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Friday, July 9, 1999 Published at 10:30 GMT 11:30 UK

Business: The Economy

WTO boost for China

Japanese and Chinese flags in Tiananmen Square

Japan has reached a trade deal with China clearing the way for Tokyo's approval of China's bid to join the World Trade Organisation.

World trade wars
In a joint communiqué, the two sides said that they had concluded negotiations on opening up China's service sector to foreign competition.

Japan wants China to grant foreign firms access to its service sectors, such as distribution, construction, telecoms and financial services, in return for support for WTO membership, a long-standing goal for the Chinese Government.

The news comes as the Japanese Prime Minister Keizo Obuchi visits China in a bid to improve relations between the two countries.

[ image: China's banking sector could be exposed to competition]
China's banking sector could be exposed to competition
He has been meeting Chinese President Jiang Zemin, Premier Zhu Rongji and parliamentary chief Li Peng, on his first visit to China since becoming head of the government. The three day visit ends on Saturday.

"The agreement is worthy of praise," Premier Zhu is reported to have said.

Japan will now push China's case for WTO membership in Geneva, arguing that China's inclusion in the world trade system is in the interest of all WTO members.

The countries hope a deal can be concluded before a new round of trade talks which is scheduled to begin in November.

WTO deadlock

Under WTO accession rules, any WTO member can request two-way talks with a proposed member and thus effectively block its entry until bilateral trade differences are resolved.

The toughest negotiations have been with the United States, where a deal was nearly reached at a summit between President Clinton and Premier Zhu Rongji in April. But since then Chinese-US relations have deteriorated over the Nato air campaign in Kosovo.

A Japanese official said that he had been told that Beijing would not resume WTO talks with Washington unless the issue of the Nato bombing of the Chinese embassy in Belgrade was resolved.

"Conditions have not been smoothed out yet to resume talks with the United States," he quoted Mr Zhu as saying.

Mr Zhu was widely criticised for making too many trade concessions to the West following his Washington summit.


China is anxious to strengthen ties with its Asian neighbours in response to mounting tensions with the United States.

The visit takes place against the background of long-standing Chinese suspicion of Japan's close links with America.

This was exacerbated after Japan signed a defence pact with the United States, despite Chinese objections.

Mr Obuchi has told the Chinese leaders that the new defence pact with the US will not pave the way for a revival of Japan's wartime militarism, Japanese officials said.

Japan hopes that in return for its support for Chinese membership of the WTO, China will put pressure on North Korea to abandon further tests of its long-range missiles, which have caused widespread anxiety in Tokyo and Washington.

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