In the 20 years since china joined the WTO, China has been the biggest beneficiary of the multilateral trading system and the biggest contributor.
——Yi Xiaojun
Wen / Ba Jiu Ling
December 11, 2021, marks the 20th anniversary of China's accession to the World Trade Organization (WTO).
How would you describe the past two decades? Yi Xiaozhun, former deputy director-general of the WTO, said: In the 20 years since china joined the WTO, China has not only been the biggest beneficiary of the multilateral trading system, but also the biggest contributor.
In 1982, China began to compile a balance of payments, and the total trade in goods and services (exports + imports) Chinese mainland that year accounted for only 0.93% of the world;by 2000, it accounted for only 2.22%.
Last year, the figure was 11.55%, and China officially surpassed the United States to become the world's largest country in terms of trade in goods and services. (Comparing trade in goods alone, it surpassed the United States in 2013)
Taking "WTO accession" as the demarcation, the growth curve of foreign trade in the first 20 years and the last 20 years is not the same.
As for foreign direct investment (inflows), Chinese mainland in 2000 was only $40.7 billion, ranking eighth in the world, reaching $149.3 billion last year, and second in the world (the first was the United States, $156.3 billion).
At the same time, China's GDP has grown tenfold from 20 years ago, rising from 3.6 percent to 17.4 percent of the world's total. GDP per capita rose from less than $1,000 to more than $10,000. As one of the troikas, foreign trade is indispensable.
Saying that China is the biggest beneficiary, it is estimated that not many people will question it, only Chinese they do not want to be so vocal. So, is China the biggest contributor?
At the beginning of the Sino-US trade friction in 2018, the Trump administration issued a report declaring that "the United States has wrongly supported China's accession to the WTO" – the country seems to have suffered a big loss.
But in 2000, Chinese mainland was only the 11th largest export destination for the United States, not even Singapore. By 2020, China imported $124.5 billion in U.S. goods, second only to Canada and Mexico, and the largest U.S. commodity market outside the North American Free Trade Area.
Over the past 20 years, U.S. exports of goods to China have grown by 670 percent, while other markets have grown by only 70 percent. Japan, for example, the fourth-largest export destination, has seen no growth in 20 years.
Boeing, General Motors, Intel and other companies in China sales, more than the United States.
In 2015 alone, U.S. exports to China directly or indirectly supported 1.8 million new jobs.
In addition, a study led by Mary Amiti, vice president of the New York Fed, showed that U.S. consumers who benefit from China's accession to the WTO can pay less and get more kinds of goods.
In 2018, Andy Rothman, a former U.S. diplomat in China, wrote that China's accession to the WTO was a blessing, not a mistake.
This gospel is not directed at the United States, but also for the benefit of other countries. At present, China's largest trading partner is ASEAN, and the second largest is the European Union.
China's pursuit of national interests cannot be separated from the world, and the pursuit of national interests by all countries is inseparable from China, and this deep binding of interests is a huge guarantee for peace.
The current director-general of the WTO, Okonjo Iweala, once said: Without China, the WTO cannot be called a world organization.
This sentence sounds as if China is a founding member of the WTO.
However, the reality is that a total of 164 of the more than two hundred countries and regions in the world have joined the WTO, and China is the 143rd member in chronological order.
In order to join the WTO, China has gone through 15 years of negotiations, which is the longest negotiation time in the history of the WTO (and its predecessor, the General Agreement on Tariffs and Trade).
Understanding the past helps us understand the present.
In 1860, more than half a year before the burning of the Old Summer Palace, Britain signed a free trade agreement with France. Britain exempted French wine and silk fabrics from tariffs, while France cut taxes on British manufactured goods.
This was the first modern free trade agreement and is considered to have set off a "golden age of free trade". Britain is also widely regarded as the standard-bearer of free trade.
But over time, protectionism rose to prominence and peaked during the Great Depression of 1929-1933. In order to boost the economy, countries are taking the neighbor as a neighbor, hoping to protect their own industries through tariff barriers, thereby ensuring employment and passing the crisis to other countries.
During the Great Depression of 1929, there was a run on a bank in the United States
In 1930, the United States passed the Smoot-Hawley Tariff Act, raising tariffs to the second-highest level in history.
Paul Douglas, Owen Fisher and 1,028 other economists signed a petition, auto king Henry Ford stayed overnight in the White House, and JPMorgan Chase CEO Thomas Lamont Jr. "almost knelt down to plead" to try to persuade President Hoover to veto the bill.
But Hoover, under pressure from within the party, signed it. They believe this can help troubled farmers and workers, increase domestic orders, solve jobs, and bring prosperity.
In 1932, the United Kingdom passed the Import Tariff Act, which imposed a uniform 10% tariff on imported goods, which was soon raised to 15% and then to 33%, marking a major shift in trade policy.
If tariffs are not retaliated against by trading partners, this may have some effect. The problem is that countermeasures are inevitable. After the countermeasure, the two sides fell into the prisoner's dilemma of "lose-lose".
Economist Jakob B. Madsen later estimated that the size of global trade actually shrank by 33 percent during that period.
Instead of resolving the crisis, trade protection severed economic ties between countries and ensued a world war.
Towards the end of the war, economists and politicians have been bitterly aware that the nature of international conflicts is economic, and that the establishment of stable and effective international economic organizations may solve many political problems.
Then-U.S. Secretary of State Cordell Hull once said:
You can't tell the difference between the idea of business and the idea of war and peace. For me, unhindered trade is associated with peace, and high tariffs, trade barriers, and unfair economic competition are linked to war. While there are many other factors involved, I believe that if trade is made more freely flowing and discrimination and barriers are reduced, one country does not develop fatal jealousy of the standard of living in another, thus eliminating the economic grievances that breed war, and we have a chance to achieve lasting peace.
1945 Nobel Peace Prize laureate Cordell Hull
It was this philosophy that gave birth to the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (later the World Bank), and the General Agreement on Tariffs and Trade (GATT), which was meant to establish an international trade organization, but countries did not fully negotiate, and the GATT as an "interim" agreement lasted for 47 years.
Not everyone agrees to free trade.
For example, the well-known British economist Maynard Keynes believed that post-war economic policy was first and foremost about full employment, so trade controls and exchange controls should be used to protect domestic industries and expand production. At the same time, he does not trust the Free Trade Proposition of the United States, believing that it is only for the sake of Americans.
It is not that Keynes did not see the benefits of free trade, but the times did.
In the nineteenth century, when the British Empire was in full swing, of course it wanted free trade, and hoped that the whole world would become a market for British industrial goods. What protection does the domestic industry need? Only we bully others, no one can bully us.
By the twentieth century, the offensive and defensive forces were different.
Before and after the end of World War II, the United States accounted for one-third of the world's GDP. Britain's industrial dominance never returned after the Great Depression. As a result, Britain, the first standard-bearer of free trade, cowered, and the United States, which had built its own barriers, became the new beacon.
If it is combined, it will be used, and if it is not compatible, it will be wasted. Everyone talks about doctrine, but in their hearts they are still thinking about their own business.
Turning a dragon slayer into a dragon is a common drama, and it is not surprising to do it again.
In 1947, the Government of the Republic of China was originally a founding party to the GATT. However, after the founding of the People's Republic of China, the Taiwan region decided to withdraw in order to prevent new China from using GATT.
It was not until the United Nations restored the legitimate seat of the people of new China in 1971 that China's ties with the GATT became increasingly close.
In 1986, China formally applied for "resumption of customs clearance" (restoration of the status of a state party to the General Agreement on Tariffs and Trade), counting from this year until its formal accession to the WTO in 2001, which is what we often call the 15-year "century negotiations".
The 15 years are roughly divided into several important stages:
1. In July 1986, China submitted an application for customs resumption, and by May 1989, the fifth round of bilateral consultations between China and the United States had reached basic understandings on some core issues, and the negotiations on customs restoration were expected to end in late 1989.
However, the international situation has suddenly changed, domestic political turmoil has occurred, Western countries have begun to impose economic sanctions on China, and the suspension of China's resumption of customs as one of the sanctions, the negotiations have reached an impasse.
2. From February 1992 to the end of 1995, after Deng Xiaoping's southern tour, China continued to deepen reform and opening up and began to promote negotiations on the restoration of customs.
However, a small number of parties "asked for high prices" and did not agree with China's status as a developing country, (in 1995, the average GDP of Chinese was only $600) asked China to assume the obligations of developed countries and postpone the negotiation process.
It was not until 1995 that the World Trade Organization replaced gatt and trade, but no agreement could be reached.
The resumption of customs negotiations was transformed into WTO accession negotiations.
3. In the second half of 1997, Sino-US relations slowed down, and the United States, through high-level officials, successively revealed to China that the Clinton Administration had adjusted the US policy on China's accession to the WTO.
During this period, there is a classic anecdote of "passing a note".
From 9 to 14 November 1999, the two delegations exchanged several rounds, and several issues were difficult to finalize.
On the morning of 15 July, Premier Zhu Rongji came to the front line of negotiations to make a final decision, and his first sentence was to say to Chief Negotiator Long Yongtu: Don't be wordy, just write me a small note on the problems that have not yet been resolved.
Long Yongtu listed seven questions, and as a result, when the US side threw out the first three questions on the negotiating table, Zhu Rongji replied, "I agree." Long Yongtu was anxious, and repeatedly handed over a note reminding him that "the State Council did not authorize it" (he did not know that at that time, the central authorities had full authority to authorize Zhu Rongji to make a decision on the spot).
Zhu Rongji slapped the table and said: Long Yongtu, you don't have to hand over the note anymore.
Starting from the fourth question, Zhu Rongji said to the Americans: You should give in to the next four questions, and if you agree, we will sign them. Five minutes later, the U.S. side agreed.
Looking back, the last four insistences are precisely key areas such as the auto trade.
4. From November 1999 to November 2001, China and the EU concluded bilateral negotiations, and after another twist and turn, the United States believed that the goals of the bilateral negotiations, such as agricultural subsidies, automobile quotas, etc., were not fully achieved, so it proposed further changes.
China certainly disagrees, and this stalemate is another two years old.
The then WTO Director-General Moore said: I must tell you (the United States) that China can join the WTO regardless of the outcome of the US Congress. If congress rejects the trade treaty, U.S. companies may not receive the trade benefits that other WTO members receive.
In the end, the Americans could not sit still.
According to the recollections of more than one participant in the negotiations, the essence of China's resumption/accession negotiations is bilateral negotiations between China and the United States, and it is always the United States that sits across the negotiating table. The 1,000 pages of WTO accession negotiations and the 900 pages of Sino-US bilateral agreements overlap very much.
At that time, the United States tried its best to get China to open more markets in order to export its own agricultural products and high-end manufactured products.
At that time, China was more excited in the face of WTO accession, but worried about "wolves coming."
In 2002, the central authorities held a special seminar on the international situation and the World Trade Organization for principal leading cadres at the provincial and ministerial levels.
Who knows that twenty years have passed, and the offensive and defensive trends are different.
Author | Wood has a medicine man | When the value is edited | He Mengfei
Responsible Editor | He Mengfei | Editor-in-Chief | Zheng Yuanmei Image source | VCG