This week, visiting US treasury secretary Lawrence Summer met with Premier Zhu, infusing a new life to the moribund WTO talk. But the hope will be short lived. Both China and the US now view the WTO negotiations through the lens of domestic politics. China's entry into the WTO this year is dead. Chinese domestic politics have shifted since Zhu's visit to the US, narrowing the maneuvering room for Chinese negotiators.
Reformers are on the defensive, while conservatives are on the rise.
The economy is suffering from ballooning unemployment rates and 24 long months of deflation. The reformist Zhu has been blamed for the sorry state of the economy and has been forced to cede public leadership on economic issues to the more conservative President Jiang Zemin. The country's top priority has become domestic stability, not membership to the WTO or radical economic reform. Chinese negotiators are acutely aware that too many concessions could spark a political backlash at home. Although China's membership in the WTO will boost exports and attract more inward foreign investments, such benefits are largely long term.