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China joined the World Trade Organization on December 11th 2001 Before joining the WTO China had an agricultural tariff of 315 and an industrial tariff of 35 Chow Foreign companies could not compete pricewise and Chinese citizens had a hard time obtaining foreign goods because of their high prices Under the conditions imposed by WTO China had to lower its tariffs allow foreign firms to sell directly in the Chinese domestic market and fulfill a variety of different economic and political requirements Chow Joining the WTO has allowed China to obtain MFN status with other WTO countries promoted domestic reforms in the country allowed for multilateral protection and created may other advantages One of main advantages for China was the lowering of trade barriers and adapting to the WTO standards whish lead to economic efficiency This has been beneficial for China as it has improved consumer product availability for Chinese people and attracted FDI which helped Chinas economic growthBy imposing high tariffs China was limiting imports into its country by making many goods too expensive for the average Chinese consumer Yao With such extremely high tariff rates consumers in China could not afford to buy products from other countries and had to buy what was available in their own country This was inefficient as the tariff limited competition The limiting of competition does not create an incentive for companies to improve the products that they make and so it deters innovation In addition if Chinese producers did not offer the products and Chinese consumers could not afford to buy them from abroad they ended up not being able to have the product at allFurthermore tariffs prevent efficiency as they do not allow for the company with the comparative advantage to be the one selling the good Ideally each country should specialize at doing what it has the most comparative advantage at and then use trade to obtain other goods it has a demand for This
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