PRC is likely to become a member of WTO by the end of 2000. Over the long term, PRC s accession to WTO and the commitments to cut tariffs, liberalize trade and investment, and open up domestic sectors for foreign participation should lead to significant efficiency gains and wider consumer choices. However, some of these benefits will take time to materialize. During the initial years, PRC s membership to WTO will pose several challenges., especially in sectors such as agriculture, banking, insurance, and telecommunications. Cutting import tariffs and liberalizing agricultural imports as part of WTO commitments may result in a replacement of domestic production by imports at the margin and thereby hurt the incomes of farmers.
Farm incomes are, therefore, likely to fall more in the poorer inland provinces.
The participation of the private sectors in the areas of distribution, marketing and grading should be encouraged to improve the comparative advantage of domestic producers. The financial position of the banking system needs to be strengthened. Although the Government is making progress in addressing the problem of nonperforming loans through the establishment of AMCs and recapitalizing the banks through bond issues, it will take time to achieve significant results in this area. Subjecting the banks to foreign competition will put pressure on them. Like the banking sector, the insurance sector and pension fund management are not well developed.