Chinese and U.S. Ambassadors present different views at WTO meeting
July 31, 2018 Category China News Round-up, Weekly
Chinese and U.S. envoys presented radically differing visions of Beijing’s economic model at a World Trade Organization (WTO) meeting in Geneva, a choice between “the world’s most protectionist economy” and a growth story that has benefited all countries. U.S. Ambassador Dennis Shea presented a paper entitled “China’s trade-disruptive economic model”. “Despite China’s repeated portrayal of itself as a staunch defender of free trade and the global trading system, China is in fact the most protectionist, mercantilist economy in the world,” Shea said. Washington says China cheats by having an economy run by the state, Beijing says it plays by the rules agreed when it joined the WTO in 2001.
Shea said the harm done by China’s state-led approach to trade and investment “can no longer be tolerated”, and it was not enough to assert that it was following WTO rules. State-owned enterprises play an outsized role in China, with control exercised by the government and Communist Party, which appoint top executives and hold the keys to crucial inputs such as land and capital, Shea said. He added that the law was an instrument of the state, and courts were structured to respond to the Communist Party’s direction.
China’s Ambassador Zhang Xiangchen said Shea’s remarks “made the air smell like gunpowder” and his report was “half-cooked”, with no evidence to support its assertion that the Chinese state “controls” enterprises. He said that WTO judges had rejected the argument that Chinese enterprises controlled by the government were “public bodies” subject to WTO subsidy rules. Beijing’s industrial policies were for “guidance” and state-owned enterprises were autonomous market entities responsible for their own profits or losses, he said. Overcapacity in some industries was due not to the state but to contraction of global demand following the financial crisis, he added. The U.S. paper had misleadingly edited China’s official policy, cutting out references to the “decisive role” of the market in allocating resources, Ambassador Zhang said, according to the South China Morning Post.
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