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Trade Policy Review: China

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Trade Policy Review: China

Trade Policy Review: China
Credit: Flickr/Peter Fuchs

The fifth review of the trade policies and practices of China took place on 1 and 3 July 2014. The basis for the review is a report by the WTO Secretariat and a report by the Government of China.

Documents from the review are available below.

Concluding remarks by the Chairperson

The fifth Trade Policy Review of China has provided an excellent opportunity to improve our understanding of its trade and investment policies. I would like to thank Mr. WANG Shouwen, Assistant Minister of Commerce and H.E. Ambassador YU Jianhua, Permanent Representative of China to the World Trade Organization and the whole delegation for their constructive engagement throughout this exercise. I would also like to thank H.E. Mr. Joakim Reiter, Ambassador of Sweden to the WTO for his insightful remarks as discussant. China received over 1,700 advance written questions, which shows the importance attached by Members to its trade and investment policies and practices. China’s written answers to most of these questions have been welcomed by Members who looked forward to answers to additional questions, no later than one month after this meeting.

Members remarked that during the period under Review, China had become the major global merchandise trader and noted the impact that China’s policies had on the world economy and on the functioning of the WTO. Hence, they highlighted the need for China to recognize the increased responsibility that comes with becoming a lead player in the multilateral trading system. They commended China for its determination to carry out challenging reforms and emphasized that the current review came at a particularly opportune time as under its new leadership China had announced an ambitious and comprehensive reform agenda. In this context, Members sought more information on the specifics of the ongoing reforms, including the functioning of the China (Shanghai) Pilot Free Trade Zone, and on future reforms.

Members noted the role that China’s economic growth had played in contributing to world economic recovery in the aftermath of the global financial crisis. However, they observed the need for rebalancing growth, which had been traditionally nurtured by investment and had heavily relied on directed credit availability. It was noted that China had already taken some steps to rebalance economic growth through policies to promote consumption. Members stated their belief that trade and a further liberalization of the domestic market could play an important role in this endeavour. In this regard Members outlined a number of areas where they thought that improvements could be achieved:

  • Transparency: as the world’s largest trader China bore great responsibility for supporting a predictable and transparent global trading system. China was encouraged to ensure the effective use of transparency mechanisms within the WTO, including ensuring that its notification obligations are fulfilled in a timely way. Members noted that although China had committed to publish in a single official journal all laws, regulations and other measures related to or affecting trade in goods, services, IPR or foreign exchange, both at the central and sub central level, and to make them available in a WTO language, this had not been effectively accomplished. Members urged China to address this shortcoming by making information regarding trade-related measures available. This would be beneficial to all as it would lead to increased trade and investment.
  • Consistency in implementation of laws, regulations and policies: Members understood the difficulties that China faced in ensuring the consistent implementation of laws, regulations and policies in such a vast country. It was noted that implementation inconsistencies affected business directly with and within China, compounding the often-reported problems of predictability and transparency. Members stated that addressing these issues was of the utmost importance, both to improve the operating environment of business – domestic and foreign alike – and to limit the risk of discretionary treatment.
  • Role of the State: Members noted that the State still had an active role in China’s economic development and that China continued to pursue policies to support domestic industries including those controlled by state-owned enterprises. They stated that on occasions this had led to overcapacity and excessive credit expansion. In Members’ view, given China’s size and importance, Government intervention affected the allocation of resources and competitive conditions of companies in and outside China.
  • TBT and SPS: Members expressed concern with respect to the use of technical requirements that diverged from international standards and the insufficient involvement of interested stakeholders in the standardization process. Regarding SPS measures Members questioned their scientific justification in certain instances, and requested China to make further efforts to increase transparency and predictability in this area.
  • Other concerns raised by Members included China’s support policies; the use of export restraints and export taxes; restrictions on services market access; the retaliatory use of trade remedies; enforcement of IPRs; the protection of trade secrets; and restrictions to foreign investors in certain areas.

Members commended China for their leadership in submitting its notification of Category A provisions under the new Trade Facilitation Agreement and in opening its market to products from LDCs. Members urged China to make further efforts to conclude the negotiations to expand the Information Technology Agreement and to become a member of the GPA. Members trusted that China would continue to positively contribute to the adoption of the post Bali work programme. China as a global economic power had an indisputable role to play in maintaining a rules-based trading system which is vital to the current and future prosperity of trading nations.

The participation of over 50 delegations in this meeting and the large number of questions posed during this Trade Policy Review indicate the clear importance of China as a trading partner. In this respect, I would wish to emphasize that it is essential for the system that China abides by its WTO commitments including that of transparency. This, in turn, would allow China to continue reaping the benefits of economic liberalization in a rules-based multilateral framework. Members believed that it is crucially important that China continues to pursue trade liberalization and economic reform despite the challenges that could arise and pledged to support China so that clear improvements could be achieved in the specific areas mentioned, in the questions posed and in the discussions held during these two days.

In closing, I would like to thank Assistant Minister WANG Shouwen and the rest of the Chinese delegation, all the other delegations, the Discussant and the Secretariat for this very successful fifth review of the trade policies of China.

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