China’s membership of the WTO

20 Feb

After 15 years of debating and campaigning China became a member of the World Trade Organisation (WTO) on the 1th December 2001. This has been one of the most influential steps in China’s open-door policy that has been in place since Deng Xiaoping’s rise to power in 1976 (Minteh, 2012). This has had a massive impact on not just the Chinese economy but the entire world.

Husted and Nishioka (2013) make clear that almost every country in the world has seen China take an increased share in its import market. In fact, in the period between 1998 and 2010, China’s share of the world market  rose from approximately 2% to 10.4% (Husted and Nishioka, 2013). This rapid increase will be have been massively boosted by China’s WTO membership – an argument backed by Mattoo and Subramanian (2012) who claim that the WTO in unique amongst the major international financial organisations (including IMF, World Bank e.t.c) in that it is effective in spreading the positive effects of China’s boom. Minteh (2012) also pushes the point that joining the WTO has forced China to share its riches while at the same time protect the interests of its own citizens. An article in The Economist (Shades of Grey: Ten Years of China in the WTO, 2011) sheds light on how this wealth has been distributed outside of China by explaining that consumers have benefitted from cheap manufactured goods coming out of China while businesses have taken advantage of China as a huge new export market.

There have however been issues with China’s WTO membership as voiced by the Economist (2011) such as that China hoards essential resources for its own industry, is slow to implement WTO rules and uses MNCs to develop technology before forcing them out of the country. These problems show that China is abusing its WTO membership so as to benefit its own economy. It could be seen that China is able to skirt around the rules because its high value to the organisation means that it if were expelled, the other members would suffer.

According to Lemoine (2013) the distinctive characteristics of China as a player in the global trade (cheap manufactured goods, large low wage workforce) will change dramatically over the next few decades. Instead, China will begin to increase its participation in higher quality goods markets such as computers and cars using a more skilled, smaller and higher wage workforce.

The consensus is that China’s membership of the WTO has been a positive factor in global trade but the nature of that membership will change. China, now a net receiver of FDI will begin to use the assets it has gained abroad to grow its economy (lemoine, 2013).

Husted, S. and Nishioka, S. 2013. China’s fare share? The growth of Chinese exports in world trade. Review of World Economics, Kiel Institute.

Lemoine, F. 2013. From foreign trade to international investment: a new step in China’s integration with the World economy. Economic Change and Restructuring, vol 46, issue 1, pp25-43.

Mattoo, A. Subramanian, A. 2012. China and the World trading system. The World Economy, vol 35, issue 12, pp1733-1771.

Minteh, B. 2012. A case study of China’s membership of the World Trade Organisation: implications on sovereignty. Journal of Global Analysis, vol 3, issue 2, pp29-44.

Shades of grey: ten years of China in the WTO. December 10th 2011. The Economist. Accessible online at http://www.economist.com/node/21541408

Theo Tritton

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