China and World Trade Organization Law

by

Qingjiang Kong, Mengqi Xu

• LAST MODIFIED: 21 June 2024
• DOI: 10.1093/obo/9780199796953-0257

Introduction

China had a complex engagement with the General Agreement of Tariffs and Trade (GATT) and the World Trade Organization (WTO) which reflected both its drastic political changes through the decades as well as its shifting attitudes toward economic integration and trade. China was an original signatory to the GATT in 1947 under the Kuomintang government. Upon losing control of mainland China to the Communists in the civil war, the Kuomintang government withdrew from GATT in 1950, severing China’s ties with global trade system for decades. China had observer status at GATT from 1982 until 1986, during which period the country started making efforts to reconnect with global trade. It first applied to resume its status as a GATT contracting party in 1986 and the GATT Working Party on China’s Status as a Contracting Party was established in 1987 to negotiate the terms for China’s accession. Major issues in the negotiations included the scope and pace of market access concessions from China, trading rights, transparency of trade policies and regulations, as well as whether China would regain its original 1947 contracting party status. China made substantial commitments to reduce tariffs, open up services for foreign investment, reform its trade policies and overhaul its legal framework in its Accession Protocol. On 11 December 2001, China officially became the 143rd member of the World Trade Organization (WTO), the successor of GATT, as a new member instead of resuming its 1947 status. This was a milestone demonstrating China’s deeper integration into global trade. Since then, China has amended considerable national laws, regulations, and policies to comply with WTO agreements. Its WTO membership facilitated its domestic reform agenda and aided its rapid growth in international trade and investment, as evidenced by its rise to be the largest trading nation (first exporter and second importer) in the world, and one of the most active players in the WTO. However, there are still frictions over China’s compliance with WTO rules related to intellectual property protection, industrial subsidies, and state-owned enterprises. The problems that were expected upon its accession to arise from its special economic structure failed to phase out during the transitional period set in the Accession Protocol, which turned out to have cast in-depth influence on WTO legal regime. As WTO reform has been put on the table, it is likely that China continues to advance the WTO regime toward a multilateral and multipolar end; meanwhile, managing China’s role within the evolving global trade system remains an important issue.

China’s Accession to the WTO

China’s official accession to the World Trade Organization (WTO) in December 2001 marked its full integration into the global trading system after years of negotiations. This milestone brought both opportunities and challenges for China’s economy and governance. China’s WTO entry process and impacts have received significant analysis in the academic literature from both supportive and critical perspectives. This section will provide in three parts a comprehensive overview of the complex challenges, debates, and transformations catalyzed by China integrating into the global trading system under the WTO terms. The first part analyzes China’s motivations, negotiations, and approach to its WTO entry. The second set of works look at debates on accession terms sparked by these external pressures to implement legal and economic reforms. The final subsection of studies assess the wider impacts of implementing WTO commitments on upgrading China’s export structure, boosting firm productivity and catalyzing marketization. Beyond the above three subsections, authentic documentations provided by WTO Secretariat 2001a and WTO Secretariat 2001b in relation to China’s WTO entry are suggested to be referred to first and foremost whenever starting an in-depth academic probe into relevant issues.

• WTO Secretariat. “Accession of the People’s Republic of China.” WTO Doc. WT/L/432, 2001a.

  The official document of the WTO Ministerial Conference/General Council Decision on the Accession of China, attached with Protocol on the Accession of the People’s Republic of China.

• WTO Secretariat. “Report of the Working Party on the Accession of China.” WTO Doc. WT/ACC/CHN/49, 2001b.

  The official report issued by the Working Party on the Accession of China, giving a full account of China’s foreign trade regime based on which the Working Party considers the impact of China’s accession to the WTO and shows its stances on China’s entering the WTO.