RIDING THE WAVE oF GLoBALIZATIoN China marks 20th anniversary of joining WTO

By Qiu Hui

(GETTY CREATIVE)

On December 11, 2001, China officially joined the World Trade Organization (WTO) as the 143rd member state.

Over the last 20 years,China’s exports have increased by 870 percent and imports by 740 percent.It has become the world’s second largest economy with trade in goods rising from the 6th to 1st place, trade in services rising from 11th to 2nd, and foreign direct investment rising from 26th to 1st place, the highest increases among developing countries.

The COVID-19 pandemic caused a severe setback for the global economy.In 2020, China was the only economy to register positive growth in the world,with its exports up by 2.4 percent and imports up by 4.4 percent over the previous year.China’s growth against the headwinds has injected strong momentum into the recovery of world trade in commodities.

As the world’s largest trading nation and a major source of foreign capital, China’s development would not have been possible without the WTO, a rules-based multilateral trading organization.Meanwhile, China has also been actively participating in WTO reform and upgrading the multilateral trading system.

Global Recession and Imbalance

The World Trade Report 2021 released by the WTO on November 16 indicates that the health and economic crisis caused by COVID-19 has been a massive stress test of the world trading system,delivering unprecedented shocks to global supply chains and trade relations among countries.The Global Trade Data and Outlook released by the same organization earlier also made the prediction that due to the pandemic,global trade could shrink by 13-32 percent this year.

Sang Baichuan, dean of the Institute of International Economy at China’s University of International Business and Economics, thinks that in the postpandemic era, uneven global economic development is inevitable, as evidenced by the drastic measures against globalization taken by the United States and other developed economies after the outbreak of COVID-19.Although the global commodity trade has gradually returned to the pre-pandemic level with routine pandemic protocols, it will be a long process to realize shortterm integrated recovery.

Under the impact of the pandemic,many countries have adopted social isolation and economic blockade policies that have affected economic growth.On October 4, 2021, the WTO released its latest issue of Trade Statistics and Outlook, which states that global trade has rebounded somewhat while regional differences remain significant, with some developing regions well below the global average.

Trade is an important means to deal with the pandemic, opined WTO Secretary-General Ngozi Okonjo-Iweala.According to her, strong growth in global trade is extremely important to trade and global economic recovery,but the “gross inequity” in access to the vaccines is undermining global economic recovery.The longer the imbalance persists, the higher the risk of virus mutation becomes, which will probably ruin early achievements, she stressed.

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Over the last 20 years, China’s exports have increased by870 percentand imports by740 percent.

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In 2020, China was the only economy to register positive growth in the world, with its exports up by2.4 percentand imports up by4.4 percentover the previous year.

Honoring Commitments to Mutual Benefits

Xu Hongcai, deputy director of economic policy at the China Association of Policy Science, thinks that China’s accession to the WTO provided access to the world market which enabled its foreign trade and economic aggregate to develop rapidly.China’s rapid development and economic aggregate have driven the development of the world economy.

Over the last 20 years, China has strictly fulfilled its commitments for WTO membership.“China should be commended as ‘a(chǎn) straight A student’who accomplished more than expected,” added Xu.Since its accession to the WTO, China has “taken great strides” in a new stage of reform and opening-up, achieved deep integration into the multilateral trading system,eradicated absolute poverty, and has been a firm supporter of global free trade.

In 2001, China was the world’s sixth largest exporter.Since 2009, it has been the world’s largest exporter, playing a pivotal role in world trade.China’s economic aggregate has surpassed that of the United Kingdom, France,Germany, and Japan successively to become the world’s second largest economy.

“Since 2002, China’s contribution to global economic growth has been over 30 percent on average, making it the most important engine driving world economic growth,” commented Sang Baichuan.Over the last 20 years as a WTO member, China has effectively boosted the growth of its foreign trade,foreign investment, and national economy, which has also contributed significantly to the world economy.

Over time, some speculated that China had taken advantage of its WTO membership to get a free ride.Huo Jianguo didn’t agree.An official who participated in China’s WTO accession negotiations and former president of Chinese Academy of International Trade and Economic Cooperation of the Ministry of Commerce, Huo is now the vice chair of China Society for WTO Studies.He thinks that sinceits accession to the WTO, China has followed universally accepted rules of the multilateral trading system.The development of its export-oriented economy has accelerated, while Chinese enterprises have gone global to integrate into the international market.Meanwhile, China has provided investment venues for foreign and multinational corporations.

The frist China Express freight train from Jinhua, Zhejiang Province, to Budapest,Hungary, departs on June 7, 2021. (HU XIAOFEI)

“While China expanded its exports,it has also expanded imports,” said Huo, “It is totally groundless to say that China took advantage of its membership for a free ride.”

Support for WTO Reform

The impact of COVID-19 caused the global economy to turn uneven and turbulent, the global supply chain to face rupture and reorganization,and the global strategy to need urgent restructuring.Sang Baichuan pointed out that China, a major developing country with a complete industrial system, is playing a positive role in stabilizing the global supply system and ensuring normal global demand.

China’s import and export of commodities have maintained a growth trend in adversity, becoming increasingly important for the recovery and growth of world trade in commodities grappling with weak growth.As a WTO member for 20 years, China has not only driven the development of the world economy in aggregate, but also structurally affected and reconstructed the world economic pattern.

The impact of the pandemic has not yet receded today, and conflicts of values among countries around the world remain as unilateralism and egoistic xenophobia continue to persist.Xu Hongcai admitted that the relationship between China and the US has entered a complex stage of strategic competition.From the perspective of the global economic recovery process,China-US relationship is a major variable in the post-pandemic era.

Li Chenggang, Chinese Ambassador to the WTO, opined earlier that the WTO is in crisis due to major changes driven by populism and the pandemic.Its dispute settlement mechanism has been pushed to the brink of paralysis due to an understaffed Appellate Body.China is facing more complex risks and challenges in the economic and trade sector.In the face of these challenges,it is necessary to draw upon the experience and wisdom of historicalpractice to further improve the WTO dispute settlement mechanism and restore its normal operations.

On May 13, 2019, China officially submitted China’s Proposal on WTO Reform to the WTO.China supports necessary reforms to the WTO to address urgent issues that threaten its survival, improve its authority and efficiency, and increase its relevance in global economic governance.

Sang thinks that with the collective rise of emerging economies, the“governing power” of the multilateral trading system has changed significantly.The United States and other developed countries advocate the establishment of higher standards of trade rules, while developing countries tend to emphasize the continued protection of the legitimate rights and interests of developing countries according to the WTO principle of“special and differential treatment.”The ideal balance between the two has yet to be struck.Negotiations on the multilateral trade system have become increasingly difficult, failing to meet the interests of all countries in the era of globalization, which has led to declines in the authority of multilateral mechanisms and severe challenges to the international economic order.

An open multilateral trading system with rules that keep pace with the times is a necessary prerequisite for the growth of China and the world.Sang opined that in the process of restoring the normal operation of the WTO’s Appellate Body and the dispute settlement mechanism, China should continue to assume the responsibility of a major country with Chinese wisdom.

“The formation of new rules should be based on more consensus,” said Xu Hongcai.Economic globalization is an unstoppable trend.In the process of WTO reform, unbalanced development should be considered.We need an atmosphere of mutually beneficial and win-win cooperation between developed countries and developing countries to promote multilateralism and open development.