China ushered in a new era of reform and sweeping changes yesterday when it became the 143rd member of the World Trade Organisation (WTO) after a marathon 15-year-battle for accession.

However, optimism at the move was tinged with concern that foreign competition would threaten jobs, and that the slowdown in the economy may mean China would not be able to meet its WTO commitments.

There are strong fears that the painful reforms required to conform with WTO rules will result in thousands of state workers losing their jobs, something which could spark social unrest across the country. But foreign investors have been waiting expectantly for the opening of the world's largest potential market with 1.3 billion consumers.

As a WTO member, China will be subject to external rules and disciplines for the first time, while at the same time reducing major barriers to imports and investments.

The official Communist Party newspaper, the People's Daily, warned state firms yesterday to prepare for foreign competition and called on the government to carry out its WTO pledges.

"There should be a rapid shift in the government's style of managing the economy, stepping up integration and transparency of policies and enhancing the ability to do business in line with international norms," it said in a front page editorial.

"Enterprises should increase their sense of urgency and awareness to compete," the newspaper warned.

There was no formal celebration to mark accession and there was little reaction from the stock markets.

In an embarrassment for the authorities, the Chinese Trade and Economic Co-operation Ministry website crashed due to the huge numbers of people logging on to get details. A spokesman said too many people visited the website which could not cope with the deluge.

The ministry also said the translation of its 900-page agreements on China's accession from English into Chinese was not yet ready but would be released soon.

China opened its sheltered economy to the world in 1978 and since then has made steps to embrace the market by loosening the state's grip over economic matters. It has already become the seventh largest trading power.

China hopes greater global integration will complete its transition to a market economy. Some argue the change spurred by WTO membership will extend beyond the economic arena to bring political pluralism.

The challenge for China in managing the change is enormous. The government must convince protected state firms, conservative local officials and workers fearful for their jobs that entry to the WTO will bring benefits.

The private sector will be the biggest winners from WTO, with sectors such as textiles, footwear and electronics expected to gain under freer trading rules. However, other sectors could be devastated such as banking, insurance and heavy industries such as steel expected to sustain heavy shocks. State firms and hundreds of millions of farmers will feel the pain from more competition and reduced subsidies on agricultural products.

Already thousands of jobs have been shed by state enterprises as they gear up for the competition which WTO will bring. The Chinese premier, Zhu Rongji, warned this week of possibly more pain than gain in the early stages of membership. But he has made a personal effort to sell the deal to the Chinese people.

"This is an important symbol of entering a new stage of China's opening to the outside world. It meets the fundamental, long-term interests of China," the Premier said.

Resistance to change under WTO is expected in many forms with local officials who don't know or don't like the rules expected to throw up the biggest obstacles. Even the central government could retreat if workers took to the street to protest mass lay-offs expected from streamlining the ailing state sector.

Under WTO, direct foreign investment into China will grow by 16 per cent a year up to 2006, reaching $100 billion (€112.4 billion).

One of the big problems which will face foreign and domestic investors is copyright piracy and bootlegging, something which the Chinese authorities claim to have been tackling this year. For example pirated copies of the Harry Potter movie were available on the streets of Beijing yesterday only weeks after it premiered in the US and Britain.