Beijing, Nov 10: A WTO deal with the United States would be a badly needed boost for Premier Zhu Rongji's faltering economic reforms and would help rescue his fading authority, analysts said on Wednesday.President Jiang Zemin, too, would gain from a successful outcome to last-ditch talks on China's entry to the World Trade Organisation that began on Wednesday.
US Trade Representative Charlene Barshefsky and Gene Sperling, top economic aide to US President Bill Clinton, are holding two days of talks aimed at wrapping up a deal before a ministerial meeting of the WTO's 134 members at the end of this month.
"Anything that encourages reform is good for Zhu," said one Beijing-based diplomat. "Jiang has also pinned his colours to the WTO and relations with the United States," he said.
"Jiang has been under incredible pressure."
In a year of public fury against Washington over the May bombing of China's embassy in Belgrade and U.S. Accusations of Chinese nuclear spying, Jiang and Zhu have lost ground to rivals.
Both were rattled by Clinton's rejection of an apparently generous market-opening offer Zhu took to Washington in April, although Zhu was more badly shaken, returning home humiliated.
Who's afraid of Zhu Rongji?
Opposition to the WTO has given a handy rallying-point for Zhu's opponents, led by arch-conservative Li Peng and the head of the powerful Ministry of Information Industry, Wu Jichuan.
Zhu's opponents were able to paint him as a destroyer of jobs, an enemy of struggling farmers and a dangerous maverick ready to sell out to the United States on terms not aired or approved at ministry level.
They saw the publication of Zhu's offer by the United States Trade Representative's office as firm evidence of his treachery.
Since then, Wu has openly crossed swords with Zhu over opening the telecommunications sector.
That kind of public challenge has tarnished the aura of invincibility that Zhu brought to the premiership two years ago -- a real problem for a political dynamo who has driven reforms through an unwilling bureaucracy largely due to the fear he inspires among officials.
Li Lanqing, a former trade Minister and now a member of the all -powerful Politburo Standing Committee with aspirations to take Zhu's job, has also scored points at Zhu's expense, Beijing-based diplomats say.
A lesser rival sapping Zhu's power is Wu Banguo, a Politburo member who chairs the Communist Party's policy-making "leading group" on state enterprise reform.
Wielding the WTO stick
Analysts said it may be too late for Zhu to recover the kind of momentum that allowed him to slash civil service jobs, restructure ministries and kick the military out of business in a whirlwind of reform soon after he took office.
But a WTO agreement would give him a new stick to beat back challenges.A good measure of his influence, if a WTO agreement is reached, will be the degree of openness in the telecoms sector, the stronghold of minister Wu, a die-hard monopolist.
Zhu's April offer - as published by Washington, but now disputed by Beijing - would have allowed 49 percent foreign equity investment in all telecommunications services, and 51 percent in value-added and paging services.
The WTO stick would be most useful for Zhu in his struggle with powerful provincial governments thwarting state enterprise reform and industrial restructuring.
The auto industry will be one of the first battlegrounds. China has 120-odd auto manufacturers, almost all of them lacking economies of scale, uncompetitive by international standards and profitable only because of protection from imports.
Local governments have resisted industry consolidation because auto factories are big tax payers.WTO membership will lower auto import duties and is likely to force a wave of mergers - and bankruptcies. Zhu may finally reach his goal of a world-class Chinese auto company.
Zhu's armour plating
Analysts generally believe the benefits of WTO success for Zhu far outweigh the risks to him of failure.
"In April, Zhu was sent out naked," said one Western diplomat. He is now shielded from public criticism by careful stage-managing of the end-game negotiations.
China has been keen to portray the United States as the anxious suitor: It was Clinton who called Jiang to arrange this week's WTO talks. They are being held in Beijing, not Washington.
Last month, U.S. Treasury Secretary Lawrence Summers was forced to pursue Zhu to the far western city of Lanzhou for a meeting at which the WTO was on the agenda.
Most analysts believe a WTO deal is now possible, though far from certain.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.