Trade Policy Review: China
This Trade Policy Review has provided an excellent opportunity for us to better understand China’s trade and investment policies. I would like to thank, once again, Vice Minister WANG and his delegation for their constructive engagement throughout this exercise. I would also like to thank our Discussant, Ambassador McCormick, for his insightful remarks; and the 59 delegations which had taken the floor for their active participation.
During the discussion, Members were informed of recent policy developments in the broader macroeconomic context. Members noted that while China’s real GDP growth had slowed down since 2013, it had remained at a relatively healthy level of 6.5%-7% a year, supported mainly by strong domestic demand. According to the authorities, the Chinese economy is undergoing a structural shift towards a "New Normal", under which economic growth will be led by the services sector and knowledge-based industries. Some Members were of the view that this transformation would require a more market-oriented approach to investment and resource allocation. They commended China for pursuing structural reforms which aimed at allowing the market to play a more decisive role. They welcomed initiatives such as establishing more Pilot Free Trade Zones and streamlining customs procedures; and sought more information on the specific measures. However, some Members perceived the reforms as having slowed down and not being as extensive as they should be, such that market forces were undermined in various sectors.
For instance, barriers to foreign investment still persisted, especially in areas considered of strategic importance or related to national security. Concerns had been raised regarding the prohibition of foreign investment in film production; distribution and exhibition; regulation of the circulation of foreign audiovisual content; standards for banking and insurance; and market access in telecommunications and financial services. Members hoped to see a more open, predictable and transparent foreign direct investment (FDI) regime, which would help China fully reap the benefits of FDI, and of the fast-growing services sector, as drivers of growth and development. Members also encouraged China to continue stepping up its protection of intellectual property rights, which was considered fundamental to attracting FDI.
Members observed that the State continued to play a very active role in China’s economy, providing domestic industries (including those controlled by state-owned enterprises) with various support measures, such as credit. Members raised questions about China’s support and subsidy policies; the use of export restrictions; import tariffs; tariff quota administration; and other measures which could distort market operations. They were interested in knowing how China would deal with overcapacity in certain sectors such as steel, which has become a global concern. Other concerns expressed by Members included the use of technical requirements that diverged from international standards and the unpredictability of its application, as well as the scientific justification of certain sanitary and phytosanitary measures.
China being the biggest merchandise trader in the world; one of the largest recipients of FDI; and the top trading partner for over 120 countries and regions, its policies can have a huge impact on the global economy. As the Discussant so aptly put it, there is virtually no area where events in China do not have an impact on other WTO Members. Hence, Members call upon China to assume the increased responsibility linked with being a major player in the multilateral trading system.
In this regard, China was congratulated on having opened its market to products from LDCs, and for its leading role in South-South cooperation. Members also commended China for its participation in the expanded Information Technology Agreement (ITA) and the Environmental Goods Agreement negotiations, and looked forward to the implementation of its commitments under the expanded ITA and the Trade Facilitation Agreement. Members welcomed China’s latest offer for its accession to the Agreement on Government Procurement, and encouraged it to make further efforts to conclude the negotiations. China was also commended for the restraint shown during the period in the use of contingency measures.
As in the last Review, China was encouraged to increase the transparency of its trade policy regime. Members highlighted the importance of fulfilling WTO commitments, in particular the notification obligations. In this regard, Members welcomed China’s recent notification on sub‑central level government subsidies and its other updates. Some urged China to publish all laws, regulations and other measures related to trade, and make them available in a WTO official language.
China has received over 1,800 advance written questions, and has responded to most of them. This TPR will be successfully concluded in a month’s time, when China replies to all outstanding questions. I hope that China will find Members’ comments useful and constructive in its pursuit of economic and trade reforms. At the same time, I believe Members will feel encouraged by China’s commitments to: ensuring the fair and equitable participation of SOEs in market competition; building a better mechanism for IPR protection; working with all Members to address the global problem of overcapacity; and vigorously promoting investment facilitation, as highlighted in the Vice Minister’s response. Members will look forward to witnessing the fruit of these efforts.