UBS Warburg warns on declining company profits after China joins WTO

WTO will benefit China long term, but in the medium term Chinese companies will see shrinking profits due to more competition, says Vincent Chan, UBS Warbug''s head of China economics.

Although joining WTO will have undoubted long term benefits, in the short tem accession will make things tougher for China, says Chan. For example, China's share of world output will decrease to 5.21% in 2005 compared to 5.3% it could have had if the country stayed out of WTO.

On the other hand, WTO will enable China to become anchored within the global trading structure, with its share of exports and imports rising to 6.8% and 6.6% respectively, compared to 4.8% and 5.3% had the country not joined WTO, says Chan.

However, joining WTO will not break China's unfortunate tradition of low corporate profitability, he warns. So far, China's impressive GDP growth has...

FinanceAsia has updated its subscription model.

Registered readers now have the opportunity to read 5 articles from our award-winning website for free.

To obtain unlimited access to our award-winning exclusive news and analysis, we offer subscription packages, including single user, team subscription (2-5 users), or office-wide licences.

To help you and your colleagues access our proprietary content, please contact us at subscriptions@financeasia.com, or +(852) 2122 5222

Article limit is reached.

Hello! You have used up all of your free articles on FinanceAsia.

To obtain unlimited access to our award-winning exclusive news and analysis, we offer subscription packages, including single user, team subscription (2-5 users), or office-wide licences. To help you and your colleagues access our proprietary content, please contact us at subscriptions@financeasia.com, or +(852) 2122 5222