WTO membership has enabled China to become the impetus for a more just multilateral trading system that benefits all

Dec. 11 marks the 10th anniversary of China’s accession to the World Trade Organization (WTO). Membership of the international organization dealing with the rules of trade between nations has proved beneficial not only to China but also the other WTO members over the past decade.

Being a WTO member has provided a more transparent, more secure, more predictable world market for China in the global industrial chain, and at the same time, China has become an important part of the world economy, providing huge market opportunities for other WTO members.

This has been particularly evident after the onset of the global economic crisis, as China’s economy is driving the global recovery. This is closely related to China’s market reforms and adjustment of its industrial structure, which strengthened the competitive power of State-owned enterprises, banks and agriculture and proves that China’s accession to the WTO was a wise decision that has benefited the nation and the world.

Over the last 10 years, China has fully and comprehensively implemented the liberalization commitments required by the WTO. Tariff and non-tariff restrictions have significantly decreased. China’s average import tariff has been reduced from 15 percent before the accession to 9.5 percent in 2010. Second, China’s foreign trade continues to grow rapidly. China’s total volume of imports and exports upon its accession to the WTO in 2001 was only $509.6 billion; by 2010 this had grown to $2.97 trillion. China is now the world’s largest exporter of goods and the second largest importer. China’s imports and exports of services grew from $71.9 billion in 2001 to $362.4 billion in 2010.

Meanwhile, foreign investment in China has continued to grow. Foreign direct investment reached $68.8 billion in 2010, accounting for 5.2 percent of the global total that year, and has maintained an annual average growth rate of 49.9 percent for nine consecutive years.

Meanwhile, foreign investment in China has continued to grow. Foreign direct investment reached $68.8 billion in 2010, accounting for 5.2 percent of the global total that year, and has maintained an annual average growth rate of 49.9 percent for nine consecutive years.

In addition, China provides preferential policies, such as tax free and quota free, to facilitate market access for the world’s poorest countries, with the result that China became the largest export market for the least developed countries in 2008. The commitment to cut tariffs to the least developed countries has been strictly fulfilled, while the duty-free quota will be further implemented. President Hu Jintao at the G20 summit in Cannes, France, earlier this month promised to gradually give zero-tariff treatment to 97 percent of products imported from the least developed countries that have diplomatic relations with China. China’s openness is now 62.5 percent, the same level as developed countries.

Before China’s accession to the WTO, the government was worried about the effect it would have on industries, such as the automobile industry and agriculture, which were considered vulnerable. But these industries have achieved great development in the process of marketization, as China launched a large-scale modern enterprise system reform to enhance productivity and invested several hundred billion dollars to adjust the industrial structure and improve technologies during these 10 years. As a result technology and product quality have increased rapidly. In 2009, China overtook the United States to become the world’s largest auto market and in 2010 the total imports and exports of automotive products was $108.53 billion.

But it is China’s policies on agriculture that have undergone the most significant adjustments. The average agricultural tariff decreased from 18.8 percent to 15.2 percent during these 10 years and China’s grain output increased from 452.64 million tons in 2001 to 546.4 million tons in 2010. China is now the fourth largest country in world agricultural trade.

China has also carried out a large-scale revision of its laws and regulations to be consistent with the basic principles of WTO. China has comprehensively revised its foreign investment law, unified domestic and foreign income tax, issued and implemented the Anti-Monopoly Law, promoted the reform of foreign exchange and expanded the cross-border use of the renminbi, which will gradually realize the currency’s free convertibility.

Moreover, WTO membership has promoted administration according to the law in China and the transformation of government functions, promoted legislation and procedural transparency and implemented legal system reform.

Over the 10 years, China has also become an important force in the future development of the multilateral trade system. Although at first its participation was limited, China is now an active participant in all areas of the Doha round of world trade talks and its representation and voice have increased significantly. It has entered the inner circle of the WTO negotiations, realizing the important transition from regulations acceptor to rules maker, presenting more than 100 proposals.

China’s status as a developing country was not defined clearly in the Protocol on China’s Accession to the WTO. But China is still a developing country and will be for a long time to come. China’s strategic perspective on fundamental interests is consistent with other developing members in the multilateral trading system, and China has been actively maintaining and developing economic and trade relations with developing members. China seeks equality between developing and developed members as the basis for dialogues aimed at solving frictions and disputes between them. However, China does not want to be the leader of developing countries whose interests are not entirely consistent.

China’s cardinal principles and standpoints in the WTO are to give full attention to the interests of developing members, to develop a more just multilateral trading system and to maintain a rational international political and economic order.

China will continue to actively participate in global trade governance within the framework of the existing WTO system. In spite of the limited voice of developing countries in the WTO and defects in its internal mechanisms and institutions, China adheres to the idea that the status quo of the WTO should be maintained rather than seeking systemic reform when participating in global trade governance. The real challenges may come from the WTO rules themselves, which the Chinese government has always maintained are imperfect and unfair. As long as the rules are reformed and perfected through negotiations, cooperation and even compromises, the WTO international multilateral system will be effective and the established international order improved.

China’s active participation in global trade governance signifies that it will continue opposing all forms of trade protection firmly, providing impetus to the establishment of a balanced world, a mutually beneficial multilateral trading system and the development of regional economic integration.

So in the next decade China will continue to take part in globalization and regional economic integration, expand its opening-up policy and further liberalize and facilitate investment with the aim of helping to build a peaceful, harmonious and prosperous world.

The author is deputy secretary-general of China Society for WTO Studies.

By Li Luosha