World Trade Organisation and China

Term Paper, 2016

10 Pages, Grade: 1,7

Michael Wittmann (Author)



Opening of the Dragon

After years of economic stagnation and misgovernment during the entire Mao era, China finally made its first steps, in the late 1970´s, to a better economic development. Deng Xiao Ping´s economic reforms and Chinas opening to the rest of the world, enhanced China into a Game changer and economic super power within the last 30 years.

To understand and comprehend the enormous economic, cultural and political development, which China went through in such a rapid time, this paper points out the major factors and driving force behind it. Also it elucidates future developments and major projects which will have a great effect on Chinas economy.

In the following pages, we will head to the major issues which China had to face and still faces today. First of all, the entry of China into the World Trade Organization and its long way till there. Which effects did this great step have for the Chinese economic growth and what are the future prognosis? How did the whole process take place and which threats is it still facing? Which benefits were achieved and which developments did they go through? How was China integrated in to the Coalition and what is the role allocation? And of course the Chinese Currency and its development will be looked at.

All these significant subjects will be discussed profound and step by step in the next pages. The aim is to get a broad overview over the backgrounds of the opening of the Dragon and also its impact on world economy. Interesting details and apposite illustrations will make this rather multifaceted topic intelligible and comprehensible.

WTO: Entry of China


In the beginning of the 21st century China´s WTO membership acceptance is recognized as the major event for the global economy. China´s WTO entry will benefit a great deal to its economic growth because it enjoys most favored nation clause and country treatment endowed growth. Parallel China has to fulfill its obligations as a member of the WTO such as opening up its market and increasing the transparency of trade policies.

In addition, China has to play by international rules. By doing so it will contribute undoubtedly to the expanding of global investment and trade. Furthermore, a potential market of 13 hundred million populations will stimulate the global economic growth. The Chinese government as well as many countries in the world consider that the outcome for China´s WTO entry will be a “win- win” situation for both, China and its trade and investment partners.

Hongfang, S. (2006). Implications of China´s WTO Entry on Philippine Economic Growth and Development. 1st ed. [pdf] Beijing: Xiamen University. Available at: / [Accessed 12 Jun. 2016].

Chinas long way into the WTO

Endless efforts during many years resulted in China achieving agreements with almost all the World Trade Organization (WTO) members. In December 2001 China officially entered the global trading system finally after bilateral negotiations with WTO members have been implemented and accepted.

China has gradually prepared itself for its WTO entry starting out at the early nineties. Since 1995 China has lowered its tariffs for a number of goods under certain conditions.

The service sectors have been opened up since 1999. China’s main challenge is its institutional structure, which is until now, still inadequate to promote the rule of certain law and the comprehensive changes mandated by its accession

Ellen, P. (2004). Chinas WTO Entry: Effects on its Economy and Implications for the Philippines. Discussion Paper Series No. 2004-41. [pdf] Manila: Ateneo de Manila University. Available at: / [Accessed 25 July. 2016].

Resistance and Pro / Con Arguments for China joining the WTO

"Selling the farm" as the result was the expression used by those inside China who felt that accepting this list of liberalization and adopted review requirements was going to far. Joining the WTO however was backed up China's leaders which put their support behind those efforts. An eight-year "Transitional Review Mechanism" process was accepted by Chinese authorities. China had to meet its WTO membership obligations, and that was reinforced by established powers as a safeguard. "Foreign humiliation," bringing up memories of the late Qing dynasty period has been promoted and broadcasted within nationally oriented commentators inside China. The Nationalists felt that Beijing's trade officials had willingly subjected China. However, China's ruling authorities stood firm in their commitment to join the global trading regime.

In the lead up to China's accession, many international experts were concerned that if it was not handled appropriately, China's entry could undermine the entire global trade system. The WTO would be swamped with dispute cases, that was the fear of numerous trade experts. Fears accelerated by China would not fully execute the norms of the global organization, including "non-discrimination” and especially the WTO's elaborate and precise "transparency" requirements — unless compelled to do so through special compliance measures., (2011). Looking Back, Looking Forward: China and the World Trade Organization 10 Years after Accession. [online] Available at: [Accessed 28 July. 2016].

Chinas further economic Development within the WTO

Today it is China’s trading partners who now contemplate its WTO membership. A variety of complaints are popping up: China exports too much, swamping their markets with cheap manufactured goods, subsidized by an undervalued currency.

Hording essential inputs, such as rare earths, for its own firms is a major concern. Restricting access to its own market against foreign companies, by being slow to implement WTO rules (notably on piracy), in others by suddenly imposing unwritten rules that are unfavorable or unknowable to foreigners is presently considered a major trade barrier.

Multinationals are being let in, only to squeeze them dry of their valuable technologies and then push them out.

Much of this criticism is right. China made significant reforms in the years around its WTO entry. Expectations were raised that it has conspicuously failed to meet. It neglected the rule of law at home but still signed up officially for multilateral rules.

Free trade did not bring wider freedoms neither was trading considered exactly free. It is in China's interest to liberalize its exchange, to prevent discrimination against foreigners and above all to do far more to support the global trading system. The WTO is undermined when any member flouts the rules, despite the fact of the shire volume and mass of today’s China economy.

Too big to be a bystander - or to be kept out

However, China’s flexible adaptation and interpretation to WTO standards should be put into perspective. In terms of global trade consumers everywhere have gained from cheap Chinese goods.

Chinese growth has created a huge market for other countries' exports. And China's remaining barriers are often exaggerated. It is more open to imports than Japan was at the same stage of development, more open to foreign direct investment than South Korea was until the 1990s. Its tariffs are capped at 10% on average; Brazil's at over 30%. And in China, unlike India, you can shop at Carre Four, Metro, Cosco most of the time.

As for the barriers foreign firms face in China, they are questionable—but unfortunately no worse than in other developing countries. The protesting noises are louder in China chiefly because the stakes are higher. Foreigners may have won a smaller slice of China's market than they had hoped, but China is a bigger pie than anyone dared to expect.

Had China been kept out of the WTO, there would have been less growth for everybody. The WTO still provides the best means to discipline. Rather than delivering congressional ultimatums, America and others could make more use of the WTO's rules to curb China's worst infractions., ( 2011 ). Ten years of China in the WTO. [online] Available at: [Accessed 27 July. 2016].


Excerpt out of 10 pages


World Trade Organisation and China
University of Applied Sciences Zwickau
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ISBN (eBook)
ISBN (Book)
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652 KB
China, Politics, Economy, Wirtschaft, English, International, VRC, USA, Opening, Dragon, World, Trade, Organisation
Quote paper
Michael Wittmann (Author), 2016, World Trade Organisation and China, Munich, GRIN Verlag,


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