Nov 22, 2021 05:20 PM

Editorial: The Best Way to Celebrate 20th Anniversary of China’s WTO Accession

Two visitors pass by an exhibition for the 20th anniversary of China’s accession to the WTO at the 4th China International Fair in Shanghai on Nov. 9. Photo: VCG
Two visitors pass by an exhibition for the 20th anniversary of China’s accession to the WTO at the 4th China International Fair in Shanghai on Nov. 9. Photo: VCG

This year marks the 20th anniversary of China’s accession to the World Trade Organization (WTO). In celebration of this, a series of official and civil activities are being launched. The Chinese government recently applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The experience China has gained from its accession to the WTO can be regarded as a good example for China to push forward with CPTPP membership. One important takeaway is that expanding opening-up to the world requires a sound domestic and international environment. At present, there are changes that China can undertake to make its domestic and international conditions more favorable for being accepted into the CPTPP and for promoting all-round opening up by deepening systemic reforms and strengthening international cooperation. This is the best way to celebrate the 20th anniversary of China’s accession to the WTO.

WTO accession was a milestone for China’s opening up and a signature event in economic globalization. To join the WTO (and its predecessor, the General Agreement on Tariffs and Trade), China spent 15 years on negotiations. On Nov. 10, 2001, the WTO’s Fourth Ministerial Conference in Doha approved the legal documents for China’s accession to the WTO. On Dec. 11, 2001, China officially joined the WTO. Joining the WTO was the right move. China has become the world’s second-largest economy and its largest trading nation. Its average annual contribution to global economic growth is now close to 30%. China’s GDP has grown eightfold, and its trade volume has increased tenfold. The country ranks first in terms of the scale of foreign capital utilization and has become the top destination for global foreign direct investment. China’s WTO entry marked a critical turning point for the Chinese economy, driving the country’s rapid economic growth. Consequently, China’s trading environment has been dramatically improved. Thanks to China’s most-favored-nation status, it has been granted a broader scope and more stable trade privileges, such as lower tariff levels and fewer non-tariff barriers on its exported products. Its trading system has also become more predictable due to the dispute settlement system that underpins the multilateral trade rules. Over the past 20 years, China has been the biggest beneficiary of the multilateral trading system.

China’s successful accession to the WTO is primarily due to the ever-improving domestic and international environment. In China, many people were concerned about entry into the WTO, worried that it would destroy domestic industries such as the auto or agriculture sectors. However, they were all aware that globalization was an inevitable trend. Heated discussions on China’s accession to the WTO took place domestically, which was all covered by the media. It was a fantastic, collective learning experience for the entire nation. This is something that will be vividly remembered. This process made governments at all levels and ordinary people understand the WTO, giving them a chance to get mentally prepared. It also helped to establish countermeasures. Internationally, the Chinese government abandoned the strategy of fighting “imminent war, major war and nuclear war” after the reform and opening-up. Instead, China stuck to the two major themes of peace and development and strived to ease relations with major powers and neighboring countries. This process coincided with the negotiations for WTO accession. In this rapidly changing world, the Chinese government remained determined to join the WTO, even though it would take 15 years of negotiations — in China it is said that the process was so long that the negotiators’ hair turned grey.

With the leadership’s determination to enter the CPTPP, it is crucial to create sound domestic and international conditions for upcoming negotiations. At present, discussions in China on the CPTPP are far less heated than those on the WTO. Some even believe that “opening-up is almost done.” Meanwhile, China’s relations with other major powers and the regional situation in the Asia-Pacific are extremely complex. China needs to make every effort to create a suitable environment for joining CPTPP from both internal and external aspects: domestically, China needs to enhance research and encourage discussions and promotion of the CPTPP, which would help the country understand the threshold requirements, identify the gap between the country’s actual state and CPTPP provisions and create an action plan for improvements. Internationally, China also needs to maintain a good relationship with its important trading partners and the current members of the CPTPP. The recent video conference meeting between the leaders of China and the United States is considered a significant positive signal.

China will not slow down its pace of opening up, with or without accession to the CPTPP. Chinese President Xi Jinping has reiterated the three “determinations” in public many times, that is, “China has unwavering determination to expand its high-level opening up, to share development opportunities with the rest of the world and to make economic globalization more open, inclusive, balanced and beneficial for all.” China continues to embrace the world with open arms, offering the world greater market, investment and growth opportunities. This will undoubtedly increase China’s chances of early entry into the CPTPP.

Good domestic and international conditions are essential for expanding opening up, which can only be achieved through reforms. Let us, again, use China’s entry into the WTO as an example. As China was in negotiation for its WTO accession, its transition from a planned to a market economy was in full swing, and the country’s ongoing drastic reforms provided a systematic basis for its accession to the WTO. To meet the numerous WTO requirements and fulfill its WTO commitments, China cleaned up over 2,300 laws and regulations, over 90,000 local regulations, administrative rules and other policies. Many were amended, others abolished. This was also the most comprehensive reform that China had ever implemented to satisfy international rules. In recent years, China has stepped up efforts to open up its service sector by accelerating the construction of domestic free trade zones and free trade ports. It has also taken action to open up its financial sector, amending laws and regulations related to market access of foreign capital and eliminating discriminatory treatments and shareholding requirements for foreign companies. Overall, the market openness has in many fields exceeded the original WTO commitments.

However, there are still some institutional obstacles China needs to overcome before joining the CPTPP. The CPTPP requires commitments in market access for goods, services and investment with a goal of promoting trade and investment liberalization and facilitation. It also has higher standards for issues such as e-commerce, government procurement, competition, state-owned enterprises, labor rights, data freedom, environmental protection, regulatory consistency, transparency and anticorruption. The only way for China to meet the CPTPP’s standards and gain support from member countries is to thoroughly implement structural reforms.

China’s reform and opening up is never-ending. China’s accession to the WTO was a thrilling and successful leap, integrating the country into the global economy. In light of the CPTPP’s high-standard rules, China’s bid to join the pact will not be a smooth ride. Besides helping its citizens to mentally and intellectually prepare, it is crucial for China to continue comprehensively deepening reform. This is also an essential move for China if it wishes to become a modern and powerful country following its two-step strategy. Furthermore, China also needs to uphold the common values of humanity, build a community with a shared future for humankind and actively develop global partnerships. Therefore, the domestic and international conditions required to comply with the CPTPP’s rules are essentially consistent with China’s own goals. China’s economic and social development, demographic dividend and urbanization dividend may gradually fade away, but the benefits gained from reform and opening up are, indeed, endless.

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