practice continues apace.
Maybe they can have it both ways -- be in favor of free trade but against a free press and the free flow of news and information. Certainly China seems intent on building a 21st Century telecom industry, and has done and said the right things for a gullible U.S. administration intent on financing its ever-growing national debt.
John M. Eger, a telecommunications lawyer, and Van Deerlin Endowed Chair of Communications and Public Policy at SDSU , opened China to commercial television (in 1984) as head of CBS's International Broadcasting Division.
