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Friday, February 23, 2024

China, the WTO and globalization

China has been a member of the World Trade Organization (WTO) since December 11, 2001. Its membership brought some 13% of world GDP, 17% of world trade and 21% of the world's population into the multilateral trading system embodied by the WTO. China's accession to the WTO paved the way for direct trade competition with the "workshop of the world". The West and other WTO member countries opened their markets to Chinese products under favorable and friendly conditions. In return, China also opened the doors of its vast market to products from all other WTO member countries. The dismantling of barriers to trade with China would boost world trade, which in turn would fuel growth - and thus employment - in both the developed (Northern) West and the developing countries of the Southern Hemisphere.

Author : Dr Faustin Mukela LUANGA, Head of the Asia-Pacific Region at the World Trade Organization

Today, China is the world's most populous country, accounting for around 20% of the world's population. It has been the world's leading exporter since 2009 and, since 2013, has become the world's leading trading power, with a total weighting in international trade of 11%. China's share of the world merchandise trade market has grown steadily in recent years. In 2015, Chinese merchandise imports and exports ranked first in the world for the third year running.

Despite the slowdown in economic growth in recent years, major economic and trade reforms have enabled China to improve the domestic business environment, promote investment and deepen its foothold in global value chains. Domestic consumption, stimulated by sustained government policy, continues to be the main driver of growth. China has also pursued the broad lines of its structural economic reform policy, aimed at giving the private sector a greater role in the economy, as demonstrated by the reform of its state-owned enterprises. In addition, significant efforts have been made in the area of trade facilitation, with the introduction of electronic customs clearance throughout China, and the ratification of the WTO Agreement on Trade Facilitation.

China has become an advocate of the multilateral trading system. It plays an active role in the current round of multilateral trade negotiations, and is actively involved in various trade disputes. China is involved in 15 cases as plaintiff, 38 as defendant and 135 as third party.

Today, globalization, a process designed to promote the opening-up of economies and societies, is characterized by the emergence of a new techno-economic model based on a new mode of production: production through innovation. Globalization is in fact a reality resulting from the historical evolution of society, which has recently moved from the era of the agricultural revolution through the period of the industrial revolution to the era of the technological, or even digital, revolution. It increases contact between individuals across borders, whether in the fields of economics, technology, culture or governance. It also fragments production processes, labor markets, political entities and societies. Our work, production and consumption habits are being shaken up and changed. Countries, societies and individuals must adapt. The economy is going digital, work and production are being shared, and even consumption is being shared. We are living in a new era: the sharing economy, which calls for new management and regulatory challenges, both nationally and internationally.

Since 1995, globalization has accelerated sharply with the liberalization of trade resulting from the implementation of the GATT (General Agreement on Tariffs and Trade) and WTO agreements. On a global scale, the volume of trade, which multiplied by 14 between 1950 and 2016, continued to grow faster than production until 2012. At the same time, technological change continued apace, with the most striking phenomenon being the explosive growth of the Internet and e-commerce. In addition, the continuing decline in the cost of international communications and transport, and the lowering of national barriers, have encouraged the expansion of global production networks around multinational companies.

China is a major player in this process. Its economy is in the throes of transformation. Known as the "factory of the world", most of the world's major multinationals have set up operations here, and continue to do so, to take advantage of the economies of scale offered by the country's size. As a result, China is at the heart of all debates on the relocation of companies, the fragmentation of production models and global value chains, global pollution, and so on. China fascinates, impresses and worries at the same time. For example, China's many investments in Africa in recent years have fascinated Africa, but worried Europe, which sees itself losing business opportunities.

In the context of globalization and the information and knowledge economy, the product of information is key. Thus, China's contribution to its development could be understood and situated, among other things, in the mastery, assimilation, accumulation and use of information and its tools. The Chinese authorities will certainly seek to pursue a strategy of rebalancing their economy in order to promote growth that is more focused on domestic demand, in particular private consumption, which she believes will play a major role in boosting economic growth.

For the Chinese authorities, China has entered an era of "new normal", so growth drivers need to be more diversified, based on the promotion of new industrialization, information-driven development, urbanization and agricultural modernization. The Chinese expect far-reaching structural reform, in line with the policy of opening up the economy and promoting innovation, to enable their country to continue to grow and prosper.

China has become a major economic power and, as is the case with all major powers, economic decisions taken at national level and for domestic use in China can, in certain circumstances, send ripples and, in some cases, shockwaves around the world. China's size means it must be aware of the impact of its actions on the rest of the world. For the sake of humanity, we can only hope that a sense of responsibility will go hand in hand with a sense of power.