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TRADE POLICY REVIEW: CHINA

21 and 23 May 2008

Concluding remarks by the Chairperson

This second Trade Policy Review of the People's Republic of China has provided an excellent opportunity to improve transparency, and thereby a better understanding of China's trade and related policies. I thank Assistant Minister Qiu Hong and her delegation together with the Discussant, Ambassador Noor Yacob of Malaysia, and Members of the Trade Policy Review Body for contributing to our exchange of views. China's response to a large number of questions is also much appreciated. I join Members in extending sympathies to the victims and those suffering as a result of the recent earthquake in the Sichuan province of China.

Members complimented China on its strong attachment to the WTO and its support for the Doha Development Agenda. Many Members also expressed their appreciation of China's assistance to LDCs. On China's bilateral/regional trading agreements (RTAs), which it regards as a necessary supplement to multilateral trade liberalization, Members hoped that they would not diminish China's commitment to the multilateral trading system.

Members commended China's continuing reforms, including trade liberalization, which had contributed to real economic growth of over 10% annually since its previous Review, resulting in rapidly rising per capita income and poverty reduction. Many Members noted that China's growth provided an impressive example of how a country can foster development. China has also continued to be one of the largest recipients of inward foreign direct investment. Clearly, the multilateral trading system, to which China has been a Member for more than six years, has also contributed to China's economic growth, by keeping foreign markets open to China's exports. Nevertheless, China faces a number of challenges. These include the need to stimulate domestic consumption without fostering inflation, growing income inequality between urban and rural areas, unequal growth in different sectors of the economy, and social welfare and environmental concerns. Some Members called for a greater flexibility in China's monetary/exchange rate policy, which would be facilitated by a more smooth-functioning capital market.

Members remarked on the fact that all China's tariff lines are bound and that the relatively low applied MFN rates are close to bound MFN rates, thereby imparting a high degree of predictability to its tariff regime. Nonetheless, Members were concerned about remaining regulatory and other barriers to trade and investment, especially customs procedures, import restrictions, anti-dumping measures, standards, technical regulations and SPS, and restrictions on foreign investment. Concerns were also raised on China's export regime, which had become more restrictive, and potentially distorting product markets. Members appreciated China's efforts to enhance transparency, but some aspects of China's policy regime, including standards and domestic regulations, remained complex and opaque; Members looked forward to improvements in this regard. Many Members welcomed China's application to join the Agreement on Government Procurement in December 2007.

Members welcomed China's move towards adopting new competition and property rights legislation. However, Members expressed concern that industrial policies entailing government intervention were still used in certain sectors, particularly manufacturing, including iron and steel. Many Members thought that, despite China's continued efforts, the enforcement of intellectual property rights remained insufficient, partly due to the lack of appropriate infrastructure and insufficient manpower. They urged China to continue addressing this matter.

Agricultural reform was commended by Members, although some were concerned about tariff and non-tariff barriers and the re-introduction of price controls on some agricultural products. Members noted that, in China, labour productivity in agriculture was one-fifth of that in the rest of the economy. Members called for more market-oriented energy pricing.

On services, many Members noted that commitments undertaken by China were more extensive than those of most other developing countries. However, liberalization in services had been slower than in other areas and most services sectors remained subject to both a high degree of state control and significant restrictions on foreign investment and private-sector activities. Members encouraged China to continue to accelerate its liberalization of services.

With China now the world's third largest economy and trader, Members looked to China to assume greater leadership in shaping the multilateral trading system. Members urged China to continue its active participation in the current negotiations and to continue to work towards a successful conclusion of the Doha Development Agenda.

This review has been very useful in providing us with an update of China's trade policies and practices. I would once again like to thank the Chinese delegation for their efforts, the Discussant for his insightful and thoughtful comments, and Members for contributing to what has been a very extensive and informative two days of discussions. We look forward to receiving responses to the remaining questions within the next month.