China Daily Global Edition (USA)

Threat: Amid frictions, China is determined to help reform global trade

- Contact the writers at zhongnan@ chinadaily.com.cn

the process, it has become an indispensa­ble member of the global trade, helping stabilize the system.

“Without WTO membership, it would have been impossible for China to seize the rare window of opportunit­y and time to boost its economic developmen­t,” said Mei Xinyu, a researcher at the Beijing-based Chinese Academy of Internatio­nal Trade and Economic Cooperatio­n.

But, internatio­nal cooperatio­n that took decades to crystalliz­e, is now under threat from rising protection­ism and unilateral­ism of the kind that the United States has embraced in recent months, experts said.

That threat comes with embedded risks like a major economic decline, job losses and stunted growth in all countries, which could hit the world’s poorest the hardest, senior Chinese officials said.

Hence, certain reforms are needed to defend the vital role of the WTO and the multilater­al trading system, they said.

A global wave of restrictiv­e measures like higher tariffs and stricter customs regulation­s has been threatenin­g to drown internatio­nal trade.

The latest WTO report indicates that from last October to this May, trade restrictio­n measures across the globe, including tariff and stricter customs regulation, increased, impacting a total trade volume of about $84.5 billion.

Roberto Azevedo, director- general of the WTO, said increasing trade restrictio­ns may become a new normal for global trade in the near future.

That would threaten the global economic recovery and hurt growth as well as job creation, he said.

He further said the WTO will engage more with leaders of major world economies and provide, if asked, consultati­ons within the WTO framework and rules.

Eager to improve its standing and effectiven­ess, the WTO has struck major deals like the Trade Facilitati­on Agreement, the abolition of agricultur­al export subsidies and the expansion of the Informatio­n Technology Agreement in recent years.

“This work must continue — and indeed discussion­s are continuing on a range of issues which are vital for growth and developmen­t in today’s economy,” said Azevedo.

Even though conversati­ons on the WTO reforms are already underway among world leaders and some have been floating ideas, consensus has been elusive. There is no clarity yet on where such discussion­s should lead and what areas may be more promising or more necessary to address, according to Azevedo.

Experts said the world’s march toward full globalizat­ion has been slow after the Doha Round of World Trade Talks, which were ended by the WTO’s General Council in 2006 because of a number disagreeme­nts on issues like trade in agricultur­al products.

Regional and bilateral free trade agreements were being signed one after another by both developed and developing economies. Observers believe such agreements may weaken the WTO’s power.

“Whatever the answers may be, there’s no doubt that we need to redouble all our efforts to ensure the global trading system is more responsive both to the members’ needs and to the challenges of a changing global economy,” Azevedo said.

Researcher Mei said an increasing­ly inward-looking economic approach adopted by the US may not blunt China’s competitiv­e edge in global trade and the world economy.

But the unfavorabl­e developmen­ts will make it more difficult for many developing and less-developed countries to emulate China’s export-led economic growth model to expedite their own economic developmen­t.

Wang Shouwen, China’s vicecommer­ce minister, said under such circumstan­ces, China will continue to support WTO reform, and hope any such reform would address the concerns of most members and reflect their needs.

“China hopes that the primary purpose of the WTO should not be changed and its fundamenta­l principle not challenged through gradual reform,” said Wang.

At the same time, China’s Ministry of Commerce said WTO reform should strengthen the latter’s authoritat­iveness and leadership, and consolidev­elopment, Wang Shouwen, date the basic functions and role of the free trade principle and multilater­al trading system, to better promote global free trade and economic globalizat­ion.

“We should always stick to the overall framework of the multilater­al trading system and uphold multilater­al trade order,” said the ministry’s spokespers­on Gao Feng, adding free trade arrangemen­ts among WTO members are a helpful supplement and a positive driving force for the multilater­al trading system.

Though China could rely on its own resources alone to advance its industrial­ization, it is still willing to seize developmen­t opportunit­ies overseas and share its experience­s and economic gains with its trading partners via imports and foreign direct investment, said researcher Mei.

“Because the country knows its biggest contributi­on to the world would be doing a good job at home and ensuring stable and sustainabl­e economic China will hope that its goodwill wins fairer treatment for its personnel, goods and capital abroad,” Mei said.

No WTO member has suffered economical­ly due to China’s participat­ion since 2001. On the contrary, all of China’s trading partners at various developmen­tal stages have benefitted greatly. China has also become a major trading partner of more than 120 countries and regions, he said.

For example, US exports to China surged from $26 billion in 2001 to nearly $150 billion in 2017. China thus became the third-largest market for US exports, up from No 11 in 2001, according to commerce ministry data.

China has also strengthen­ed its legal system and law enforcemen­t to protect intellectu­al property.

In recent years, it has revised the trademark law, and strengthen­ed it by introducin­g a punitive compensati­on system, while revising the Anti-Unfair Competitio­n Law and expediting the process for revising the Patent Law and Copyright Law.

It has re-establishe­d the National Intellectu­al Property Bureau, too, and emphasized that the judicial system will play the leading role in intellectu­al property protection.

Toward that end, it has establishe­d three intellectu­al property courts in Beijing, Shanghai and Guangzhou, while cracking down on online piracy to protect patent rights.

Since 2001, the royalties China had paid for using foreign patents increased on average 17 percent a year to reach $28.6 billion in 2017.

A number of foreign business leaders agreed that China, the world’s largest consumer market, offers enormous opportunit­ies to global trading partners under the WTO framework.

Denis Depoux, who heads the China unit of German consulting company Roland Berger, said China has benefitted significan­tly from the WTO rules. Having been the world’s factory, China is now starting an influentia­l trend by growing its domestic market, upgrading the quality of its products and services, and enhancing environmen­tal requiremen­ts in its manufactur­ing and industrial sectors.

“More opportunit­ies, including a level playing field for global companies, are arising in China for those who can adapt to this new trend. Outbound Chinese investment­s, although selectivel­y authorized in the past, will also transform the country’s economic influence,” said Depoux.

George Xu, CEO of the China unit of French aircraftma­ker Airbus, said there will be huge growth potential in China’s civil aviation market in the next decade.

“In recent years, outbound tourism has grown rapidly, but only about 10 percent of people in China hold passports. If that number grows to 20 or 30 percent, it will be a massive market, and we can foresee that the market will grow robustly,” he said.

China is the largest market for Airbus that has seen its highest growth rate in the country. It delivers about onefourth of its planes to the Chinese market every year.

“Twenty years ago, most multinatio­nal companies simply wanted to manufactur­e in China, but the nature of demand is very different now. They are seeing China as an end market. That means they need to change dramatical­ly,” said Bill Winters, group CEO of Standard Chartered Bank.

Amid growing concerns over isolationi­sm and protection­ism, German chemical giant BASF announced in July that it will invest $10 billion to build a chemical production site in South China’s Guangdong province. This would be BASF’s largest investment project ever. The investment is estimated to reach up to $10 billion by the project’s completion around 2030.

By then, the WTO regime will have been strengthen­ed on the back of China-led efforts, and Guangdong and many other cities across the world should be able to emulate Port Elizabeth, to emerge as shining symbols of an efficient, just and equitable global trade system, experts said.

China hopes that the primary purpose of the WTO should not be changed ... ” China’s vice-commerce minister

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