A vigorous handshake, a round of applause from officials and a champagne toast marked the signing yesterday in Beijing by US and Chinese trade negotiators of a dramatic agreement paving the way for China's entry into the World Trade Organisation.
The agreement gives foreign firms unprecedented access to a market of 1.2 billion consumers in the coming years, and commits the Chinese government to economic openness and competition.
It will mean American-made cars on Chinese streets, foreign banks catering for Chinese account-holders, and Hollywood movies showing in Chinese cinemas on a profit-sharing basis.
Among other innovations, foreign companies will be allowed to invest in Chinese Internet content providers, eventually on a 50-50 basis.
The final document was signed by the US Trade Representative, Ms Charlene Barshefsky, and the Chinese Trade Minister, Mr Shi Guangsheng, after six days of gruelling talks during which the US team more than once threatened to give up and head for the airport.
The deal was struck after a critical intervention on Saturday by the Chinese Prime Minister, Mr Zhu Rongji, whose role as a reformer will be strengthened by China's entry into the WTO.
The agreement was opposed by some powerful Beijing ministries seeking to protect state-owned enterprises from foreign competition, especially those producing steel, heavy chemicals, automobiles, electronics and machinery, but Mr Zhu sees WTO membership as essential in forcing bankrupt state industries to reform and in modernising the economy, despite the short-term pain of further unemployment. For China's President, Mr Jiang Zemin, the agreement furthers his goal of integrating China into the world's political and economic system. Mr Jiang told state radio that it was a "win-win" situation for both sides, the same phrase used by Ms Barshefsky at a press conference.
Mr Shi said the deal was "conducive to the interests of both countries and to the stable development of China-US relations", and said he looked forward to China becoming a full member of WTO this year. The US trade negotiator, who was accompanied by senior White House aide, Mr Gene Sperling, said she hoped China could join the WTO this year, though some diplomats in Beijing said that accession could take up to a year. The milestone agreement ends 13 years of fraught US-China negotiations with only days to spare before time runs out on November 30th, when ministers of the 134 WTO member countries meet in Seattle to launch a new trade round.
Under the agreement China has undertaken to reduce its average import duties from 22.1 per cent to 17 per cent. Export subsidies will be eliminated and tariffs on farm goods will come down. US firms will be granted access to China's distribution networks, and motor companies will be permitted to offer vehicle financing.
Ms Barshefsky said China would reduce tariffs on foreign-made vehicles from 80-100 per cent to 25 per cent, though it has been given until 2006 to do so, a year longer than WTO guidelines. This will allow cars made outside China much readier access to the Chinese market. US companies will be allowed to invest in Chinese Internet content-providers. This is "no longer an issue - we have rights to invest", she told reporters. "There was some ambiguity about coverage of the Internet from last spring. This has now been fully secured."
Mr Sperling added: "Securing that and making Internet issues clear and secure were a top priority for us."
Yesterday's agreement will scarcely have been welcomed by Mr Wu Jichuan, the conservative Minister of Information Industries, who said in September that foreign investment in Internet Content Providers and Internet Service Providers was "illegal".
Foreign investors have poured upwards of $200 million into Internet companies in China where the undeveloped Internet industry relies almost entirely on risk capital, mainly from the US.
China has also agreed to allow foreign firms to hold 49 per cent stakes in Sino-foreign telecom ventures from the date of Beijing's accession to the WTO, Ms Barshefsky said, and this would rise to 50 per cent after two years.
The US had pressed for 51 per cent, but China made clear it could not cede control of telecoms, she said. This was a setback for US negotiators, especially as Mr Zhu had offered foreign majority ownership in April.
Foreign banks will be able to conduct local currency business with Chinese enterprises two years after accession and with Chinese individuals five years after accession.
Up to now Beijing has confined overseas banks to foreign currency business, though it has allowed foreign banks to take deposits and make loans in China's currency, the yuan, in China's two main financial centres, Shanghai and Shenzhen.
China will also reduce both tariff and non-tariff barriers to industrial goods and farm products and address unfair trade practices. It also agreed to improve access for foreign lawyers, accountants and medical service providers.
Hollywood was also a winner yesterday. "The motion picture issue has been resolved," said Ms Barshefsky, "by agreement by China to allow for the importation of motion pictures on a revenue-sharing basis." This is "quite unprecedented", she said, and important for Europe and Canada as well as the US. China began its marathon attempt to join the world trade body when it applied in 1986 to join WTO's precursor, the General Agreement on Tariffs and Trade (GATT), seven years after it launched its opening-up policy. The negotiations were suspended after the 1989 suppression of pro-democracy demonstrators in Beijing and resumed in 1994.