China officially joined the World Trade Organization on Dec. 11, but the celebratory fireworks went off nearly two months earlier, at a gathering in Shanghai of the world's top business and government leaders. For 20 minutes, bursts of communist red and capitalist gold above the Huangpu River reminded onlookers that China invented such displays, more than 1,000 years ago, when the Asian giant had little contact with the outside world. At the Shanghai show, however, the fireworks were choreographed by a company named Grucci, based in Brookhaven, N.Y.--an emblem of China's acceptance of the competition and specialization embodied in global commerce.
China's leaders are making a huge bet: that their 1.3 billion people will gain more and better new jobs from the opening of foreign markets and the inflow of new capital than they will lose from the idling of state-supported industries and farms that can't compete with the more efficient producers that will have access to China. The 143 other WTO members are making a similar bet: that they will lose less business by opening themselves wider to China's exports of, say, textiles and apparel, than they will gain through new factories in China and new exports of technical know-how and certain grains. (Uncle Ben's is not expected any time soon.) There's enough efficiency to be gained from quickened global commerce that all these bets may well turn out winners.
But it will not happen overnight. Little does in China. The country's leaders must carefully manage the five-year transition to full WTO compliance. The potential for social and political unrest will be high, as an estimated 10 million peasants leave their land to search for new work in the cities. Even the executives and heads of government oohing and aahing at the fireworks in Shanghai at October's Asia Pacific Economic Cooperation forum wonder to what extent China will play by the rules or find clever bureaucratic ways to keep goods and services out, as Japan and Korea often have done.
What's certain is that China will lift some of its restrictions and open some of its markets faster than others, and that will require some deft navigation by global businesses expanding there. And expand they will, despite the hazards and uncertainties. They can't afford not to. The potential profits--though far off--are just too large, and so is the risk of being left behind. It's a cliche, but it's nonetheless apt to note that in written Chinese, the same ideogram is used to express both danger and opportunity. As Sy Sternberg, chairman of New York Life Insurance, puts it, "If we got 1% of the Chinese population, we would double the number of policies we have." That has been the dream of global executives ever since the first glimmers of an opening by China in the 1970s.