China and the WTO: a success story

 2018-07-02  100

More than 700 million Chinese people have been lifted out of poverty over the last 40 years according to the current United Nations standard, accounting for more than 70 percent of the global total. 

Many people have attributed China's success to its policies of reform and opening up, which it has had now for 40 years. And rightly so. But inside China, people also give huge credit to China's accession to the World Trade Organization in 2001. It is widely understood that membership unleashed another wave of opening to a wider world of trade and investment, and fostered deepening reforms that helped the country to cope with a rapidly developing economy. 

But China's success didn't come without hard work. In order to meet the requirements of the WTO, China launched major efforts to review and revise its laws and regulations, as has been documented in the white paper on this topic that was published on June 28, 2018, by China's government. These efforts touched upon 2,300 laws, regulations, and departmental rules at the central government level, and 190,000 policies and regulations at lower levels of government on topics including trade, investment, and the protection of intellectual property rights. Gradually bringing China in line with international rules under the WTO has been an arduous process.

There are specific requirements that each country needs to meet when it joins the WTO. By 2010, China had fulfilled all of its tariff reduction commitments, reducing the average tariff from 15.3 percent in 2001 to 9.8 percent. It further cut the average tariff on agriculture products from 23.2 to 15.2 percent, about one-fourth of the global average and far lower than the 56 percent imposed by the WTO’s developing country members, or the 39 percent limit by developed countries.

And China has formulated and improved laws and regulations on a wide range of topics related to its role as a member of the WTO and a good global citizen. These include the Trademark Law, the Anti-Unfair Competition Law, the Copyright Law, and the Patent Law. In 2014, China set up courts in Beijing, Shanghai, and Guangzhou specifically to deal with questions about intellectual property right protection. And early last year, it witnessed the launch of 15 specialized intellectual property case tribunals in cities including Nanjing, Suzhou, Wuhan and Xi'an.

Admittedly, there were many challenges for China when it came to building a well-functioning system of intellectual property rights protection, given the lack of adequate regulations and laws, limited public awareness of the issue, and the problem of enforcement in such a large country. Even today, copycat products can still be found in the outskirts of cities and in regional areas. But there is more widespread awareness of the importance of protecting the rights of others when it comes to intellectual property, and the heavy costs that can be levied in punishment when these rights are abused.

Part of China's success in developing intellectual property protections has grown from its changing domestic situation. According to the World Intellectual Property Organization, 51,000 patent applications filed from China were accepted in 2017 – second only to the United States. China's intellectual property rights holders are one of the strongest voices calling for greater protection of these rights, because they know it is in everyone's interests. 

As the largest trading nation of goods, China has naturally encountered disputes with its partners. Records show that China has always turned to the WTO dispute settlement mechanism, which acts like a court to rule over disputes among its members. By April this year, China had brought 17 disputes to the WTO, of which eight had been concluded. Meanwhile, 27 disputes were raised against China, of which 23 have been concluded. And up to now, none of the complainants has requested retaliation against China, unlike what we are seeing in the ongoing global trade war, which was initiated by one member resorting to its domestic laws and applying a unilateral approach.

China well understands the dangers of protectionism, and has been urging the international community to defend the multilateral trading system. President Xi Jinping noted that pursuing protectionism is like locking oneself in a dark room: "While wind and rain may be kept outside, that dark room will also block light and air."

In its latest defense of the international system, China and the European Union agreed to establish a working group to modernize the WTO rules and systems to ensure they can meet the needs of the global economy in the 21st century.  

Since 2002, China's contribution to global economic growth has approached 30 percent per year on average. The country has become a major engine for global economic growth. In 2008, when the world was engulfed by financial crisis, China represented more than 50 percent of new GDP growth of global economy.

Building on the monumental progress it has made since its accession to the WTO, China has embarked on a new stage of reform and opening up, with a focus on nurturing domestic consumption. This can be seen through events like the first China International Import Expo that will be held later this year. More than 100 countries will come to China to showcase their products and services to the country's domestic consumers. 

Major global investors seem fully confident in the Chinese market, which is expected to become the largest this year. For example, the "2018 China Business Climate Survey Report" by the American Chamber of Commerce in China found that nearly 60 percent of respondent enterprises ranked China as a top three investment priority. Some 74 percent of them plan to expand their investments in China in 2018. 

In a similar vein, the "Business Confidence Survey 2018" by the European Union Chamber of Commerce in China reveals that more than half of its member enterprises plan to expand their presence in China.

If there's a takeaway from the China success story, it has been that the international multilateral trading system centered on the WTO has played a critical role in a country's development. The success of a WTO member brings benefits to the global economy overall, which in turn benefits everyone. 

By Xu Qinduo

(Xu Qinduo is a political analyst for CRI and CGTN, and a Senior Fellow of the Pangoal Institution. He has worked as CRI's chief correspondent to Washington DC.)

Source: China Plus