In China and the WTO, Supachai and Clifford offer optimistic views about the prospects for China's reform, Asian cooperation, and WTO-related growth in developing countries. The book makes a sustained and focused case that China must succeed as a new WTO member and a future participant in the next round of global trade talks. The authors also direct attention to the rise of China, primarily as it influences Asia and the WTO. In addition, the book speaks to issues concerning the "world split between those who benefit from the increasing wealth and openness of globalization and those who don't." The authors' views are that China's entry will lessen environmental, social, political, and security tensions around the world--rather than increase them.

Although it went to press before the release of the final accession package for China, this book serves as a primer on the US and EU bilateral market-access agreements that together encompass the bulk of China's WTO entry terms. The themes of the book stress the principles and broad commitments made by China, and on these particulars, the book is vital for anyone trying to understand the significance of the problems and prospects facing the PRC. The authors make an important contribution to the debate that will arise from the process of integrating China into the world economy.

A problem for the book, and indeed for any research assessing the economic impacts of China on the world, is one of evidence. Critics often debate the evidence about China, and usually most of them are partly right. Many observers note that PRC statistics are in need of much greater accuracy, and even Premier Zhu Rongji is said to have quipped: "Our statistics are no less true than last year." This humor works because all but the most committed skeptics recognize the positive trends resulting from economic reform, and a majority, at least in America at the time of Congress's vote on permanent Normal Trade Relations for China, believe that China's economic reforms are heading in the right direction. The authors acknowledge that the measures for basic indicators ranging from national income accounts to unemployment and bad bank loans are open to dispute and present the best case they can for giving China the benefit of the doubt.

Some Washington officials and nongovernmental organization skeptics want so-called "compliance police" to monitor and sanction China's shortcomings as it struggles to build government capacity and implement the principles and commitments made to the WTO. These readers may find the book too optimistic and lacking in a basic skepticism about conditions in China. But the authors make a convincing case for patience and forbearance, emphasizing that the WTO is fundamentally significant to a global economic order and that China has a rightful place in the body. China's WTO entry should have a positive influence on internal reform and on the Asian economies badly in need of recovery after the regional financial crisis and US recession (see Commentary).

In response to the impacts of the September 11 attacks in America, the authors focus on the contribution of the WTO to the continued viability of globalization. On this point at his book launch in Beijing, the incoming director-general said that at Doha, Qatar, the WTO succeeded in three areas: the members avoided a Seattle breakdown, set the basis for the new trade round, and reasserted an economic priority for the global political and military coalition against terrorism. For such statements and more, this book will merit wide attention.

--Stephen J. Anderson
Stephen J. Anderson is a commercial officer with the US and Foreign Commercial Service in the US Embassy in Beijing.

International Rules: China's Legal Strategy After WTO Accession

by He Yanmei, Li Jun, and Ni Zhengmao. Shanghai: Shanghai Academy of Social Sciences, 2001. 304 pp. Yen20 ($2.42) softcover.

Now that China is a World Trade Organization (WTO) member, how will it meet WTO standards and obligations? The authors, scholars from the Shanghai Academy of Social Sciences, examine this issue from a legal perspective.

As the authors point out at the beginning of International Rules: China's Legal Strategy After WTO Accession, China must meet international competition while maintaining economic growth at home. The authors argue that China cannot rely solely on exports to maintain growth, as some Asian countries have done, because so many domestic hurdles need to be overcome. These include the lack of experience in market economies; the old traditions of the planned economy; local protectionism; and most of all, insufficient preparation for the domestic application of WTO rules.

As a WTO member, China will have to meet the WTO's three underlying principles: free trade, transparency, and national treatment. In terms of free trade, China will have to lower tariffs, abandon its quota system, and reform its import permit system. The authors suggest that China should also issue new foreign trade and antidumping laws to revise the current single tariff mechanism. They recommend introducing a special tariff system that will include emergency, retaliatory, antidumping and antisubsidy, and environmental tariffs to protect domestic industries.

Under WTO rules, China's government must also meet international standards for transparency. Traditional government intervention in corporate operations must give way to market competition. The authors assert that China should introduce ISO 9000 standards for implementing the WTO's Technical Barriers to Trade agreement and should introduce a new Customs Price Estimation Agreement to regularize the customs reporting system.

Many PRC laws contravene the principle of national treatment, under which all members must give the same treatment to domestic and foreign goods and services. For instance, Chinese lawyers have more access than foreign lawyers to the market for clients engaging in litigation. China has long allowed foreign law firms to take on non-litigation cases in its territory, but has restricted their litigation cases. To remedy this and other situations, the authors recommend a review of domestic trade laws and "internal documents"--indeed such a review is well under way, and several important foreign investment laws have already been revised to meet WTO rules. Still, the authors advocate that the PRC enact a National Treatment Law to eliminate unnecessary local intervention.

For Chinese firms, the authors note, WTO entry means not only that PRC companies must comply with world standards, but also that they have a chance to increase their international competitiveness. Chinese firms have suffered in recent years from foreign antidumping charges. Domestic companies often refrain from appearing in court because of the high litigation fees abroad. After entry, China can resort to the WTO's dispute settlement body to argue for equal treatment. In addition, China's own antidumping and price laws are being revised to protect the interests of domestic industries.

The WTO rules on subsidies will act as an incentive for the government to increase investment in agriculture. The authors recommend establishing an agricultural association and agricultural conglomerates to increase the international competitiveness of this sector.

The authors also emphasize the importance of personnel training. After all, future competition will be based on the quality of human capital. China is in great need of professionals specializing in international trade and WTO rules and practices.

The book offers vivid examples throughout to illustrate the importance and urgency of enacting new laws and revising those that do not conform to WTO rules. China's Legal Strategy After WTO Accession could serve as a textbook for students majoring in trade and law. The book is also a good introduction to China's legal strategy after WTO entry for readers interested in China and WTO research.
--Dong Ke

Dong Ke is a research assistant at The CBR.

Strategy, Structure, and Performance of MNCs in China

by Yadong Luo. Westport, Connecticut: Quorum Books, 2001. 320pp. $72.50 hardcover.

Yadong Luo's book Strategy, Structure, and Performance of MNCs in China provides a broad analysis of organizational behavior and strategies of multinational corporations (MNCs). In the book, Luo undertakes a comparative study of Western versus Asian business practices in China. Among Luo's findings are that Asian MNCs tend to focus on direct product promotion while Western MNCs concentrate their efforts on research and development. He finds no difference in the return on assets between these two approaches, however.

Luo, an associate professor of International Business and Strategies at the University of Miami, has written this book for the newly minted manager to China or the student of Chinese business management. The book primarily serves to provide statistically significant data sprinkled with mini-case studies, along with a breakdown of foreign direct investment flows into China during the reform era.

While Luo provides a basic framework of how successful and unsuccessful MNCs have operated in China, he makes some glaring oversimplifications. For instance, he notes that Japanese investment practices were constrained mainly by Japan Inc. itself. He tries to make the case that Japanese firms preferred to trade first and then invest because they were overly risk averse. While this is true to a certain extent, Luo does not mention that in most industrial sectors, the more realistic explanation for the cautiousness of Japanese firms is their strong resistance to co-production in, and transfer of business technology to, China. The exception is, of course, when technology is the primary good, such as in semiconductor manufacturing. And here, Luo does lay out the dynamics of Japan's NEC Corp. and its successful production facility in China.

The author also does not give adequate attention to German business models in China. Luo discusses the highly profitable Shanghai Volkswagen Automotive Co., Ltd. and its success in establishing local sources for a high percentage of its parts and materials, but does not seem to have a handle on the politics of German business practices in China, which have been far more successful than those of Japan.

These political aspects will eventually change once China starts implementing World Trade Organization standards and norms, and maybe it's asking too much for one book on foreign direct investment in China also to embrace business politics. Nevertheless, Luo fails to state what was really behind the success of Shanghai Volkswagen: political considerations by China blended with economic pragmatism and entrepreneurial enthusiasm on Germany's part.

These oversights are truly a shame, since Luo's thorough research could have been the basis for much more incisive analysis of China's business environment. To his credit, however, the appendices, consisting of six case studies, warrant careful examination for the valuable details they provide on company-specific strategies.

In the end, Luo's drive to provide a comprehensive understanding of MNCs in China over the past two decades produces an inconsistent, albeit statistically rich, explanation of the real reasons why certain multinational businesses in China thrive while others fail.

--Mark T. Fung

Mark T. Fung is a PhD candidate in China Studies at The Johns Hopkins School of Advanced International Studies.

250 Chinese NGOs: Civil Society in the Making

Nick Young, editor. Beijing: China Development Brief. 2001. 300pp. $35 (Yen290) softcover.

250 Chinese NGOs: Civil Society in the Making is a directory of Chinese nongovernmental organizations from every province, municipality, and autonomous region. Each of the more than 250 organizations, arranged geographically, is allotted one page with complete contact information in English and Chinese, as well as a brief description of the organization's goals and activities in English.

The directory is a useful reference tool, but is by no means comprehensive. In his introduction, an essay on the emergence of civil society in China (see p.34), the editor points out that because of time and resource constraints, the organizations listed are almost exclusively in urban areas. Many organizations focus on a few popular issues--the environment, women's rights, migrants' rights, legal aid, and poverty alleviation--though a glance at the table of contents shows that educational and religious associations, as well as those aiding the handicapped, are also well represented.

One of the main problems nongovernmental organizations in China face is that they fall into a legal gray area and are often unable to register themselves as legal organizations. This unclear legal status leaves many organizations open to government criticism or worse. The directory tries to clarify this murky area by including several relevant Chinese laws, translated into English.

Though the volume offers a wealth of contact information for the foreign investor interested in supporting these worthwhile organizations, Young cautions companies to examine the organizations carefully; many are so small that they would have difficulty managing large influxes of money.