Let me begin by
saying how pleased I am to be in China at such an important point in the negotiation of
China's entry into the World Trade Organization. Years from now we will look upon this
time as a watershed in the evolution of the global economic system.
There is a simple
reality which lies at the heart of our current negotiations and the real challenges of
adjustment we all face: the reality that China is already a leading power in an ever more
interdependent global economy. China increasingly needs the opportunities and security of
the WTO system to fulfil its huge potential for growth and development. And the WTO
increasingly needs China as a full and active member to be a truly universal system.
is emphasized by the sheer force of China's rise in the world. During the last decade,
output has been expanding by an average of 10 per cent a year, while merchandise export
volume has been growing even faster, at about 15 per cent. In two decades, the
value of China's merchandise exports has expanded more than twenty-fold, reaching
US$151 billion last year. China is already the world's fifth largest trading power,
and the second largest recipient of foreign investment. Today the Chinese economy
represents between 5 to 10 per cent of global output, depending on the method used to
calculate national production.
economy expands into the future, so too will its ties to the global economy. Dependence on
export markets will continue to grow rapidly, and not only for labour intensive products
like footwear and toys, but for the higher technology goods and services that are an
increasing proportion of China's output as it climbs up the production ladder. Imports
will also rise, in part to fuel further industrialization and modernization, but also in
response to consumer demand. And an ever expanding web of inward and outward investment
will draw China deeper into the global financial system.
estimated that China's modernization will require imports of equipment and technology of
about US$100 billion annually, and infrastructure expenditures during the latter half of
this decade could amount to about US$250 billion. This is not to mention rising
demand for energy, mineral resources, food and farming imports, which, despite the size
and resources of the Chinese economy, cannot be satisfied by domestic output alone.
fact is that China is moving to the very centre of the globalization process, and both
China and other nations are benefiting from it. We live in a world where technology,
capital, and trade move increasingly more freely; where the old economic tools have lost
their edge; and where economic strength and security increasingly depend on economic
openness and integration. China's path to growth and modernization is also a path to
of globalization will not be reversed - it will accelerate. Throughout the world, economic
and technological forces are breaking down walls, reaching across borders, and weaving
together a single world economy. In the late twentieth century our new opportunities, as
well as our challenges - in trade, in economics, in every facet of international
politics - arise from our worlds moving closer together, not further apart. Deepening
interdependence is the central reality for China and for the world. Managing
interdependence is our shared responsibility.
A key step
towards completing this interdependence is bringing China into the multilateral trading
system. China's economic relations with the world are simply too large and too pervasive
to manage effectively through a maze of arbitrary, shifting and unstable bilateral deals.
China's best guarantee of coherent and consistent international trade policies is to be
found inside the rules-based multilateral system.
By the same
token, China, like all other countries, can best manage its growing economic relations
with the world on the basis of rights and obligations agreed by consensus and reflected in
enforceable rules and disciplines. This is the only way to resist bilateral pressures or
threats of unilateral actions. It is also the only way to sustain and promote domestic
economic reform knowing that China's efforts in this direction are being matched by its
trading partners, members of the WTO, who share the same obligations under the WTO
WTO means assuming binding obligations in respect of import policies - obligations which
will necessitate an adjustment in China's trade policies and, in most cases, economic
restructuring. But, in turn, China will benefit from the extension to it of all the
advantages that have been negotiated among the 130 members of the WTO. It will be entitled
to export its products and services to the markets of other WTO members at the rates of
duty and levels of commitment negotiated in the Uruguay Round - this includes tariff
bindings benefiting nearly 100 per cent of China's exports of industrial products to
developed countries, with almost one-half of these products being subject to duty-free
treatment. These tremendous market access opportunities will be underpinned and reinforced
by the two cardinal principles of most-favoured-nation and non-discrimination.
importantly, China will have recourse to a multilateral forum for discussing trade
problems with its WTO partners and, if necessary, to a binding dispute settlement
procedure if its rights are impaired. This greater level of security will benefit China
immensely - encouraging even greater business confidence, and attracting even greater
levels of investment.
There is a
third major reason for China's participation in the multilateral system. Only inside the
system can China take part in writing the trade rules of the 21st century. This will be an
unprecedented set of rights and obligations negotiated internationally by consensus.
power of the multilateral system is its power to evolve. In 1994 we concluded the Uruguay
Round of the GATT which, at the time, was the most ambitious and far-reaching agreement in
the fifty year history of the international economic system. Just three years later, we
have moved on to negotiate path-breaking agreements to liberalize the global
telecommunications industry and to remove tariffs on trade in information technology
products - the combined value of which, at some US$1 trillion, matches global trade in
agriculture, autos, and textiles combined. And their value reaches beyond trade figures;
by opening up access to knowledge, communication and their technologies we are opening up
access to the most important raw materials of the new century. This will be of immense
importance to the development and competitiveness of all economies, not least China's.
every sign that we can also conclude a multilateral agreement on financial services by the
end of this year - another area in which we are trading into the future. And this is
to say nothing of the WTO negotiations on agriculture, services and other sectors, that
will resume in three years time.
outward-looking China cannot afford to stand on the sidelines while others write the rules
of the game. A China with growing export interests cannot afford to be left without secure
and expanding access to global markets - security which only the multilateral system
provides. And perhaps most important, a China dependent upon technology and modernization
cannot afford to fall behind the fast-moving pace of globalization - particularly in
sectors like information technologies, telecommunication, or financial services which will
be the key building blocks of the new economy.
economic success so far is directly linked to its impressive domestic reforms, including
trade and investment liberalization. China has already benefited from the unilateral
tariff reductions offered in the context of its accession negotiations; one study puts the
gains at US$22 billion. But this is not the end of the road. Further liberalization -
undertaken on the basis of WTO rules, and in exchange for benefits from other WTO partners
- could prove the biggest stimulus yet to China's economic growth. And, by extension, a
giant stimulus to the world economy.
I am not
suggesting that joining the WTO is a simple step. Just the opposite. But many other
countries that are already members of the WTO share a comparable level of development with
China. They have subscribed to its rights and obligations and enjoy its benefits. The
other accession candidates are also showing they have made the same choice.
attraction of the WTO lies precisely in the strength and consistency of its rights and
obligations - which we continue to broaden and deepen with the further expansion and
integration of the global economy. Fifty years ago the focus was only on tariffs and other
border measures; today WTO rules extend well inside the border, to encompass technical
standards, services, intellectual property, trade-related investment, and a host of other
economic policies that were once considered domestic. Fifty years ago, almost all GATT
members were from the industrialized world; of today's 130 WTO members, eighty per
cent are developing countries or economies in transition.
complexity of the rules and diversity of membership, far from weakening the WTO, has
strengthened it. In moving to broader participation we have done more than add a new rule
here or a new member there. We have created an expanding network of interlocking interests
and responsibilities - a system which grows more vital to all our trading interests as it
It is because
China's accession to the WTO will profoundly shape the future evolution and direction of
global economic relations that we must get the process right. China is too large and
important an economic player - and its entry into the WTO will have too great an impact on
the system - to compromise these negotiations.
recently seen important signs of momentum and creative flexibility we have recently seen
in these negotiations - in difficult areas like trading rights, non discrimination, non
tariff barriers, state trading, investment, and intellectual property where the
negotiators have made quite remarkable progress, especially in recent months. None of this
progress would have been possible without the vital - if time-consuming - technical
groundwork that all parties to this negotiation have laid over the previous decade. But
what is really driving this process forward is a shared recognition of the rewards that
are riding on success.
My purpose is
not to underestimate the work before us, especially as we approach the next negotiating
session scheduled in May this year. Like all negotiations, much of the important work -
and the toughest issues - have been left to the end. My purpose instead is to urge all
concerned to redouble their efforts - and to stretch their imaginations - now that we can
claim to be entering the final phase and there is a widely shared need to move forward
with urgency. There still remain crucial issues pertaining to China's terms of accession
to the WTO. Equally important, there are the bilateral market accession negotiations with
China's major trading partners which, as you know, are a critical and essential element of
any successful negotiation. Once again we should recall that China's position as the 5th
world exporter reinforces the need for its own market to be accessible to others. These
are all important issues that will need to be resolved to everyone's satisfaction before
China can be brought into the WTO.
the period of China's accession process, the GATT/WTO Secretariat has been ready to
facilitate negotiations and to render any assistance which may be needed on all possible
fronts. I need hardly add that this commitment of the Secretariat stands equally firm as
we approach the final stages of the accession process.
challenges ahead do not alter the basic reality that no aspect of China's economic and
trade relations will be easier to handle outside the multilateral system. On the contrary,
everything would be more difficult, for China and its partners - more arbitrary,
discriminatory and power-based. No-one can want such a scenario.
international debate about globalization vividly illustrates this last point. Implicity or
explicitly, China is moving to the very centre of this debate. The wonder is not that the
accession negotiations have been so long and so complex. The wonder is that this immense
country has moved so far into the mainstream of the global economy in so short a time.
that divided us are falling down; but some still see disparities and differences, rather
than our common interests. Globalization is weaving the world together as never before;
but it is a world of different cultures, different systems, and different levels of
demands that we respect our unique cultures and civilizations. Interdependence also
demands that we find common solutions to our common problems. These include the concerns
of China's major trading partners about its persistent trade surpluses. Equally, the world
will have to understand the immense challenge China faces in transforming itself with a
modern and competitive society - and all in a matter of decades. China is not alone
in making this effort of restructuring. Globalization obliges all nations, small or large,
rich or poor, to take part in a continuous process of adjustment. More than ever before,
the world's problems will be China's problems; and China's problems will be the world's.
Yet our world
of dramatic change is also a world of dramatic possibilities. China's living standards
have doubled in the last decade, and will no doubt double and triple again. New
opportunities are opening up for Chinese workers and Chinese entrepreneurs. New choices
are opening up for Chinese consumers. And out of this economic opening springs new hope. I
would argue, from the evidence of the huge success of reform so far, that the real cost
would lie in keeping doors closed, in slowing the restructuring process, and in
maintaining inefficient public structures.
What is true
for China is true for the world. The global economy could easily double by 2020, raising
global living standards by almost two-thirds - among the greatest advances in world
history. Technology and communications are weaving together an interconnected planet,
spreading the tools of economic and social progress, and equalizing the human condition.
And we are breaking down the barriers, not just between economies, but between people,
giving us a shared interest in prosperity and peace.
We must be
clear about what is at stake: China's entry into the global trading system is about more
than trade. It is about China's future r˘le as a world economic leader. And it is about
the future direction of the global economy and our global community.
I began by
saying that we are at a turning point in China's relations with the world. One of those
moments in history, which come but rarely, when the choices we make shape the course of
events for years and even decades to come. The Cold War landscape has been swept away, as
if by an historical earthquake. The next era of globalization has yet to take shape. We
have a unique opportunity - between eras as well as between centuries - to lay the
foundations of a new kind of international system, one which offers the best chance yet of
lasting world prosperity and peace. For the first time we have in our grasp the
possibility of creating a universal system based on rights and obligations agreed by
consensus and binding all its members.
- the successful integration of China into the global economy is the key to many of
the international challenges we face. We will need creativity in the days ahead. We will
need resolve. And we will need vision. Change will come whether we like it or not. We can
either engage it positively and steer it to positive ends or ignore it to our peril. The
choice before us is an obvious one.
I have come
to China, not as a negotiator, but as a man with one interest - to help build a truly
global trading system which can bear the weight of the twenty-first century. I leave you
with the message that China must be a central pillar of this system - otherwise we risk
building the new century on the foundations of economic instability and an even more
uncertain peace. I am confident China will bring an equally great breadth of vision to