China’s membership in the World Trade Organization represents a significant political and economic achievement say TD Bank economists.

Admittance will raise China’s international profile, TD says, including participation in future global trade talks. “On the economic front, the entrance into the WTO is yet another step towards a market-based economy with greater ties to the rest of the world.”

With WTO membership, China’s share of global trade will continue to increase, TD says, and many more joint ventures in various industries are likely as the restrictions that foreign companies face at present will be eliminated or, at least, considerably eased. China will be bounded by international rules to carry through on reforms, it notes.

“Further progress on structural reform will also build international investor confidence, encouraging more medium- and long-term investment in the country.”

WTO membership also brings some significant challenges, increasing competitive pressures in a number of sectors, many of which have been highly protected by the central government in the past; and, additional foreign capital inflows are not likely to be equally distributed across China, aggravating the problem of regional disparities.

“Despite the significant near-term challenges, WTO membership will contribute to the development and prosperity of China over the long-run. China is already the world’s second largest economy, and with further progress on structural reform it has the potential to become an even greater economic powerhouse. For Canada, China’s entrance into the WTO is a mixed blessing. It offers new business opportunities for Canadian exporters, but simultaneously implies that Canadian businesses should be prepared to cope with increased competition from Chinese products,” TD concludes.