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China West - A Breakaway Future
Still Leans on its Past

Myron Stokes/Martha Hindes

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Surface Appearances

"It's true China can change, and it has been changing. But I wouldn't underestimate the forces that resist change," said Greg Mastel, economist and author with two books to his credit about the Chinese economy.

Mastel directs the global economic policy project for the New America Foundation, a three-year-old Washington, D.C. think tank sometimes referred to as "radical central." With some 13 trips to China behind him (the latest in 1999), he personally has concluded that extending trade recognition to China is the correct way to go - but with caution.

"I supported the PNTR," said Mastel. "But I think it's going to be a very, very difficult transition. China is not a natural fit for the WTO. It will take many, many years - maybe decades."

Although WTO status is to phase down import tariffs, particularly on motor vehicles, from a high of nearly 100 percent to a more reasonable 25 percent, Mastel feels that rate still is excessively high and will keep imported goods out of the reach of most Chinese.

"There could be some imports of parts or materials, but I don't think we're going to see freighter after freighter filled with U.S. automobiles going to China," he said.

Reconciling Differences

The real challenge, said Mastel is how to reconcile China's version of trade and industrial policy with the rest of the world, as the emerging nation seeks to shelter its own self interests while WTO policy mandates call for a much more liberal trading partner.

A major interest for the Chinese is gaining expertise in the manufacture of vehicles needed to move goods and people around the country. China has pursued the auto industry vigorously for a quarter century, with most companies that now are doing business there manufacturing locally for the Chinese market, said Mastel.

But history has a littered trail of trade violations when China felt it was not in its best interest to keep them, he added. "'Actual contracted investment' in China really is a deceptive term. It means what's promised has not always emerged."

And American companies have felt the sting of losing proprietary rights, and of violations of trademarks such as the copying of hood ornaments or vehicle body designs by the Chinese to whom the concept of one person or corporation owning an idea seems foreign.

"It's been a big problem for Western companies operating there," said Mastel. "There are all kinds of horror stories heard throughout the year."



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