Impact of Chinese Characteristics on the World Trade Organization: Challenges and Strategies

• DOI: http://doi.org/10.1111/cwe.12239
• Author: Xinquan Tu,Siqi Li
• Date: 01 March 2018
• Published date: 01 March 2018

©2018 Institute of World Economics and Politics, Chinese Academy of Social Sciences

China & World Economy / 107–126, Vol. 26, No. 2, 2018

107

*Siqi Li (corresponding author), Assistant Professor, China Institute for WTO Studies, University of

International Business and Economics, China. Email: lisiqi_uibe@126.com; Xinquan Tu, Professor,

Dean of China Institute for WTO Studies, University of International Business and Economics, China.

Email: tuxinquan@126.com. This research is supported by the National Social Science Fund of China

(No. 17ZDA098).

Impact of Chinese Characteristics on the World

Trade Organization: Challenges and Strategies

Siqi Li, Xinquan Tu*

Abstract

Following China’s accession to the World Trade Organization (WTO), it has been

impossible to overlook the influence of its economy on the multilateral trading

system. Many published studies have examined why China joined the WTO and the

comprehensive impacts of WTO membership on China, but few studies have focused on

China’s impact on the WTO. This article attempts to ll this gap by examining China’s

changing role in the multilateral trading system from political and legal perspectives,

seeking to shed light on how Chinese characteristics have reshaped the power structure

and rule-based system of the WTO. While its accession has made the WTO more relevant

in regards to global trade governance, China has been accused of upsetting the WTO’s

rules-based system because of its unique political and economic regime. The WTO and

its members should take the Chinese characteristics into consideration and regulate

China’s practices through using the dispute settlement mechanism, promoting China’s

accession to plurilateral agreements and adopting a “soft law” approach.

Key words: China, global trade governance, World Trade Organization

JEL codes: F13, K33, P20

I. Introduction

Following 15 years of tough negotiations, China became a member of the World

Trade Organization (WTO) in 2001, which was a landmark event for the multilateral

trading system and for China itself. The WTO accession marked a milestone of China’s

remarkable success in the integration to the multilateral trading system. Notwithstanding,

China had to accept numerous WTO-plus commitments which exceeded those of most

other developing countries.

Siqi Li, Xinquan Tu / 107–126, Vol. 26, No. 2, 2018

©2018 Institute of World Economics and Politics, Chinese Academy of Social Sciences

108

China is the biggest winner from this strategic decision to enter the WTO. Through

entering the WTO to open up its domestic market and implement trade liberalization,

China has achieved remarkable economic and trade growth. With tremendous progress

in economic performance and policy reform, China has been gradually integrated into

the multilateral trading system and has become an important player in the agenda-setting

and decision-making of the WTO.

China’s WTO accession has opened an enormous market, benefiting all WTO

members. Since China joined the WTO, global trade has experienced a signicant boost,

with trade increasing in particular between developing countries. More importantly,

China’s WTO membership has provided trading partners with the assurance that China

will comply with international rules and regulations.

However, China’s WTO accession also brought some new challenges. The

fundamental challenge is integrating such a transitional economy that bears both

market economy and non-market economy (NME) characteristics into the WTO.

Wu (2016) argues that the WTO rules are not fully equipped to handle the range of

economic problems associated with China’s rise. Because the WTO was not designed

to regulate trade practices of NMEs, it faces systemic challenges in dealing with the

China’s political and economic regime. Given China’s large economic scale and,

therefore, its capacity to have a greater impact on other WTO member economies, the

accommodation of China in the WTO is necessarily more complex than for other NMEs,

such as Vietnam, and how the WTO addresses the China-specic challenges will shape

its future relevance for global trade governance.

Although many published studies have examined the reasons why China joined the

WTO and the political, economic and social impacts of WTO membership on China (e.g.

Fewsmith, 2001; Liang, 2002; Agarwal and Wu, 2004; Blanchard, 2013a,b; Liao and Yu,

2015), few studies have focused on China’s impact on the multilateral trading system

centered on the WTO (Blustein, 2011; Mattoo and Subramanian, 2011; Sun, 2011;

Blanchard, 2013a).1 This article attempts to enrich the current literature by examining

China’s changing role in the multilateral trading system, as well as how “Chinese

characteristics” have reshaped the power structure and rule-based system of the WTO.

More importantly, how the WTO should respond to the shifting landscape of global

trade governance, particularly in the context of a modern rising China, will be discussed.

The present paper is organized as follows. Section II provides an overview of

China’s performance in the global economy and trade. Section III describes China’s role

in the power structure of the WTO, shedding light on the challenges brought by China’s

1Blanchard (2013a) mentions this issue but does not provide a detailed analysis.