The Tumen Region and the Impact of China's Accession to WTO
By H.E. Long Yongtu Vice Minister of Foreign Trade and Economic Cooperation,
China's Chief WTO Negotiator

Thanks to its vision in the early 1990s, UNDP identified a cooperation Programme to develop the remote Tumen Region, in my opinion one of the most important projects in UNDP's history. And thanks to the concerted efforts of the participating countries to create a sound policy framework and an environment conducive to development and investment in the region, I am confident that the Tumen Region will make the most of the opportunities created by China's accession to the World Trade Organization (WTO) and move into the bigger picture of international cooperation.
Having said that, few sectors of the Chinese economy will remain untouched by WTO compliance, and we now face the major task of trying to limit the widening the gap between rich and poor. Farms and state-owned enterprises in particular are likely to face serious challenges.
With regard to agriculture, the WTO agreement will reduce import tariffs from a current average of 21.2% to 175 over time, and quotas will be phasedout. Trade will be permitted between private parties, and subsidies to support Chinese exports of agricultural products will be eliminated. The WTO agreement will have deep implications for Jilin Province. which is one of China's major agricultural areas.
Yanbian Prefecture, the Chinese part of the Tumen Region located in eastern Jilin Province, has an urbanization level of 78%, reflecting a relatively high level of industrialization. However, agriculture is still important, accounting for 16% of Yanbian's GDP in 2000. following agricultural reforms in the 1990s, the Prefecture has become a surplus area for grain and other crops, consistently producing over 60000 tonnes of grain annually in recent years. Animal husbandry has also grown rapidly.
As for state owned enterprises (SOEs), the government is committed to eliminating all direct subsidies. While this will exacerbate the problems of inefficient enterprises, it is likely to lead to more efficient use of inefficient enterprises, it is likely to lead to more efficient use of resources and will encourage both domestic and foreign investment in the private sector. In fact, Yanbian has few large and inefficient SOEs, and assessment of the commercial and environmental feasibility of modernizing two state owned plants in the area is already underway.
It is worth noting that Yanbian has received considerable foreign investment in labour-intensive manufacturing industries and will be in a strong position to benefit from the scrapping of the multilateral fibre agreement in 2005, when all quotas and other quantitative restrictions on China's textile exports will be removed.
Although the transformation to a market-oriented economy will be tough, a new influx of foreign products, services and enterprises will help to create the necessary momentum to ensure viability of the economy in the long term. Yanbian is likely to benefit from having a relatively diversified economy, and the area's experience in attracting foreign direct investment will be especially useful when faced with the challenges and opportunities presented by the WTO agreement. It is essential to utilize the capital and expertise available from foreign investors wisely and to the full in order to ease the region's transition to greater prosperity. The experience of policy reform and economic restructuring that China is acquiring may prove useful for the rest of the Tume Region.
During the past ten years, great changes have taken place in Russia, DPRK and Mongolia, but it is perhaps in Yanbian, China, that the Tumen Programme has played the most effective role in bringing about change. GDP statistics and other facts and figures indicate significant improvement, but in my view the most important development brought about by the Tumen Programme is the transformation in the minds of local residents. From being an isolated population in a remote part of the world ten years ago, the population in the border area of Yanbian now considers itself at the center of Northeast Asian cooperation. This concept has had a far reaching impact on the region's economic development.
China's accession to WTO is part of the same policy of economic integration and opening that is behind the Chinese government's strong support for the Tuumen Programme. In the Tumen Region the process started over ten years ago the build a better political atmosphere, a better investment environment, a better legal environment, and an economically strong area. Economic restructuring can be a painful process, but the Tumen Region has already gone some way along that road. The whole region can benefit from a more economically mature, WTO-compliant China as a source of investment and tourism revenue, and in terms of its huge market. As quotas are scrapped, tariffs reduced and the labor market opened, I am confident that WTO accession will play a positive role in enhancing economic cooperation in Northeast Asia.