An occasion to celebrate

It is difficult not to overstate the effects of this, certainly on China, but also on China’s trading partners and the global trading system itself. By integrating fully into the global economy, China has become the largest exporter of manufactured goods and the second largest economy in the world. This remarkable expansion has contributed significantly to China’s development and has helped lift some 500 million people out of poverty.

This is not to suggest that China’s success is entirely due to WTO accession. But membership helped the Chinese government to anchor the reform and opening-up initiated by former leader Deng Xiaoping. These reforms improved the efficiency of the Chinese economy and boosted growth.

WTO accession helped China’s economic development efforts in three vital ways. The goal to become a member acted as a formidable lever for domestic modernisation. It generated the trust of foreign investors, who have been key actors in China’s take-off through massive foreign investment and transfer of technology. And now China is becoming a significant provider of new technologies. Membership also underpinned Chinese export-led growth with a strong insurance policy against protectionism. This has proven crucial in the current economic crisis, which could have had a disastrous effect on China had it not been a WTO member.

While many in China point to the concessions the country had to make to join the WTO, the important thing to remember is that China first took the decision to reform its economy for its own good, and then decided to bind these reforms within with the WTO. 

Gains have accrued to the Chinese economy by making Chinese enterprises more competitive. To some extent, this has come about because of the technology transfer and best practices brought in by foreign investors. But a large part of the efficiency and productivity gains have emerged because of the need for Chinese enterprises to improve their competitiveness. Such improvement has enabled Chinese workers to benefit, with real average wages rising by 12.6 per cent a year during the last decade, according to the International Labour Organisation.

While the gains to China are clear, there is a tendency sometimes to forget how much China’s trading partners have also profited. China is now the world’s second largest importer, and imports have risen nearly six times to US$1.4 trillion since accession. The Chinese market has become one of the most important for many exporting nations.

But as it develops, China is also facing important challenges such as regional and income distribution imbalances, the need for stronger social safety nets, environmental degradation and an ageing population. It is also working to achieve more balance between external and domestic demand and better protection of intellectual property.

Just as China faces these challenges, the global trading system is also being severely tested. The delay in concluding the Doha Round is raising doubts about the WTO’s capacity to deliver further trade opening and regulation.

Looking into the future, China’s role and influence will be vital in our collective endeavour to advance trade opening and global trade regulation.

And this in turn is linked to the continuation of China’s reform and opening-up process. Further reforms of China’s services sector or further opening of its procurement markets can bring welfare gains and can help sustain China’s growth for the next decades. China can also provide tremendous opportunities of growth for other countries – because growing together is more stable and sustainable than growing alone.

The WTO offers a stable, transparent and predictable environment in which trade can flourish. Certainly, this has been of benefit to China, and hopefully there is still more to come.

 

The author is director-general of the World Trade Organisation.