Transcript China`s stakes in the WTO and the role it could play Lin Guijun

China’s stakes in the WTO
and the role it could play
Lin Guijun
University of International Business and
Economics
Beijing
WTO Public Forum
September 26, 2012
I. How grateful is China to WTO
when discriminated?
• Most of China’s total exports (60%) were
realized after the accession.
• But the massive expansion in China’s export can
not be explained by multilateral reductions in
trade barriers.
• A key factor is China’s participation in global
vertical specialization.
China’s exports since the reform
(USD100 bn)
19
78
19
93
19
94
19
95
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
16.00
15.00
14.00
13.00
12.00
11.00
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
中国出口总额(仟亿美元）
• However, China is discriminated in a nondiscriminating organization as evidenced by:
--the first creation of special safeguard
mechanism;
-- the invention of non-market economy status;
-- consequently, a large number of anti-dumping
and countervailing duties against China.
--review mechanism after 8 years of accession
+independent review.
II. China’s interests in WTO
1. A relative stable exchange rate
system
• To protect its huge foreign exchange assets;
• To reduce uncertainty in import and export
caused by unpredictable exchange fluctuations;
• In line with its underdeveloped financial system.
• After the 2008 financial crisis, the imbalance in
China’s current account surplus declined
continuously with the BCA/GDP ratio to 2.8% in
2011.
Current account surplus and net oil
exports: China and Arab countries
2. To guarantee market access to
OECD economies
• With the enormous production capacity of
consumer goods and global slowdown, China
needs to stabilize its traditional market in EU
and North America.
3. To increase access to developingcountry markets
• In addition to stabilizing the markets in the
developed countries, China also hopes to gain
greater access to the markets in the emerging
economies for the manufactured goods.
Average tariffs in emerging
economies
India
48.5%
Brazil
31.4%
S. Africa
19.0%
Indonesia
37.1%
Mexico
36.1%
Argentina
31.9%
US
3.50%
EU
5.30%
China
9.10%
4. To desire a new approach to
discipline by WTO to antidumping and
safeguard measures
• A large number of trade actions against China
shows that the WTO, seemingly provides little
discipline over such actions.
• Now the question raised is ‘Can WTO help
protect China’s interests? ’
• If not, …..
5. To guarantee an uninterrupted
and dynamic global supply chain
• In quantity terms, China is the hub of Asia’s
supply chain.
China
Hub and Spoke
• Current WTO discussion is very useful for the
smooth functioning of the global value chain.
• Government actions and trade dispute should
avoid disrupting the value chains.
6. Regionalism can not protect
China’s fundamental trade interests
• China’s exports are more diversified across
regions.
• Increased access to global markets is in China’s
interest.
• Asia or other type of RTAs can not compensate
for this, but only a supplement.
7. To open up domestic markets
more to foreign investors
• Given the present slowdown in FDI inflows,
China may be willing to take more liberal
measures to improve the environment for
foreign investors.
Export Growth pattern by region, 2012
Jan-May
Jan-Aug
Chongqing
230%
170%
Henan
110%
63.4%
Sichuan
78.7%
47.8%
Jiangxi
57.2%
43.3%
Hunan
21.7%
13.2%
Guangxi
22.7%
15.9%*
Fujian
9.3%
6.3%
Guangdong
6.9%
5.8%
Zhejiang
5.3%
2.2%
Beijing
4.8%
2.9%
Jiangsu
2.0%
2.5%
Shanghai
3.1%
-0.2%
Shandong
-0.5%
-0.2%
China
8.7%
7.1%
III. China’s priorities in its
agenda
1. Expand domestic demand
• In recent years, China’s growth has been
criticized by export-oriented.
• Trade disputes and economic slowdown in
OECD countries have forced China to give more
attention to the potential to its internal markets.
• To expand domestic demand is an important
task to rebalance the economy.
Composition of China’s GDP： 1995-2009
2. Upgrading its industries
• Move up along the global value chain.
• Production pattern: Labor-intensive to capital
intensive, skills- and knowledge-intensive;
• develop new generation of export products.
China’s advantage exports:
• office machines and automatic data processing
machines (SITC 75);
• telecommunications and sound recording
equipment (SITC 76);
• electrical machinery (SITC 77);
• miscellaneous goods such as textiles and
apparel, furniture and footwear（SITC 8）;
• Road vehicles (SITC 78) ;
• metalworking machinery (SITC 73).
Advantage of NAFTA and EU
• Road vehicles (SITC 78),
• Other transport equipment (SITC 79)， such as
aircraft and helicopters;
• power-generating machinery (SITC 71)，
• Specialized industrial machinery (SITC 72)，
• metalworking machinery (SITC 73)，
• general industrial machinery (SITC 74).
• To achieve the upgrading, a gradualist
approach may be favored.
• Some flexibility in industrial policies may
be allowed.
IV. What bargaining chips
China has?
1. Commitment to further
liberalization in goods and agriculture
• China could further cut its average tariffs;
• Open up more to foreign agricultural goods.
2. commitments on further service
liberalization
• China still has potential to commit to further
liberalization in professional services, computer
services, telecommunications, construction and
distribution services, etc.
3. Huge foreign exchange reserves
• At the end of June 2012, China’s total foreign
exchange reserves reached 3.24 trillion dollars.
• A substantial part of this has to be expended on
imports.
4. Growing domestic consumption
and demand
• Over the past decade, China’s real urban income
increased by 151 percent, while real rural
income rose 111 percent.
5. The need to eliminate trade
surplus
• In 2011, China’s trade surplus decreased from
185.6 billion dollars to 155.1 billion dollars;
• In the first half 2012, China’s trade surplus was
68.92 billion dollars, an increase of 6.4 percent
over the previous period.
V. Was China more
discriminated than Russia at
accession?
• V. Putin (December 2009): “We have the
impression that for some reason some countries,
including the US, are hindering our entry into
the WTO.”
• Alleged by some Russian officials that Russia is
being discriminated against—asked to make
more commitments than other nations that
accede.
• Russia negotiating accession since 1993 and
China started in 1986
•
Russia and China: Accession commitments
goods
Average tariff, bound
Average tariff, manufactured
Import tariff, agriculture
Russia
China
8.0%
9.1%
7.3%
8.9%
10.8%, with tariff
quotas allowed
15%
Tariff on IT products
0
0
Export subsidy, agriculture
no
no
Tariff, automobiles
15%
25%
GPA
join
willing to join
Specific safeguard
No
Yes, 12 yrs.
Russia and China: accession commitments
services
• Russia has committed to more sectors than
China (Russia 116 vs China 100）.
• But the depth of liberalization vary.
• Market access:
• Russia tends to maintain more restrictions in
commercial presence, natural person
movements and to some extent, beyond the
border consumption and cross-border delivery.
• National treatment:
• Russia has higher restrictions in commercial
presence and natural person movements;
• Both countries are similar in cross-border
delivery and beyond border consumption;
• Russia’s commitments in finance and
telecommunication lag behind China.
Mode
Scope
1 cross-B delivery
2 beyond-B
consumption
3 commerce
presence
4 Nat-person
move
No
Res.
With
res.
No
com
No
res
With
res.
No
com.
No
res.
With
res.
No
com.
No
res.
With
No com
res.
M
Russia
64
30
6
75
19
6
25
71
4
2
93
5
access
China
21
21
57
52
3
45
1
52
46
0
55
45
Russia
63
33
4
69
26
5
17
81
2
2
96
2
China
44
1
54
55
0
45
30
20
50
0
55
45
NT