RIDING THE WAVE OF GLOBALIZATION

Qiu Hui

China marks 20th anniversary of joining WTO

On December 11, 2001, Chinaofficially joined the WorldTrade Organization (WTO) as the 143rd member state.

Over the last 20 years,China’s exports haveincreased by 870 percent and imports by 740 percent. It has become the world’s second largest economywith trade in goods rising from the6th to 1st place, trade in services rising from 11th to 2nd, and foreign directinvestment rising from 26th to 1stplace, the highest increases amongdeveloping countries.

The COVID-19 pandemic caused asevere setback for the global economy.In 2020, China was the only economyto register positive growth in the world, with its exports up by 2.4 percent andimports up by 4.4 percent over theprevious year. China’s growth againstthe headwinds has injected strongmomentum into the recovery of worldtrade in commodities.

As the world’s largest tradingnation and a major source of foreigncapital, China’s development wouldnot have been possible without theWTO, a rules-based multilateral trading organization. Meanwhile, China hasalso been actively participating in WTO reform and upgrading the multilateraltrading system.

Global Recession and Imbalance

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

Sang Baichuan, dean of the Institute of International Economy at China’sUniversity of International Businessand Economics, thinks that in the post- pandemic era, uneven global economic development is inevitable, as evidencedby the drastic measures againstglobalization taken by the United States and other developed economies afterthe outbreak of COVID-19. Although the global commodity trade has graduallyreturned to the pre-pandemic levelwith routine pandemic protocols, itwill be a long process to realize short-term integrated recovery.

Under the impact of the pandemic, many countries have adopted socialisolation and economic blockadepolicies that have affected economicgrowth. On October 4, 2021, theWTO released its latest issue of Trade

Statistics and Outlook, which states that global trade has rebounded somewhat while regional differences remainsignificant, with some developingregions well below the global average.

Trade is an important means todeal with the pandemic, opined WTOSecretary-General Ngozi Okonjo-Iweala. According to her, strong growth in global trade is extremely importantto trade and global economic recovery, but the “gross inequity” in access tothe vaccines is undermining globaleconomic recovery. The longer theimbalance persists, the higher the riskof virus mutation becomes, which will probably ruin early achievements, shestressed.

Honoring Commitments to MutualBenefits

Xu Hongcai, deputy directorof economic policy at the ChinaAssociation of Policy Science, thinksthat China’s accession to the WTOprovided access to the world marketwhich enabled its foreign trade andeconomic aggregate to develop rapidly. China’s rapid development andeconomic aggregate have driven thedevelopment of the world economy.

Over the last 20 years, China hasstrictly fulfilled its commitments forWTO membership. “China should becommended as ‘a straight A student’who accomplished more thanexpected,” added Xu. Since its accession to the WTO, China has “taken greatstrides” in a new stage of reform andopening-up, achieved deep integrationinto the multilateral trading system, eradicated absolute poverty, and has been a firm supporter of global freetrade.

In 2001, China was the world’s sixth largest exporter. Since 2009, it has been the world’s largest exporter, playinga pivotal role in world trade. China’seconomic aggregate has surpassedthat of the United Kingdom, France,Germany, and Japan successively tobecome the world’s second largesteconomy.

“Since 2002, China’s contribution to global economic growth has been over 30 percent on average, making it themost important engine driving worldeconomic growth,” commented SangBaichuan. Over the last 20 years as aWTO member, China has effectivelyboosted the growth of its foreign trade, foreign investment, and nationaleconomy, which has also contributedsignificantly to the world economy.

Over time, some speculated thatChina had taken advantage of its WTO membership to get a free ride. HuoJianguo didn’t agree. An official whoparticipated in China’s WTO accession negotiations and former presidentof Chinese Academy of InternationalTrade and Economic Cooperation ofthe Ministry of Commerce, Huo isnow the vice chair of China Societyfor WTO Studies. He thinks that sinceits accession to the WTO, China hasfollowed universally accepted rules ofthe multilateral trading system. Thedevelopment of its export-orientedeconomy has accelerated, whileChinese enterprises have gone global to integrate into the international market. Meanwhile, China has providedinvestment venues for foreign andmultinational corporations.

“While China expanded its exports, it has also expanded imports,” saidHuo, “It is totally groundless to saythat China took advantage of itsmembership for a free ride.”

Support for WTO Reform

The impact of COVID-19 caused the global economy to turn uneven andturbulent, the global supply chainto face rupture and reorganization,and the global strategy to need urgent restructuring. Sang Baichuan pointed out that China, a major developingcountry with a complete industrialsystem, is playing a positive role instabilizing the global supply systemand ensuring normal global demand.

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

The impact of the pandemic hasnot yet receded today, and conflictsof values among countries aroundthe world remain as unilateralismand egoistic xenophobia continue topersist. Xu Hongcai admitted that therelationship between China and the US has entered a complex stage of strategic competition. From the perspective ofthe global economic recovery process,China-US relationship is a majorvariable in the post-pandemic era.

Li Chenggang, Chinese Ambassador to the WTO, opined earlier that theWTO is in crisis due to major changesdriven by populism and the pandemic. Its dispute settlement mechanism hasbeen pushed to the brink of paralysisdue to an understaffed Appellate Body. China is facing more complex risks and challenges in the economic and tradesector. In the face of these challenges,it is necessary to draw upon theexperience and wisdom of historicalpractice to further improve the WTO dispute settlement mechanism and restore its normal operations.

On May 13, 2019, China officiallysubmitted China’s Proposal on WTOReform to theWTO. China supportsnecessary reforms to the WTO toaddress urgent issues that threatenits survival, improve its authority andefficiency, and increase its relevance in global economic governance.

Sang thinks that with the collectiverise of emerging economies, the“governing power” of the multilateraltrading system has changedsignificantly. The United States andother developed countries advocate the establishment of higher standards oftrade rules, while developing countries tend to emphasize the continuedprotection of the legitimate rightsand interests of developing countriesaccording to the WTO principle of“special and differential treatment.”The ideal balance between the two hasyet to be struck. Negotiations on themultilateral trade system have become increasingly difficult, failing to meetthe interests of all countries in theera of globalization, which has led todeclines in the authority of multilateral mechanisms and severe challenges tothe international economic order.

An open multilateral trading system with rules that keep pace with thetimes is a necessary prerequisite forthe growth of China and the world.Sang opined that in the process ofrestoring the normal operation of theWTO’s Appellate Body and the disputesettlement mechanism, China shouldcontinue to assume the responsibilityof a major country with Chinesewisdom.

“The formation of new rules should be based on more consensus,” said XuHongcai. Economic globalization is an unstoppable trend. In the process ofWTO reform, unbalanced development should be considered. We need anatmosphere of mutually beneficialand win-win cooperation betweendeveloped countries and developingcountries to promote multilateralismand open development.