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China became the 143rd member of the World Trade Organization (WTO) On December 11, 2001. The ascent to this important multilateral trad ing system came after a long 15-year process of bilateral negotiations with the existing WTO members.1 Although long anticipated, this new reality of China's full integration into the world economy continues to stimulate research and discussions on the possible impact it has on individual economies and on the world economy as a whole. The impact scenarios depend on the effect the accession will have on China itself and how China adjusts to the changes. While China has prepared its people for its WTO accession psychologically, market and structural adjustments will take time to perfect.
The Chinese economy has grown at an average annual rate of close to ten percent since 1979. Despite the very negative external economic environment it faced in the late nineties and the turn of the century, China still managed to grow at annual rates of between seven to eight percent.2 In the last couple of years, the growth rate again exceeded nine percent. Emerging from a virtually isolated economy, China is now the sixth largest trading country in the world. Developing countries are generally more concerned about such rapid development of China's economy. And with China's WTO entry, such concerns have intensified. The likelihood of developed countries gaining from China's emergence in world markets is more obvious. Developed countries are the largest importers of China's lowwage, labor-intensive manufactured products. In turn, China's imports of capital-, technology- and knowledge-intensive goods necessary for its economic development as well as those of high quality consumer goods, which are increasing very rapidly because of rising population income, are mostly from the developed countries. The developing countries, on the other hand, face competition from China for markets of similar labor-intensive manufactured exports and foreign direct investments (FDIs).
Nevertheless, evidence in the last couple of decades shows that China's rapid economic growth, which was accompanied by liberalization in trade, presented more economic opportunities to the Philippines than before. An empirical study (Palanca 2001) on China's trade with the ASEAN countries for the period 1980-1996 shows that the opportunities for trade are available even between countries with similar level of development.3 The myriad of consumer...