20 years after China’s accession to the WTO: How China’s WTO Entry Changed China and the World-BBC News

“Accession to the WTO” and “Olympic bidding”, these two images 20 years ago are engraved in the minds of many contemporary Chinese people and become deep collective memories. The Beijing Olympics is regarded by the Chinese government as a great opportunity for self-exhibition. Just like the Tokyo Olympics in 1964 and the Seoul Olympics in 1988, the three Oriental countries with similar cultures will host the Olympics as a platform for proclaiming the “rise of the country.” .

Although not as dazzling as the fireworks at the opening ceremony of the Olympics, China’s entry into the WTO has profoundly and extensively changed the country and the world. Western developed countries stripped off low- and mid-range manufacturing, while China took over. Western countries occupy the high end of the global value chain and their economies are advancing with leaps and bounds. However, the blue-collar class of various countries has been “left behind” by the economic development, which eventually led to the rise of conservatism, and even the phenomenon of extreme right political take-off; China’s economy is also experiencing rapid development. Great changes, but accompanied by high pollution, low security, low investment efficiency and other shortcomings, and after the economic rise, this “heterogeneous” China began to become tense with the whole of the West, so that the “new cold war” talk became raging.

In fact, in the middle of the two time points of China’s “WTO entry” and “Olympic bidding”, an event of even greater impact occurred-the “September 11 Incident.” Many analysts believe that this terrorist attack allowed the United States to devote resources and energy to the Middle East and the pan-Islamic world, and at the same time shook hands with potential strategic opponent China, making China unexpectedly happy at the beginning of its “WTO entry.” “Window of Opportunity”.

However, 20 years later, this window seems to have been closed: the United States completely withdrew from Afghanistan, and basically withdrew from the Middle East, and even persuaded many Gulf countries to normalize relations with Israel, and basically completed the escape from the “war on terror” and began to concentrate. Energy to “compete” with China. Tariffs between China and the United States are high, technological barriers are high, and the World Trade Organization is also undergoing a difficult transition amidst the crisis of shutdown and the calls for reform.

At a time when people are concerned about what China will face in the WTO in the next 20 years, understanding China’s “WTO” path may provide some reference.

The predecessor of the WTO was the General Agreement on Tariffs and Trade (GATT). In 1971, the People’s Republic of China “restored” its seat at the United Nations General Assembly. According to the “General Agreement on Tariffs and Trade”, Beijing could have joined the General Agreement on Tariffs and Trade as a matter of course.

According to Long Yongtu, who later presided over China’s “WTO” negotiations, recalled: “At that time, the mind was not emancipated enough, thinking that it was a rich country club, dominated by Western countries, and it was not good for us, so I decided not to join.”

For the decision at that time, it took more than ten years for China to react, and in 1986 it formally submitted an application for “resumption of accession to the General Agreement on Tariffs and Trade.”

Nine years later, the road to “recovery” was far away, but the General Agreement on Tariffs and Trade was upgraded and expanded into the World Trade Organization, which turned into “accession to the WTO”, and it took another six years.

Fifteen years later, China has gone through all the procedures and conducted bilateral negotiations with the member states. Almost every item has a major impact on China’s future development.

At the time of China’s entry into the WTO, Nicholas Lardy, a senior researcher on foreign policy at the Brookings Institution in the United States, expressed emotion with the rapid development of China at that time. Player. Indeed, no country has ever been able to expand so rapidly.”

But Ruddy also pointed out that behind the development, China’s problems are rapidly becoming prominent. Indeed, China experienced more than 20 years of reform and opening up at that time, experienced disputes and breakthroughs in economic routes, experienced the attempts of special economic zones and agriculture to “contract output to households”, and experienced the tremors of the June Fourth Movement. Although the economy is developing at a high speed, problems such as “triangular debt”, “illegal fundraising”, “financial constraints”, “dead state-owned enterprises”, and “property disputes” have accumulated serious problems.

Coupled with the simultaneous attacks of the 1998 Asian financial crisis and the Yangtze River flood, the then Premier Zhu Rongji compared the situation to a “land mine formation” and a “million-foot abyss.”

At the same time as joining the World Trade Organization, Zhu Rongji tried his best to carry out exchange rate reforms, abolishing the official exchange rate and mobilizing the “dual-track system” of market exchange rates. The black market in foreign exchange has disappeared, the renminbi has depreciated sharply, China’s foreign trade advantages have been highlighted, and cheap labor has pushed China to go up. The road to the “world factory”.

With the coordination of the external stage and internal reforms, even Ruddy could not foresee that China’s development after its “WTO entry” will be truly rapid.

Over the past 20 years, China’s GDP has increased by 8 times, becoming the world’s second largest economy, and its share of the world’s economy has increased from 4% in 2001 to 17.4% in 2020. China’s exports of goods have increased by more than 7 times, becoming the largest economy. Goods trading countries rank first among developing countries in the use of foreign capital.

Nick Marro, Chief Analyst of Global Trade at the Economist Intelligence Unit (EIU), told BBC Chinese that after joining the World Trade Organization, market competition has been introduced in key areas of China’s economy, which has improved China’s industrial structure. In particular, foreign investment has brought capital and technology to promote employment and economic growth. In turn, these increases also increase government taxation and household income and expenditure, as well as support technological innovation.

“From a global perspective, China’s accession to the WTO enables China to integrate into the global economy more comprehensively, creating an important position for China in the regional and global value chain.” This can be demonstrated by the number of foreign companies that continue to view China as a priority market.

Wang Huiyao, director of the Globalization Think Tank (CCG), said in an exclusive interview that all of China’s trade activities were originally monopolized by dozens of state-owned trading companies. Imports and exports must have quotas. Joining the WTO means that everyone is on the same starting line. It broke the original monopoly. In preparation for WTO accession, China revised tens of thousands of clauses that were “out-of-time” for the market economy, and revolutionized the concept, practice, and system. It can be said that joining the WTO is a “key move” for reform and opening up.

“China’s accession to the WTO is a win-win result for China and the world,” said Wu Jing, an assistant professor at the Chinese University of Hong Kong’s School of Business.

When people are surprised by China’s export growth after its accession to the WTO, they may ignore the growth of Chinese imports. In fact, in 20 years, China’s total imports have also increased by nearly six times, and the total volume of global trade in goods has nearly doubled. In 2020, China’s total imports have accounted for 12% of the world‘s total imports of goods trade, which is an astonishing number.

However, although the overall global trade has grown substantially, it is structurally unbalanced. Ma Zhiang believes that many countries are questioning whether China is capable of fully fulfilling its WTO commitments, as well as unfair state subsidies and other market-distorting tools, which in turn have brought political influence.

“For example, many Western politicians associate China’s entry into the WTO with the impact of their own employment, manufacturing competitiveness, and the transfer of traditional industries overseas.”

In July 2016, just as the Republican presidential candidate Trump “wins the Quartet”, BBC reporter James Naughtie followed his campaign team to Ohio, one of the small towns in the “Rust Belt” of the United States. Youngstown (Youngstown).

In the 1970s and 1980s, the steelmaking furnaces in Youngstown illuminated half of the sky, together with Pittsburgh to the south, forming the heart of the American steel industry. Iron ore is continuously transported from Lake Erie, and long trains laden with steel are shuttled from east to west in the United States.

However, in only one generation, the population here is less than half of that of the year, and the steel plant has closed down, and people are very angry.

In the 20 years since China’s entry into the WTO, China’s steel production accounted for 57% of the world‘s total output, while the United States accounted for only 4%.

In Youngstown, Noti met the third generation of steelmaking workers, and their immigrant predecessors came to the Midwestern United States with the promise of finding jobs and creating a better life. The younger generation now leaves as long as they can. Lost job opportunities, manufacturers moving overseas, sharp decline in income, immigration issues… all make people angry.

“Only when people are angry will Trump become a presidential candidate,” Notti said with emotion.

The people here vote for Trump. They hope Trump will fight a trade war with China as he said, so that the manufacturing industry will return and “make the United States stronger again.”

To a certain extent, Trump has done what he said. After taking office, he did wield a “tariff” stick, and implemented the strongest tariff war against China in history, imposing high tariffs on almost all Chinese goods. But hitting a big stick on China does not seem to hurt. China’s exports to the United States have even ushered in a double-digit increase. Not only did the manufacturing industry not return to the United States, but instead stayed in China because of the epidemic.

The WTO may be stunned by the big stick. The Sino-US trade war has intensified, and the world‘s two largest trading nations have completely bypassed the WTO. Trump has repeatedly expressed his distrust of the WTO, believing that it has not treated the United States well and regarded China as a developing country. As a result, China has gained many benefits, while the United States has suffered a great loss, and has restricted the hands and feet of the United States and hindered the implementation of its “U.S.” The concept of “first”.

By December 2019, the worst crisis since the establishment of the WTO occurred, and one of the most important functions of this international organization, the dispute settlement appellate body, was officially closed. The reason is that after American judge Thomas Graham expired and resigned, the United States refused to nominate, making it impossible for the institution to reach the minimum number of three persons for discussion and review.

Immediately afterwards, the world was hit by the new crown epidemic. In addition to the interruption of logistics, various countries also set up various trade barriers, and the global trade volume dropped sharply. By August 2020, WTO Director-General Azevedo has left his post ahead of schedule. The WTO, which has no leader, is struggling to hesitate amidst the crisis of shutdown and the calls for reform.

The value of the WTO can be seen from the recent speech of Wang Shouwen, Vice Minister of Commerce of China. He believes that multilateral trade, with the World Trade Organization (WTO) at its core, is the foundation and core platform for promoting global trade liberalization and facilitation. WTO has 164 members, and its trade volume accounts for more than 98% of global trade volume. No agreement can reach this level. Although free trade agreements are generally “WTO+”, which is much higher than the WTO’s open level, free trade agreements cannot replace the multilateral trading system. For example, the issue of agricultural subsidies and public reserves for food security can only be implemented in the multilateral system. To solve the problem within the trade system.

In fact, behind the current WTO crisis is the game between China and the United States on trade interests. The United States accuses China of not fully fulfilling its WTO commitments and using unfair competition methods; China insists that it fully fulfills its WTO commitments and that China supports multilateralism. Instead, the United States has taken improper tariffs against China.

Ma Zhiang believes that China has not fully fulfilled all its commitments to the WTO. This includes retaining state subsidies and other trade-distorting tools, as well as preferential treatment of domestic companies in procurement and licensing decisions, and trade retaliation related to diplomatic disputes, which at least violates the spirit of the WTO.

Ma Zhiang said: “This behavior has become particularly obvious in the past five to six years, casting a shadow over China’s trade and investment negotiations in other places.”

But Wu Jing holds a different view. He believes that every trade policy of China is subject to strict scrutiny by WTO members, and many countries tend to carefully check every economic and trade policy of China to see if its interests are affected. Statistics show that China, the United States and the European Union have been complained and prosecuted by other countries about the same number of times in WTO disputes. Therefore, China’s performance in complying with the rules and fulfilling its commitments is basically equivalent to that of the United States and the European Union.

He said: “In addition, China is the only’developing country’ in the World Trade Organization that has promised zero-tariff treatment for 97% of exports from least developed countries. The United States has not even made such a promise.”

However, Wu Jing also said that China can also do better in the future. The biggest hope that WTO members put on China is that China will accelerate the protection of intellectual property rights, accelerate the reform of state-owned enterprises, and expand the opening up of the service industry.

Over the past 20 years, the United States has experienced five presidents, and its attitude towards China in trade has undergone a sea-shaking change. In 2001, China and the United States reached a bilateral agreement, and the negotiations with the European Union and other economies are almost in line with the agreement with the United States.

Looking back on that year, Wu Jing said that as the main supporter of China’s application to join the WTO, the Clinton administration was wise in the interests of the United States itself. In 2001, China’s total imports to the United States accounted for less than 2% of total US exports. Twenty years later, US exports to China have increased to 9% of US exports, making it the third largest export market for the United States, after its two neighbors, Canada and Mexico.

Wu Jing said: “Today’s world economic structure and trade structure are undergoing profound changes. It is worth noting that unilateralism and protectionism are on the rise, and economic globalization is being challenged. However, China has always been a firm firm in multilateral trade. Supporters and defenders at the same time oppose unilateralism and protectionism.”

Ma Zhiang pointed out that in the past 20 years, many issues surrounding China’s accession to the World Trade Organization in Western countries, including most countries’ expectation that China’s economic reforms will eventually promote political liberalization, have not become a reality. Moreover, the current situation seems to be exactly the opposite of what people expected.

Many international analyses and reports believe that economic and trade issues may have caused the confrontation between the United States and China and the deterioration of relations in the first place. However, this “competition” or wrestling that began with the “trade war” has already spread from trade to technology, finance, and finance. Political, and even ideological and national security levels.

Although China and the United States are still members of the WTO, the current international political, economic and diplomatic environment is completely different from the situation where China had just “entered the WTO” 20 years ago and was “welcomed” by all major economies. Where will the relationship between China and the United States, the WTO, and the entire Western world go? It is becoming a question mark of the times that has attracted worldwide attention.