A New Chapter in China’s reform and Opening up to the World

> Pascal Lamy’s speeches


President Hu Jintao,
Distinguished Guests,
Ladies and Gentlemen,
大家好 ( Da Jia hao, meaning Good morning to all).

It is a great pleasure for me to join China in celebrating the 10th anniversary of its WTO membership. 

Ten years is a long minute in China’s millenary history. And yet these ten years have witnessed an unprecedented transformation of China’s economy and society.

My first trip to China was in the 1980s, accompanying the then President of the European Commission on his first visit to Deng Xiaoping. Bicycles in ChangAn Street were the rule. Cars were the exception. I travelled to China frequently at the end of the 90s. Agriculture and automobiles were areas of particular concern to China as it finalised its accession to the WTO. Ten years later, the streets of Beijing are crowded with family cars, not bicycles. China has become the largest automobile producer and market in the world. Chinese agriculture has become more productive and efficient. Millions of Chinese farmers have moved to the cities, employed by a rapidly expanding industrial sector, including multinational corporations which have come into China at unprecedented speed since 2001 and played a key part in creating a network of global value chains.

China’s growth miracle did not start in December 2001. It predates its entry into the WTO. But joining the WTO was a means to anchor reforms and pursue the transformation. WTO membership has served as a stabilizer and accelerator in China’s economic take-off. 

China’s accession to the WTO proved decisive in several respects.

The goal to become a WTO member acted as a lever for the process of domestic modernisation.

It generated trust by foreign investors who have been key actors in China’s take-off through Foreign Direct Investment and transfer of technology. 

WTO membership also underpinned Chinese export-led growth with a strong insurance policy against protectionism.

The commitments accepted by China as part of its entry into the WTO were demanding. In fact, many went well beyond what other emerging economies had accepted in the past. But China first took the decision to reform its economy for its own good, and it then decided to bind these reforms in the WTO. It was the result of a domestic choice that saw in the opening of the Chinese economy a way to grow, to develop, to reduce poverty and to provide Chinese citizens with a decent future. And the results have been impressive, also because of the accompanying policies put in place in parallel with trade opening.

Accession to the WTO strengthened China and helped lay down a more solid basis for China’s future development.

But as China develops, it also has to wrestle with tremendous 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, to foster a friendlier business environment and a 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 global trade regulation. Behind this inability lies a key question to which WTO members must respond: what is the balance of rights and responsibilities between developed and emerging economies? The answer to this question holds the key to unlocking the Doha Round, as it does with addressing climate change negotiations under the UNFCCC.

On the other hand, the WTO risks crumbling under the weight of excessive expectations, especially in areas where its role is only modest, such as in addressing global macro-economic imbalances or currency fluctuations.

And yet the lesson learnt from the recent global economic crisis is that the WTO has a significant role to play as a bulwark against protectionism. This is particularly true of China which would have been much more severely affected by protectionist measures, given its prominence in world trade. The WTO has so far protected China against high intensity protectionism during the crisis.

Looking into the future, as a key member of the WTO family, 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 process. Understandably the pace of such reforms is a topic of debate within China. But the best argument in favour of such policy is that market opening, coupled with the right domestic policies, have worked for this country as well as for its trade partners. Anchoring in the WTO 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 for growth in other countries. Growing together is more stable and sustainable than growing alone.

Today, the Chinese economy and its influence are greater and stronger than ten years ago. As a global power, it is only natural that the expectations of other countries on China have also grown. China’s participation and support are vital in any collective action to address global challenges. With today’s economic difficulties across the world, resolve and leadership are in desperate need. We all need a proactive China.

I was particularly encouraged by President Hu’s announcement at the Cannes G-20 Summit that China will provide duty and quota free market access to 97% of exports from the world’s poorest countries. This is a good example of leadership and shows that China is willing to share its growing prosperity with other countries and to take on more global responsibility as it grows.

President Hu, I would like to thank you for this timely support for our work in the WTO.

On this tenth anniversary, and as we look forward for the next decade, I have two wishes that I would like to express.

The first is that China’s involvement in the WTO helps us all in keeping this organization on the move towards more open and fairer trade.

The second is that the WTO’s relevance for China keeps growing and helps this country to address its reform challenges.

China has been and should remain important for the WTO. The WTO has been and should remain important for China.

Thank you for your attention.

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