Press release: Economic reform has produced impressive results
but important challenges remain
1. The first Trade Policy Review of the People's Republic of China has given us a much better understanding of China's trade policies and practices and of challenges that remain. I thank Vice Minister Yi Xiaozhun and his delegation as well as the Discussant, Ambassador Gafoor of Singapore, and Members of the TPRB for contributing to our frank exchange of views. China's response to a large number of questions is also appreciated.
2. Recognizing the considerable steps taken by China in reforming its economy, and the role played by openness in fostering its rapid economic growth, Members commended China's continued trade liberalization. China has taken major steps, especially in the run up to its WTO accession, to streamline its trade policy regime, revising and updating a large number of laws in the process. Reform has resulted in a remarkable transformation of the Chinese economy. Real economic growth has been at some 9% over almost two decades, resulting in an eleven-fold increase in per capita income between 1978 and 2005. The percentage of China's population living below the poverty line has declined from 73% in 1990 to 32% in 2003. Trade and investment reforms have resulted in China becoming the world's third largest trader and one of the largest recipients of FDI.
3. Nevertheless, there remain a number of challenges. These include growing income inequalities and the need for job creation, while continuing and deepening economic reforms. China noted that in meeting its goal of annual average GDP growth of 7.5% over the next five years, particular attention would be paid to agriculture, rural development and farmers' incomes, balanced regional development, technological innovation, energy conservation and environmental protection. Regarding the exchange-rate regime, which some Members raised, China said that it was taking steps to further develop its foreign exchange market. There were also remarks by some Members about China's RTA activity. China noted that RTAs could not, and should not, replace the multilateral trading system; rather they could usefully complement the system.
4. On trade policy, Members complemented China on measures to implement its accession commitments. As a result, border measures, including the tariff and export restrictions, had declined. Applied and bound rates are close, making the tariff more predictable and transparent. Notwithstanding these achievements, many Members raised the issue of transparency in policymaking and implementation, and were concerned about the use of certain measures on imports and exports, especially anti-dumping and countervailing, standards, SPS, export taxes and VAT rebates. Some Members also thought that policies, such as that on automobile parts, were being used to restrict imports. China said that it had implemented its accession commitments in good faith. As a result, the economy was much more open and transparent. China's trade and related laws had also been extensively reviewed, and amended where necessary, to meet its WTO commitments.
5. Members noted although direct intervention by the Government in the economy had declined, but expressed concern that indirect measures were still used to “guide” investment in certain sectors, particularly in manufacturing, including the steel and automotive sectors. They thanked China for its recent notification on subsidies and raised further questions. Several questions were raised about the investment climate, as well as about the draft Competition Law and its treatment of the public sector.
6. Many Members expressed concern that, despite China's efforts, the enforcement of intellectual property rights (IPRs) remained problematic. They urged China to address this. China acknowledged that there remained gaps between the level of protection of IPRs in China and developed Members. Nevertheless, China had set up a complete legislative and enforcement mechanism for IPRs and had raised public awareness of IPRs.
7. Reform in agriculture was commended by Members; further liberalization would help raise rural productivity. China's demand for natural resources and energy, in the view of some Members, could also be better met through a more open and transparent policy on investment in this sector. On energy conservation and environmental protection, Members requested details on steps to be taken to improve energy efficiency.
8. On services, many Members noted that commitments undertaken by China were more extensive than those of other developing countries. However, liberalization in services had been slower than in other areas and Members encouraged China to continue to relax ownership and entry requirements and to strengthen regulation. Continued reform, particularly in the financial sector, was crucial to ensure a better allocation of resources.
9. Members urged China to continue its active participation in the current negotiations and to work for a successful conclusion to the DDA. They noted, and welcomed, steps taken by China to provide assistance to LDCs, including through improved market access and debt forgiveness.
10. This review has been very useful in giving us all an overview of China's trade policies and practices. I would once again like to thank the Chinese delegation for their efforts, the Discussant for his insightful comments, and Members for contributing to what has been a very enlightening two days of discussions. We look forward to receiving the remaining outstanding responses within the next month.