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China since its WTO Membership: An exploration

22 May 2019

Biswajit Dhar

Venue: Conference Room II, IIC
Time: 3:00 PM

Abstract

In 2001, China became a member of the World Trade Organization (WTO), ending a 15-year long process of accession process. Most commentators, largely from the Western world, maintained that China had made significant concessions to earn an entry back into the multilateral trading system (China had left the General Agreement on Tariffs and Trade after the Communist take-over in 1949). Many wondered if the Chinese growth momentum can be maintained after joining the WTO on the terms it was doing. The United States Administration was quite confident that China’s accession to the WTO will help in increasing American companies to expand their footprint in the Chinese economy. In this background, a frequently asked question was that when the developing world, in general, was so dissatisfied at the way the WTO had functioned and China was expected to pay a high price for gaining membership of the organization, what was it so keen to join the multilateral trading system.

In the decade and a half following its joining the WTO, the performance of China’s external sector provided the answers as to why its leaders were keen to join the organization at any cost. Immediately before joining the WTO, China’s share in global exports was below 4%, but by 2015, its share was within touching distance of 14%, Economic uncertainties in the past year and a half, especially the trade war with the United States, has had a slight impact on its exports share, which was pegged at below 13% in 2018. Another area of stupendous performance was China’s ability to attract foreign direct investment. At the turn of the millennium, the country attracted net inflows of nearly $41 billion, which had increased to over $136 billion in 2017. Never before has any country realised anywhere near the growth in exports and FDI inflows as China has shown since 2001. These are some of the numbers that explain why China has emerged as the strongest votary of globalisation, upstaging the leaders of the Western world.

China experience as a WTO member raises a number of important questions many of which need to be explored and explained. The most intriguing is that while most developing countries, including India and Brazil, were complaining about the constraints they had faced in the WTO to protect their interests, China was able to expand rapidly in international markets. On hindsight, it is obvious that China used its WTO membership to considerable advantage. How was it able to do this?

In order to understand China’s external sector performance, the supporting measures taken by the government and the industry are immensely important. The question is, what did China do so strikingly different from other developing countries to make such a big difference on the international stage?

A final point: can developing countries draw lessons from China’s engagements with the WTO and replicate them, at least partially?

About The Speaker

Dr Biswajit Dhar is a Professor at the Jawaharlal Nehru University’s Centre for Economic Studies and Planning. An international trade expert, he has headed the Centre for WTO Studies at the Indian Institute of Foreign Trade and been closely involved with the government’s WTO strategy. He has been working extensively on the multilateral trading system for more than two decades.  He has been nominated by the Government of India as a member of expert groups for providing advice on trade and development strategies. He was also a member of the official Indian delegation in several multilateral negotiations, including in the WTO Ministerial Conferences.  

Dr. Dhar has been interacting closely with several institutions that have been involved in working on issues relating to trade and development. Besides institutions based in India, he has been working closely with several inter-governmental organisations. These include the United Nations Development Programme (UNDP), the United Nations Conference on Trade and Development (UNCTAD), the UN Economic and Social Commission for Asia and the Pacific (UNESCAP), the International Development Research Centre (IDRC), the Commonwealth Secretariat and the International Trade Centre (ITC). He has presented research papers in several international and national conferences and has publications in reputed national and international journals. 

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