Institutional change with the WTO has been evident in China but on the political frontChinahas a single dominant party that is the Chinese Communist Party (CCP) and this party is powerful enough to dictate institutional changes to serve their party interests.China’s judiciary has modernized but it is still not an independent body (Murrell, 1995).China’s transition from planned to market economy has been a slow and gradual process that is still under process. During 1978, inChinaan open door policy was introduced but it took another fifteen years of debate and arguments to convince the leadership to accept the policy for the benefit ofChina. But with the accession to WTO the economy is moving towards democracy exerting a control over the leadership inChina(Gregory, 2003).
Any country that wants accession to the membership in WTO has to lower tariff rates and follow the most-favored nation (MFN) principle that means tariff reductions to all members of the WTO (WTO, 1995 b). Then the next step for membership is to have market access negotiations with each member and the tariff commitments for each country is determined by WTO/GATT negotiations (WTO, 19995 a). The MFN principle might restrict the bargaining position ofChinain the international market since giving up a percentage on each member will mean loosing more and more dollars (WTO, 1999). This will mean more wealth out ofChinaand into other foreign countries (Bagwell & Staiger, 2001).