Restructuring and further trade liberalization are keys to sustaining growth

The third WTO Review of China’s trade policies and practices and their impact on the functioning of the multilateral trading system took place in Geneva on 31 May and 2 June 2010. The third WTO Review of China’s trade policies and practices and their impact on the functioning of the multilateral trading system took place in Geneva on 31 May and 2 June 2010.

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 has 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 and, ultimately, trade disputes when trade frictions arise.   
 
A well-functioning multilateral trading system has contributed considerably to China's sustainable economic growth and development.  The global recession had a substantial adverse impact on China's economy as external demand fell sharply from the end of 2008.  The Government's response of expansionary fiscal and monetary policies, including a Y4 trillion (13% of 2008 GDP) 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. 
 
The global economic crisis has reinforced China's determination to transform its pattern of economic development, 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.
 
The TPR covered all aspects of China's trade policies and practices.  It was based on reports by the WTO Secretariat and the Chinese Government as well as an extensive and detailed exchange of views between China and other WTO Members involving more than 1,500 written questions. 
 
There was widespread recognition of China's constructive role in resisting protectionist pressures and boosting global demand during the recent economic downturn, appreciation for China's stepped-up involvement in South-South trade and its duty-free scheme for imports from least-developed countries, and acknowledgement that China has continued the gradual liberalization of its trade and investment regimes, although several members felt that this had slowed down compared to its pace in earlier years. 
 
Among the detailed issues covered were:
 
-the importance of China continuing to improve the transparency of its trade and investment policies and practices, building on current efforts to review, revise and amend its trade and trade-related laws
  
-the need for the Government to continue reducing regulatory and other barriers to trade, especially customs procedures, technical regulations and  standards (including SPS measures) and certification practices, import licensing, and export restrictions (notably taxes and partial VAT rebates)
  
-the benefit to China and to foreign suppliers of faster liberalisation of China's services industries, such as banking, insurance, telecommunications and postal services, including the lifting of foreign investment restrictions and the adoption of more international standards in these industries
  
-the importance of China accelerating its accession to the WTO Agreement on Government Procurement, given the increasingly important role that government procurement will play in China's economy
  
-concern about China's indigenous innovation policies, and their effect in restricting access for foreign products, investors, technology and intellectual property
  
-accelerating progress towards China's goal of comparatively high standards for intellectual property rights by 2020.
 
Trade Policy Reviews are an exercise, mandated in the WTO agreements, in which member countries’ trade and related policies are examined and evaluated at regular intervals. Significant developments that may have an impact on the global trading system are also monitored. For each review, two documents are prepared: a policy statement by the government of the member under review, and a detailed report written independently by the WTO Secretariat. These two documents are then discussed by the WTO’s full membership in the Trade Policy Review Body (TPRB). These documents and the proceedings of the TPRB’s meetings are published shortly afterwards.
 
Print copies of previous TPR publications are available for sale through the online bookshop (http://onlinebookshop.wto.org).  The TPR publications are also available from co-publisher Bernan Press, 4611-F Assembly Drive, Lanham, MD 20706-4391.
 
Source: World Trade Organization
www.wto.org