The essence of WTO in China was to encourage trade and investment by eradicatingbarriers to trade and to lower tariffs in order to welcome new entries into the market for investment growth. After the advent of WTO China had reduced its tariff on industrial products which is very less in comparison to Brazil, Argentine, India and Indonesia. The major purpose of the WTO in China was to encourage competition on the foreign front. This would give China a comparative advantage due to low tariffs, cheap labor and overall low costs.
Eventually increase in investment shall lead to economic growth. The new investment will bring in competition from foreign entities which in turn will help motivate Chinese firms to improve quality, decrease prices and drive sales. The price system in turn will be driven by the natural forces of demand and supply. Foreign investments will also bring in new technology toChinawhich will in turn encourage efficieny, growth and economic development. This way the state owned firms will automatically have to raise their standards in order to survive or will simply be driven out of the market. The development in general will help shift the focus from being agrarian to manufacturing and financial servicesindustry. WTO in China has encouraged reforms leading to the development of the country and also to ensure stability and growth of the economy.
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