BEIJING -- After the euphoria of a WTO agreement with the United States, China began selling the deal on Tuesday to a public anxious about job losses, and floated ideas for radical economic reform to meet the challenge of foreign competition.
The first signs that a shake-out of inefficient enterprises was on the way came when shares in Chinese auto makers slumped on the Shanghai stock market.In dramatic contrast, shares in Chinese Internet and high-technology companies -- seen as the wave of the future under liberalizations promised by China's entry to the World Trade Organization -- soared in Hong Kong.
Chinese officials appeared to have lost hope of joining the WTO before a meeting of ministers from the group's 134 members in Seattle on Nov. 30, which will launch a new global trade round.
Chief WTO negotiator Long Yongtu said China expected to complete its entry in the first half of next year.
But he called on Chinese to develop a national fervor for change.
"A nation cannot develop and become strong without a sense of urgency and a sense of crisis," he told state television. "We must turn competitive pressure into action."
Ordinary Chinese fretted that foreign competition would destroy jobs by pushing teetering state firms over the edge.
"Most state-owned enterprises which cannot survive the competition might have to close, leaving many people jobless," said Liu Jianchuan, 45, supervisor of a state-owned heater maintenance company in Beijing.
"Once that happens, there might be social unrest."
Other people in Beijing, despite anxiety over jobs, nevertheless looked forward to cheaper and better goods -- especially cars.
The Beijing Youth Daily, a popular broadsheet, warned its readers that after Japan joined the General Agreement on Tariffs and Trade, the WTO's predecessor, in 1955 there were "painful adjustments in industries and employment." But it noted that Japan's economy doubled in size over the next decade.
Entering WTO would provide a turning point for Chinese enterprises, it added.
WTO entry would be China's most radical economic step since then paramount leader Deng Xoaping launched his capitalist-style reforms in 1978. The government's leading think-tank made clear that all options were now on the table by publishing a proposal for a sell-off in shares of state banks to foreigners. It also suggested listing shares of indebted banks on the country's stock markets to avoid a "banking crisis" as foreign financial institutions entered the market.
Banking reform is key to efforts spearheaded by Premier Zhu Rongji to overhaul money-losing state enterprises.
The historic deal was signed on Monday after a crucial intervention by Zhu on Saturday. Beijing still needs to reach separate deals with the European Union and other key trading partners.
Also, U.S. President Bill Clinton must now steer the agreement through a hostile Congress, which is required to vote on granting China normal trade relations (NTR) before Washington can benefit from China's more open markets.
U.S. Trade Representative Charlene Barshefsky said she was confident the U.S. Congress would back the deal.
"We're confident that Congress will approve permanent NTR and we will certainly work very hard towards that end," she told reporters in Hong Kong.
Gene Sperling, the White House economic adviser, acknowledged winning over some lawmakers could be difficult.
"We are confident, but we also expect it will be a difficult and tough struggle," he said.
U.S. Senate Majority Leader Trent Lott reserved judgment until Congress had a chance to look it over, saying "significant questions" remained.
In Hong Kong, investors piled into Internet stocks, seen as an immediate big target for foreign money following the WTO deal, which strips away a ban on foreign investment in Internet firms and allows foreign telecom firms to have 50-50 joint ventures with local partners.
"There are relatively few things in life you can say are unadulteratedly positive and this is one of them," Merrill Lynch political analyst Richard Margolis said of the trade pact.
Investors agreed, sending shares of Chinese software firm Founder (Hong Kong) Ltd up a spectactular 23.48 percent.
In September, Founder signed a deal to launch an Internet portal with U.S. web giant Yahoo! Inc, but the project had been dogged by worries about its legality that appeared wiped away by the WTO deal.
Shares of New World Infrastructure, the biggest shareholder in Internet portal China.com Corp, soared 19.53 percent.
Overnight, China.com shares on New York's Nasdaq exchange rocketed nearly 75 percent.
Auto firms suffered in Shanghai on news that the WTO deal will send tariffs on car imports plunging to 25 percent in 2006 from 80-100 percent at present. Also, foreign carmakers will be allowed to provide financing.