Concluding remarks by the Chairperson

This third TPR of China has provided an excellent opportunity to examine, from a multilateral perspective, China's trade policies and practices and their impact on the trading system.  I thank Vice Minister YI Xiaozhun and his delegation, together with the Discussant, Ambassador Swärd-Capra of Sweden, and Members of the Trade Policy Review Body for contributing to our exchange of views.  China's response to a large number of questions is also much appreciated.

At a time of heightened trade tensions around the world as governments manage the economic consequences of last year's global recession and 12 percent drop in world trade flows, this Trade Policy Review (TPR) of China highlighted the valuable role that the WTO's TPR Mechanism plays by increasing transparency, encouraging consultation and cooperation among WTO Members, and helping to avoid misunderstandings. 

Members commended China's constructive role in the WTO and noted that a well-functioning multilateral trading system has helped China to sustain its economic growth and development.  Its dependence for many years on export-led growth, particularly in manufactured goods, left it vulnerable to the effects of global recession.  The Government's response of expansionary fiscal and monetary policies, including a Y4 trillion stimulus package, helped China's economic growth to rebound in 2009 and made an important contribution to global recovery elsewhere, particularly in the Asia region.  Members welcomed China's constructive role in resisting protectionist pressures and instead boosting global demand during the recent economic downturn.

The global economic crisis has reinforced China's determination to correct imbalances in its economy, including through structural diversification, improving the functioning of the domestic capital market and strengthening social safety nets for the population.   Looking ahead, as the Government pursues policies to increase the role of domestic demand in underwriting China's growth and to encourage the expansion of the services sector, further liberalization of the trade and investment regimes is called for to foster competition and achieve more efficient allocation of resources in the economy.

Members appreciated China's efforts to enhance domestic transparency, and welcomed China's ongoing efforts to review, revise, and amend its trade and related laws.  Nevertheless certain aspects of China's legislation and the regulatory process remain complex and unclear.  Examples include some provisions in the recent Anti-Monopoly Law, concerning “national security reviews”, mergers and acquisitions, and the balance between IPR protection and competition. 

Members noted that China has continued the gradual liberalization of its international trade and investment regime.  It was mentioned that progress towards market liberalization showed signs of slowing down, and China was urged to give a new impetus to its reform programme.  Members urged China to continue its trade and investment liberalization, particularly in the areas of government procurement, export restrictions, standards and technical regulations and services. 

Members remarked on the fact that all China's tariff lines are bound and that the relatively low applied MFN rates are close to bound MFN rates, thereby providing a high degree of predictability to its tariff.  However, the applied MFN tariff contains 60 different ad valorem rates, and China was urged to simplify its tariffs.

Members remain concerned about regulatory and other barriers to trade and investment, especially customs procedures, import prohibitions and licensing.  Concerns were raised about China's trade remedy activities, which are assuming increasing importance. 

China was asked to clarify the procedure it follows to make its voluntary standards mandatory;  it was noted that less then half of China's national standards correspond to international standards.  Concerns were also raised about China's technical regulations, including its use of a Compulsory Certification Scheme.  China was urged to follow more closely recommendations from international organizations on SPS measures. 

Members were also concerned about China's indigenous innovation initiative and “Buy China” policies in the government procurement framework.  Many expressed their willingness to work with China to facilitate its accession to the WTO Agreement on Government Procurement.

Members remained concerned over certain aspects of China's export regime, notably, restrictions, licensing, quotas, export taxes and partial VAT rebates.  Its export barriers have not been falling at the same pace as its import barriers, and could potentially distort markets.  Members welcomed China's consideration of suitable internal measures, rather than trade measures, to conserve natural resources, save energy, and protect the environment.  In this regard, Members asked China to provide details of plans to levy a tax on its natural resources.  Some were particularly concerned with the export-related subsidy programmes run by local governments;  they also urged China to ensure that officially supported export credits do not distort trade.  In addition, Members urged China to submit new notifications regarding its subsidies.

Concerns were raised about China's industrial policies that entail government intervention in certain sectors, particularly manufacturing, and that have been used to guide resource allocation with resulting overcapacity in several industries.

Members considered that, despite China's continued efforts, the enforcement of intellectual property rights remained insufficient, and some aspects of IPR protection remain complex.

Concerns were raised about border measures and production subsidy programmes affecting imports of agricultural products.  Members were also concerned about entry barriers to the energy sector, and called for more market-oriented energy pricing. 

With regard to services, Members complimented China on its unilateral relaxation of restrictions on FDI.  Members encouraged China to further liberalize its services, especially banking, insurance, electronic payment systems, telecommunications, express delivery and legal services.  Moreover, the Central Government has been delegating to local governments licensing authority for the establishment and modification of operations of some foreign-invested enterprises (FIEs).  Members noted that there were still areas to be improved, such as foreign participation limits, on foreign investment in some sectors and private-sector activities. 

Members expressed their appreciation to China for offering special preferential tariffs for imports from 41 LDCs, and for China's involvement in South-South cooperation more generally.  They encouraged China to offer duty-free quota-free access to all 49 LDCs identified by the United Nations. 

China considers regional/bilateral trading agreements (RTAs) as a necessary supplement to multilateral trade liberalization;  Members expressed the hope that RTAs would not diminish China's commitment to the multilateral trading system.

This third review has been very useful in providing us with a better understanding and an update of China's trade policies and practices.  I would once again like to thank the Chinese delegation for their constructive efforts in preparing for and participating in this meeting.  I appreciate the participation of a large delegation representing different ministries and agencies across broad areas of responsibilities.  I wish to congratulate China for its impressive economic performance, to become the world's largest exporter and the second largest importer.  I would also like to thank the Discussant for her insightful and thoughtful comments, and Members for contributing to what has been a very extensive and informative two days of discussions.  We look forward to receiving within the next month China's responses to the remaining questions, including those outstanding from its second Review.