China's broken promises: its manipulation of its World Trade Organization commitments is damaging the global trading system.

• Author: Ezell, Stephen

When China entered the World Trade Organization in December 2001, pundits hailed China's accession as a pivotal moment that definitively heralded the country's shift toward a market-based economy. Observers were assured China was prepared to accept the fundamental principles upon which globalization rests: national treatment, nondiscrimination, transparency, and the primacy of rules-governed, market-based trade in accordance with the theory of comparative advantage. But almost fifteen years later, it's become clear that the promise has fallen short.

To be sure, China reformed thousands of domestic laws as it entered the WTO and has complied with many of its WTO commitments--such as joining the Information Technology Agreement and reducing average tariffs on industrial products. But all too often, one step forward has been met with two steps backward. China has erected new, often behind-the-border non-tariff barriers to more than compensate for concessions elsewhere. In many other cases--such as its practice of limiting market access or conditioning access on the transfer of technology or intellectual property, its ongoing subsidies for state-owned enterprises and export industries, and its failure to accede to the Government Procurement Agreement--China has simply failed to fully comply with its WTO accession commitments and membership requirements. Worse, modern Chinese economic policy is increasingly characterized by an autarkic approach that seeks absolute advantage across hundreds of high-technology products, from automobiles to semiconductors, including intentional strategies to curtail foreign imports of such products and replace them with Chinese-manufactured ones. This article puts Chinese economic and trade strategy in context, articulates several WTO commitments China has failed to uphold, and explains how policymakers in concerned nations should respond.

In the early 2000s, China's economic development strategy sought principally to induce foreign multinationals to shift production to China, but that approach changed in 2006 as the country shifted to a "China, Inc." model of "indigenous innovation" focused explicitly on advancing development of Chinese enterprises, often at the expense of foreign ones. Marking this shift was a seminal document. the National Medium- and Long-Term Program for Science and Technology Development (2006-2020), or "MLP," which called on China to master 402 key technologies, from intelligent automobiles...