USTR: China Must "Allow Market Forces to Operate" - Global Trade Magazine
  December 31st, 2014 | Written by

USTR: China Must “Allow Market Forces to Operate”

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Washington, D.C. – If China is going to deal successfully with its economic challenges at home, “it must allow market forces to operate, which requires altering the role of the state in planning the economy,” according to the latest Report to Congress on China’s WTO Compliance compiled by the Office of the U.S. Trade Representative (USTR).

The country, the report added, likewise “must reform state-owned enterprises, eliminate preferences for domestic national champions and remove market access barriers currently confronting foreign goods and services.”

The report cited a “dramatic expansion in trade and investment” among China and its many trading partners since the country acceded to the WTO in December 2001.

U.S. exports of goods to China totaled $122 billion in 2013, representing an increase of 535 percent since 2001 and positioning China as the U.S.’ largest goods export market outside of North America, while U.S. services exports reached $38 billion in 2013, representing an increase of 603 percent since 2001.

Services supplied through majority U.S.-invested companies in China also have been increasing dramatically, totaling an additional $39 billion in 2012, the latest year for which data is available.

“Despite these results, however, the overall picture currently presented by China’s WTO membership remains complex, largely due to the Chinese government’s interventionist policies and practices and the large role of state-owned enterprises and other national champions in China’s economy,” the report said.

In 2014, as in past years, when trade frictions have arisen, the U.S. “pursued dialogue with China to resolve them,” it said.

But, when dialogue with China “has not led to the resolution of key trade issues, the United States has not hesitated to invoke the WTO’s dispute settlement mechanism.”

Since China’s accession to the WTO, the U.S. has brought 15 WTO cases against China, more than twice as many WTO cases as any other WTO member has brought against China, according to data supplied by the Geneva-headquartered global trade group.

In doing so, “the United States has placed a strong emphasis on the need for China to adhere to WTO rules, holding China fully accountable as a mature participant in, and a major beneficiary of, the WTO’s global trading system,” the USTR report said.

“The United States views economic reform in China as a win-win for the United States and China,” the report concludes “not only because the Chinese government’s interventionist policies and practices and the large role of state-owned enterprises in China’s economy are principal drivers of trade frictions, but also because a sustainable Chinese economy will lead to increased U.S. exports and a more balanced U.S.-China trade and investment relationship will help drive global economic growth.”

12/31/2014