September 2001

Guizhou Province is one of the poorest parts of China. People who live there have a traditional saying that Guizhou is a land where there are "no three days without rain, no three miles without a mountain and no three coins in any pocket." More than 80% of its land is covered by mountains or leached limestone soils on which little will grow. But it is a place of breathtaking beauty, with a landscape reminiscent of the fantastic scenes on a Ming scroll.

Great conical limestone mounds, thousands of feet high, are dotted across the landscape. Fairytale mountains, like giant anthills, jostle for space, one after the other, as if lifted from a child's drawing. Villages inhabited by the ethnic minority Miao people perch on the bluffs - clusters of thatched roofs and ochre walls, with overhanging eaves and latticed paper windows. The higher slopes, often wrapped in mist, are thick with pine forests, golden bamboo and dark green firs. Chain bridges are slung across the rivers, and alongside torrents that cascade from the heights are pocket-handkerchief sized patches of cultivated land, where peasants work on fifty-degree slopes to coax a few poor vegetables from the dark red soil. Miao fishermen punt serenely across crystal-clear lakes, scattering ducks and ducklings in their path.

It was in an obscure farmhouse in the nearby market town of Tongdao that the Red Army leadership gathered in 1934 for a meeting that marked the beginning of Mao Zedong's rise to supreme power. And yet if Guizhou acted as a cradle for the communist revolution in China, it may be set to do so again as China faces an inevitable upheaval as she seeks full integration into the global economy through World Trade Organisation (WTO) membership. For the poverty of the peasant population in Guizhou and the prospect that they might become even poorer under the WTO, has raised fears of a free-trade induced famine across rural China. The leadership of the People's Republic, mindful that they themselves came to power through a peasant revolution that had its roots in the countryside, are searching desperately for ways to placate the peasants. They know every dynasty that ever ruled China was overthrown by peasant revolts and they do not wish to suffer a similar fate.

The journey into the Miaoling Mountains is long and arduous. The narrow, twisting roads are strewn with rocks and potholes. Here and there peasants can be seen trying to scratch a living out of the poor soil. Miao women, their backs bent under the burden of baskets tied to each end of heavy wooden poles, carry dung from tiny farmyards to fields sometimes many miles away. They dump the dung in neat little piles before making their weary way back to the farmyard for another load. In the fields, the Miao men plough the turf with single-furrow ploughs pulled by water buffalo. It is a vision of an agricultural way of life unchanged for the past two thousand years. And it is evident not only in Guizhou, but also across much of rural China, where 900 million peasants eke out a forlorn existence, on an average income of less than 500 Euros a year.

China's farmers are impoverished and yet much of the food they grow costs far more than that being grown by foreign producers. With WTO membership, a flood of high quality, low-price produce from abroad will surge into China, de-stabilising the struggling peasant masses, driving them off the land and into the cities. Each new tractor that arrives in Guizhou will displace at least ten peasants from their jobs. And yet Beijing is determined to keep these people on the land, fearful that a mass drift into the cities could undermine China's fragile social stability. Having agreed to reduce import barriers and eliminate export subsidies as part of WTO membership criteria, Beijing is now being forced to confront the prospect of introducing the Chinese equivalent of the Common Agricultural Policy (CAP) in order to subsidise its rural population. But if the CAP in Europe devours more than half the EU budget at a staggering annual cost of £30 billion, the cost of a Chinese CAP would be incalculable and well beyond the means of Beijing. With current WTO rules demanding the de-coupling of farm subsidy from production, the Chinese authorities will need to look for new ways of paying the peasants to keep them on the land.

After five centuries of isolation, China is keen to normalise trade relations with the rest of the world. They see the Beijing Olympics in 2008 as a major step towards global acceptance. The reforms undertaken by the Government of the People's Republic have paid off to an extent undreamed of only a decade ago. Phenomenal rates of economic growth of nearly 10 per cent a year on average have been achieved. Though China is still a developing country, it already has one of the biggest economies in the world.

The basic reason for this achievement has been the turning away from the old system of rigid central control towards free markets. Membership of the WTO will promote and deepen this process. It will encourage those Chinese who want to innovate and confound those who resist reform. It will open China to global competition and give an incentive to privatise state-owned industries. This role of the market is bound to expand in future too, not least because both Chinese and foreign businessmen will now have the right to import and export on their own accounts, and sell their products without going through official channels.

All this means that the age-old commercial genius of the Chinese people will find fresh scope. They will be better able to seek the opportunities which economic reform has brought them. But these opportunities will be more than economic. For example, the opening of China's market in telecommunications, including the services of the Internet and satellite, will mean for many millions of Chinese greater access to information, ideas and debate from the rest of the world. China will become a more mobile, prosperous and diverse nation.

The lesson from other countries that have previously freed their markets is that such developments, while of course creating problems of their own, will at the same time create a more stable and progressive society. The global trading system as it is now developing cannot be equated with anarchy. On the contrary, it rests on the rule of law, obliging all governments to apply the rules mutually agreed among them - with appeal to an international body in cases of doubt.

On that basis, Chinese entry into the global trading system is a welcome step. It advances the interests of all countries by strengthening China's involvement in international agreements and institutions, while giving the People's Republic a major stake in preserving peace and stability. But the process of integrating China into the WTO will be fraught with problems, on both sides.

From the point of view of the existing members of the WTO, swallowing a new member with a population of more than one billion could well be an uncomfortable experience in certain respects. Many regions of the world and many industries will feel the impact of this rising economic giant, with its vast resources, its rapid growth, its different commercial traditions and its trading acumen. In time it is likely to become a fierce competitor in the many goods and services which the talents of the Chinese people and the structure of its prices equip it to produce. It is a big step for China, and it is bound to arouse some fears. There will be anxiety about economic change and the disruption of old patterns of working. But the biggest fear of all surrounds the enormous upheaval looming in the countryside, as China's rural population struggles to meet the new challenges of global free trade.

For the remote ethnic minority Miao people in Guizhou Province, the future is uncertain.

Struan Stevenson is a Conservative Member of the European Parliament for Scotland. He is a Member of the European Parliament's Delegation for Furthering Relations with the People's Republic of China and recently addressed a major international conference in Athens on China's imminent accession to the WTO. He is currently organising a visit of Ministers and senior politicians from the National People's Congress in Beijing, to Scotland in September.