The Social and Political Implications of China's WTO Membership

Abstract

China will join the WTO soon. This article does not question the rationale of China's decision to join the WTO; nor does it challenge the premise that, all in all, the potential benefits from WTO membership outweigh the potential costs, at least in the long term. Rather, it focuses on the social and political implications of China's WTO membership. It is assumed that even if WTO membership is potentially a productivity-enhancing move for China, the benefits and costs of such a change will not be evenly distributed. Unless there is a mechanism that can induce or force the winners to compensate the losers, distributive conflicts between the two groups will be inevitable. Such conflicts may weaken or even erode political support for globalization. Thus, to remain committed to globalization, the government of an open economy must play a role in redistributing gains and costs. The first section elaborates this analytical framework. The second section argues that Chinese reforms have changed from a win‐win game to a zero-sum game. As a result, China has turned itself from a relatively egalitarian society into one with huge and growing inequalities. The third section analyzes who will stand to win and lose when China joins the WTO. It predicts that precisely those social groups who have borne the costs of recent reforms will be hit hardest. More significantly, those losers happen to be the social groups that have long served as the political bases of the communist regime. WTO membership thus poses a challenge to the legitimacy of the Chinese government. The final section discusses the political implications of China's WTO membership.

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