BEIJING - If US trade officials are
critical of China's aloof attitude toward the
upcoming global trade talks, held in the Chinese
territory of Hong Kong, they have a
point.
China, as a developing country
sharing the West's desire for broad trade
liberalization but perceiving itself as a champion
of the developing world, could play a central role
in the World Trade Organization (WTO)
negotiations. "I believe that China, being a major
player now in the global trading system, and a
major beneficiary of the multilateral trading
system, has a responsibility to be more engaged in
the talks," US trade representative Rob
Instead, China has remained on the
sidelines of the big debate between developed and
developing countries about agricultural tariffs
and subsidies. Chinese President Hu Jintao did
join the chiefs of the Pacific Rim economies at
the Asia-Pacific Economic Cooperation (APEC)
meeting in South Korea in November in calling for
an end to the tariff impasse that has brought the
global trade talks to a standstill. But with only
days before the trade ministers from 148 countries
converge in Hong Kong for the December 13-18 WTO
talks, China has been nearly silent on what stance
it would take during the negotiations.
Poorer nations want to expand their
exports of agricultural products, and want
wealthier countries to lower tariffs on farm goods
and slash subsidies to domestic producers.
Developed countries, on the other hand, are more
interested in opening markets further for their
manufactured goods and services.
The
reason for the loud silence is not only that China
has little experience in leading international
negotiations (having joined the body only in 2001,
it is one of the newest members of the WTO). Far
more significant is China's controversial position
as the globe's most competitive exporter. China
seeks to reassure the world that its economic
juggernaut doesn't pose a threat to any country or
industry and that its surging exports of textiles,
steel and other basic materials present a
challenge, but no threat, to the global market.
While China, a major agricultural country
with 800 million peasants, supports the lifting of
agricultural subsidies demanded by the developing
world, its main priority remains the facilitation
of manufactured exports. Exports of agricultural
products only account for 4% of China's total
overseas sales each year, much lower than the 13%
and 17% recorded by India and Brazil,
respectively. By contrast, overseas sales of
manufactured goods have become an important engine
of growth for China's overall economy. They
represent some 92% of China's non-agricultural
exports and Beijing has aggressively sought new
overseas markets for its manufactures.
"China is a supporter of free trade," said
Ren Yifeng, a researcher at the China Society for
WTO Studies. "Over the past 20 years of economic
reforms and opening up, the country has benefited
enormously from the trade liberalization process.
Today, external trade is still very important to
China."
Nonetheless, China's export
juggernaut has been blamed for a variety of global
ills, particularly for creating unemployment in
the US. Manufacturers and their representatives in
the US Congress have pressed the Bush
administration to condemn Beijing's economic
policies. They assert China is a trade predator
whose fixed currency is so artificially weak, it
renders US companies uncompetitive.
In
fact, China is in a class of its own on the WTO's
list of nations subject to anti-dumping
investigations and charges. Of the roughly 2,500
anti-dumping cases brought between the
establishment of the WTO in 1995 and June 2004,
some 386 were against China, with measures imposed
in 272 cases.
Beijing argues that the
country is the victim of protectionism. When China
joined the WTO in 2001, it agreed to be treated as
a non-market economy (NME) until 2015, meaning it
plays by more stringent trade rules - in this case
specifically related to dumping. The NME status
was part of concessions negotiated by Washington
and Beijing to facilitate the country's entry -
other concessions include special safeguards on
Chinese imports that the US may deem are causing
market disruption.
But with the US and the
European Union berating China over its soaring
exports of everything from textiles to steel,
Beijing has protested that China's NME status is
being exploited to ensure the easy imposition of
anti-dumping penalties. When a WTO member attempts
to determine the normal price of an NME export, it
is allowed to use another country as a
"surrogate". If the Chinese export price is found
to be lower than the surrogate, then China can be
found to be dumping. But with China's price bound
to be lower, dumping is easily proved. Chinese
officials insist that, were its home market to be
used for comparison, it would win most dumping
cases.
Over the last few years, the
Chinese government has been busily negotiating
bilateral agreements with a number of nations
granting it market economy status. Brazil,
Malaysia, New Zealand and Singapore are among the
major countries that have granted China
recognition as a market economy. But with the US
and the EU rejecting such requests so far, China
remains vulnerable to anti-dumping accusations
from its main trade partners, prompting experts to
charge that WTO rules are now being used by rich
nations to victimize the country and contain its
emergence as a new world power.
"Most of
the time, developed countries turn to double
standards in economic affairs and apply their
theories of 'economic integration outweighing
sovereignty' to force weak nations into conceding
some of their inherent privileges," Pang
Zhongying, a professor of international relations
and trade at Tianjin Nankai University
wrote in the English-language China Daily. "The
dispute about economic sovereignty is essentially
a hidden power struggle on the world stage. Under
the current context of 'economic openness',
outside economic influences upon individual
nations are distributed in an unbalanced manner,"
Pang concluded.
Under such circumstances,
China is understandably keen to ease international
concerns about its increasing volume of exports
and try to avoid damaging accusations of dumping.
During a speech made on the sidelines of the APEC
summit in November, Hu appealed for his country's
high-powered economy to be perceived as an
opportunity rather than as a threat to the world.
"China's development will not stand in the way of
anyone, nor will it pose threat to anyone," he
told business executives in Busan, South Korea.
Should China's ballooning trade surpluses
with major partners such as the US and the EU lead
to more protectionist measures, China is likely to
emerge as a fervent global advocate of free trade.
Still, there is considerable anxiety among
developed countries that China might align itself
firmly with the developing countries as it did
during the acrimonious WTO talks in Cancun, Mexico
in 2003. These concerns stem, not the least, from
Hu's professed agenda to put poor people first and
to redistribute economic wealth in the country so
as to benefit China's farmers.
Raising
income levels in China's depressed rural areas has
become a priority for the current government and
increasing farm exports could help achieve this
aim. This however, will be difficult if rich
countries continue to impose restrictions on
agricultural imports. China has already had spats
with Japan, South Korea and the EU over the limits
of agricultural exports, but new stricter
environmental requirements for farm product trade
could lead to more trade conflicts in coming
years.
But China experts dismiss the
possibility of internal policies influencing
Beijing's stance at the WTO talks. "We are in the
process of building a 'harmonious society', which
means equalizing the uneven economic growth of the
country. But this process is far more likely to be
helped by the facilitation of free trade than by
the collapse of it," Ren Yifeng said.
