.
Read in Chinese
Speakers:
Wang Shouwen, vice minister of commerce and deputy China international trade representative
Yan Dong, director general of the Department of WTO Affairs of the Ministry of Commerce
Chairperson:
Xing Huina, deputy director general of the Press Bureau of the State Council Information Office (SCIO) and SCIO spokesperson
Date:
Oct. 28, 2021
Xing Huina:
Friends from the media, good morning. Welcome to this press conference held by the State Council Information Office (SCIO). At this press conference, we will brief you on the World Trade Organization's (WTO) eighth trade policy review of China and answer your questions. Today, we are joined by Mr. Wang Shouwen, vice minister of commerce and deputy China international trade representative, as well as Mr. Yan Dong, director general of the Department of WTO Affairs of the Ministry of Commerce.
Next, I'll give the floor to Mr. Wang Shouwen.
Wang Shouwen:
Friends from the media, good morning. The WTO conducted its eighth trade policy review of China via video link on Oct. 20 and 22. At today's press conference, I'd like to brief you on the trade policy review. Welcome, and thank you for attending this press conference.
The trade policy review is one of the WTO's three main functions, with the other two being the negotiation function and the dispute settlement mechanism. As you know, the dispute settlement mechanism is facing a crisis, and the negotiation function is faced with great difficulty. But it is good to see that the trade policy review function is continuing as normal. China attaches great importance to these three functions. The trade policy review function can ensure the transparency of WTO members' trade policies so that members can point out each other's problems to avoid misunderstandings and possible trade disputes in the future. This has played a very important role in promoting the smooth operation of the multilateral trading system.
Since its accession to the WTO in 2001, China has attached great importance to the WTO's trade policy review. For every review, we have invested lots of effort, made meticulous preparations and taken every question other members posed to us seriously. This fully demonstrates China's commitment to the multilateral trading system and the importance China attaches to the trade policy review system.
I myself have participated in four of the WTO's trade policy reviews of China, including this one. Most of the trade policy reviews were held in Geneva, but the review this year was conducted via video link due to the pandemic. The WTO has reviewed China's trade policy many times, from which we have summarized the following characteristics:
First, the number of reviews China has undergone is relatively large. Since its accession to the WTO, China has gone through nine transitional reviews and eight trade policy reviews, more than any other WTO member. The United States ranks second, having received a total of nine reviews since 2001.
Second, the number of questions other members posed to China is the most. For almost every review, the number of questions raised by other members reached a new high. This time, for example, we received 2,562 questions from 39 members, about 1.5 times as many as that of the U.S., which received more than 1,700 questions for their last review.
Third, the questions posed to China cover a wide range of areas, including trade in goods, trade in services, intellectual property rights and investment. The Chinese government attaches great importance, and in 2002, we set up an inter-ministerial coordination mechanism on trade policy review. Led by the Ministry of Commerce and involving more than 60 departments, the mechanism carefully analyzes and responds to the questions raised by other members.
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The number of questions raised by WTO members during the first phase (Sept. 29-Oct. 6) of the review reached 2,151. To answer these questions, we organized 62 departments to work overtime during the National Day holiday (Oct. 1-7) to conduct in-depth analysis of the questions and fully understand members' concerns. We responded to the questions by Oct. 19 in strict accordance with the time limit set by the WTO. After Oct. 6, additional questions were posed which we needed to answer within a month of Oct. 22. Responses totaling 400,000 words in Chinese and English have been made to questions of the first phase alone.
During this review, Wang Wentao, minister of commerce and head of the Chinese delegation, highlighted three aspects in his keynote speech. First, through unremitting efforts and hard work as well as long-term commitment to the reform and opening-up policy, China has secured leapfrog economic growth, which has provided great opportunities for the world and made notable contributions to global economic development. Second, over the past 20 years since its accession to the WTO, China has strictly abided by WTO rules and earnestly delivered its commitments, serving as a firm supporter, active participant and important contributor for the multilateral trading system. Third, China has taken concrete actions to support international cooperation against COVID-19. At this review meeting, China also introduced in detail its development of economic and trade policies, and participation in the WTO's work since its seventh review in July 2018.
Representatives from 65 WTO members spoke at the meeting of this review and made positive comments about China. First, they recognized that China has actively participated in the work of the WTO, keenly delivered its accession commitments, earnestly engaged in the fisheries subsidies negotiations, played a leading role in the investment facilitation negotiation, and played a constructive role in the e-commerce negotiations. Second, they spoke highly of China's important role in the international cooperation against COVID-19 and appreciated China's support for the WTO's early decision to waive intellectual property rights on COVID-19 vaccines. Third, they thanked China for granting tariff-free treatment of imported products from the least developed countries (LDCs) and helping other developing members and LDCs integrate into the multilateral trading system. Fourth, they fully recognized China for actively lowering tariffs, shortening the negative list for foreign investment, widening market access, actively promoting trade and investment liberalization and facilitation, and providing a broad market for all other WTO members. Fifth, they spoke positively of the great potential of the Belt and Road Initiative (BRI) in promoting trade and economic cooperation among relevant countries and bringing more development opportunities to partners.
As I've mentioned before, the trade policy review provides a very good platform for communication and dialogue. On this platform, member states can raise questions and avoid further misunderstandings through frank exchanges. During this meeting, member states have learned about China's economic and trade policies, such as the Belt and Road Initiative, transparency, intellectual property rights (IPR) protection, government procurement, state-owned enterprises, industries with overcapacity, dual circulation and trade surplus. In response to their concerns, we have given them written answers or delivered speeches during the conference. We have clarified and elaborated on these questions to help them better understand the situation. We also pointed out that, due to the limited time of the review – which only takes place for two to three days – we cannot address every aspect or fully explain all of them during the conference. So we would like to further our communication with other member states within the WTO framework.
That concludes my briefing about the WTO's eighth trade policy review of China. Together with my colleague, Yan Dong, director general of the Department of WTO Affairs of the Ministry of Commerce, I'd like to take your questions. Thanks.
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Xing Huina:
Now the floor is open to questions. Please identify your media outlet before raising questions.
CCTV:
What is China's view on the WTO's eighth trade policy review of China? What was achieved through this review?
Wang Shouwen:
Thank you for the questions. I just provided a brief about the review. In accordance with the existing rules of the WTO, China undergoes a WTO review every three years, with the last one having occurred in 2018. As such, this year marked the eighth trade policy review. In general, the review is routine work, but it has diversified content, meaning it delivers fruitful results and meets our expectations. It also demonstrates that the WTO's trade policy review, as one of the three pillars of the WTO, is still working well. Member states recognize the importance of the review and actively participate in it. Due to the impacts of COVID-19, we gathered online, and 65 representatives delivered their speeches during the conference. A record high of 2,562 questions were raised at the meeting, which was 16% higher than the number of questions raised during the seventh review in 2018. So this is a successful review.
People raised abundant and diverse questions at the meeting. First, questions about the related agreements of the WTO. For example, regarding the goods trade, many have been concerned about China's implementation of the Trade Facilitation Agreement. In terms of the service trade, they have been curious about whether related regulations of China's Cybersecurity Law are in accordance with WTO's General Agreement on Trade in Services. On the subject of IPR protection, people have been interested to know whether pertinent information can be released when ruling on cases related to IPR protection, or whether they are in accordance with regulations outlined in the WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights. Second, WTO member states have raised questions that are beyond the framework of the WTO. These can be seen as their hopes or expectations. For example, they expect that China will further open its market, ease foreign access to the market, shorten the negative lists for foreign investment, and advance the replication and promotion of the achievements of institutional innovation made in pilot free trade zones to the whole country. We fully understand their concerns and expectations. For example, they would like to enter China's market. The pilot free trade zones have been progressing well. However, the current zones only cover a small area. They have been curious about whether the pilot free trade zones will be expanded nationwide so that they can enjoy easier access to the whole market of China. China has become a major trade country of the WTO's more than 120 member states. These member states have many expectations and raised abundant and diverse questions at the meeting.
The results achieved during the eighth policy trade review are as follows:
First, we elaborated on China's policies. Before the review meeting, we prepared a declaration by the Chinese government on China's policies, which is more than 20,000 characters. Today, we also brought the Chinese and English versions of the document to the press conference. You may read about it. In the declaration, we explain the development and changes of China's latest trade policies, through which people may understand China's efforts and determination to push forward its reform and opening-up. At the same time, the secretariat of the WTO also prepared a report on China's trade policies from their perspective. Through these two documents, member states of the WTO can glean a deeper understanding of the changes to China's trade policies over the past three years.
Second, we explained and clarified responses to the concrete concerns of member states. Some of the member states were a bit confused about the direction of China's policies and had questions about it. For example, they worry about the new development paradigm of "dual circulation" proposed by China. They worry that fostering the new development paradigm means China will slow down its steps of opening-up. We have explained it. President Xi Jinping has, on many occasions, stressed that the "dual circulation" is by no means a closed domestic loop, but a more open system that includes domestic circulation as well as international circulation. Some member states are worried about forced technology transfers in China. In response, we explained that China's revised Administrative License Law and the newly-adopted Foreign Investment Law both clearly stipulate that no administrative department or its staff members shall force any transfer of technology by administrative means.
Third, more than 60 departments that took part in the eighth trade policy review conducted in-depth research on the questions of member states and gained a better understanding of their concerns. It would be helpful for us to further improve our trade policies and practices in the future, to promote trade and investment relationships with other member states of the WTO, and avoid misunderstandings and possible trade conflicts.
Fourth, the trade policy review of China this time has further strengthened the recognition of WTO members on the values of the organization and the significance of trade policy review. Therefore, it can help boost people's confidence in the WTO when the organization confronts difficulties. Thank you.
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Phoenix TV:
As we know, the eighth trade policy review has coincided with the 20th anniversary of China's entry into the WTO. Some members hold that China has not fully fulfilled its WTO commitments up to now. What does China think of such view? Thank you.
Wang Shouwen:
This year marks the 20th anniversary of China's entry into the WTO. At the time of its accession, there were a protocol of accession, accompanying a working party report, stipulating China's commitments after its accession and the timetable for fulfilling the obligations. If you take the schedule for your reference, you will find that we have fully fulfilled our commitments stipulated by the WTO and the promises we made. Moreover, several directors-general of the WTO and most of its members have fully affirmed and recognized this. I will show you some examples.
First, in terms of adapting to WTO rules, we need to revise laws, regulations, and policies to conform with WTO rules after China entered into the WTO. The Chinese central government repealed more than 2,000 pieces of laws, regulations, and departmental rules, and local governments removed more than 190,000 local laws and regulations. After China's accession into the WTO, we brought our laws, regulations, and policy framework fully into line with WTO rules according to the timetable. In a given period of time after China's accession into the WTO, we have worked to ensure China's legal and policy systems consistent with WTO rules. Meanwhile, we also ensured that the newly enacted policies and laws and regulations conform and continue to conform with WTO rules.
Second, in terms of opening the market, we promised to reduce goods tariffs to below 9.8%. At the beginning of China's accession to the WTO, the figure was 15.3%. We have fully delivered on this commitment. China's general tariff is now only 7.4%, lower than the average ofdeveloping country members and approaching the levels of developed country members. China has also widely opened its market in the services industry. The Protocol of Accession and the Working Party Report stipulated that 100 sub-sectors in nine categories needed to be opened by 2007. Now, China has opened nearly 120 sub-sectors, exceeding our commitments.
Third, in terms of complying with laws and regulations, our laws, regulations, and policies should conform with WTO rules, and we have also done quite well in this regard. Explicitly speaking, we have set up intellectual property courts in some places and even particular judicial organs of intellectual property in some provinces to enhance intellectual property protection. We have done well in ensuring laws and regulations of intellectual property conform with WTO rules. In addition, more efforts have been made in the enforcement, as well as in providing administrative and judicial protections. To improve the transparency, we have timely notified the WTO of the adjustment and implementation of China's legislation, as well as of laws and regulations. The number of notifications has exceeded 1,000. Among them, the notification of subsidy policies is very difficult to prepare. WTO member countries need to submit to the organization the amount of subsidy the government gives to its enterprises and industries, such practice was deemed by many WTO members, especially developing country members, as the most challenging task. The Chinese government has overcome many difficulties and made timely notifications. This July, China notified the WTO of subsidy policies between 2019 and 2020, setting an excellent example for other WTO members.
China had also honored previous rulings of specific cases before the WTO dispute settlement mechanism was formed. We executed all those rulings no matter whether they were favorable for China or not. No retaliation from complaining members has been incurred due to China's nonacceptance of WTO rulings. Based on the aspects mentioned above, we can see that China has fully and effectively fulfilled its WTO commitments.
As I just mentioned, some members also raised other concerns and expectations that may go beyond WTO rules. It is improper to judge that China has not fulfilled its commitments based on rules beyond WTO provisions. Specifically, some regulations of intellectual property in the WTO Agreement on Trade-related Aspects of Intellectual Property (TRIPS) are different from those in some free trade agreements. Therefore, it is inappropriate to ask China comply with intellectual property provisions of some high-standard free trade agreements within the framework of the WTO.
Generally speaking, China has done an excellent job fulfilling its WTO commitments, which is not only China's view but also the view of WTO members and several directors-general. Thank you.
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CGTN:
Mr. Wang just mentioned the subsidy notification. We know that the subsidies are a hot issue in the WTO reforms. Many WTO members have proposed tightening the subsidy rules even further. Will China be supportive of negotiations on subsidy rules under the framework of WTO reform? Does China support tightening the subsidy discipline? At the same time, how does China plan to increase the transparency of its subsidy policies? Thank you.
Wang Shouwen:
Thank you for your question. Mr. Yan will answer this one.
Yan Dong:
Thank you for your question. Subsidies are a policy tool commonly used by governments around the world. They are mainly used to mitigate market failures and achieve various public policy objectives, such as promoting economic development, technology research and development, environmental protection and employment stabilization. More specifically, during the COVID-19 pandemic, WTO member governments have introduced numerous subsidy measures to help domestic enterprises overcome difficulties and guarantee employment and social stability.
The WTO has a special agreement for industrial products, called the Agreement on Subsidies and Countervailing Measures (SCM Agreement). The WTO also has a special agreement for agriculture subsidies, called the Agreement on Agriculture. These two agreements have established specific regulations for the WTO members, in terms of providing industrial and agricultural subsidies. Among them, the SCM Agreement prohibits a subsidy if it is contingent on export performance or on the use of domestic over imported goods. Moreover, it stipulates that, if subsidized imported products harm the domestic industry, the importers can enact countervailing measures.
These two agreements were both reached in the 1990s. Now, however, after operating for more than 20 years, the overall situation is fine, but problems do still exist. For instance, agricultural subsidy rules are critically unfair, imbalanced and unreasonable. The rules grant permissions for some developed members to have high agricultural subsidies. Some members are allowed to wrongly enact countervailing measures on industrial products to protect their domestic industries. Aside from that, the original subsidy rules do not reflect the economic and trade reality of today, and the rules are incapable of meeting WTO members' shared demands.
China supports necessary reforms to the WTO and is open to launching subsidy negotiations and discussions under the framework of WTO reform. Specifically, we have three detailed proposals: First, the agriculture subsidies must be discussed in concert with industrial subsidies to ensure equitable competition across these two important fields. Second, the discussions should address tightening trade remedy disciplines such as countervailing and anti-dumping, so as to solve the current problem of abusing trade remedy measures. Third, the issue of resuming non-actionable subsidies should also be discussed, so as to leave policy space for members in response to the pandemic and climate change.
You mentioned the issue of subsidy transparency. The WTO requires its members to submit notifications for subsidy policies and agricultural domestic support on a regular basis. Agricultural domestic support is the issue of agricultural subsidies. China is one of the members that adequately fulfilled these obligations. During the review, China submitted two subsidy policy notifications in accordance with WTO requirements, while some major developed members delayed their notifications for several months, and still, others are yet to submit their notifications at all. With regard to the notification for domestic support on agriculture, China plans to submit the latest notification soon. That's all for your question. Thank you.
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Shenzhen Satellite TV:
When China joined the WTO, its global share of GDP was only 4%, and its per capita GDP was only 8,700 yuan. At present, China accounts for 17.4% of global GDP and its per capita GDP has reached 72,000 yuan. Some members hold the view that, in the context of its growing comprehensive national strength, China should give up the special and differential treatment enjoyed by developing members in the WTO. What is China's view on this? Thank you.
Wang Shouwen:
Thank you for your question. Under the strong and correct leadership of the CPC, the Chinese government has led the people of the whole country to adhere to the basic national policy of reform and opening-up, give full play to institutional advantages, and follow the general global trends. After decades of hard work and unremitting efforts, our economic and social development has indeed made considerable progress, and our comprehensive national strength is also increasing. However, we must also be aware that China still faces the serious problem of unbalanced and inadequate development, and the task of its own development remains daunting. According to the report of the 19th National Congress of the CPC, China's international status as the world's largest developing country remains unchanged. China's international status as a developing country has not changed.
You mentioned the issue of special and differential treatment. There are special provisions in the WTO, whereby developing members enjoy special and differential treatment in terms of market opening and compliance with rules. Specific rights and obligations have to be decided through negotiations. According to the statistics of the WTO Secretariat, there are 155 provisions on special and differential treatment in the WTO agreement, covering six areas: increasing trade opportunities, safeguarding the interests of members, maintaining policy space, transitional time-periods, technical assistance and special flexibility for the least developed countries (LDCs). For example, one agreement stipulates that developed members need to implement immediately, but developing members can do so within five years. Developing members enjoy such transitional periods, which is special and differential treatment.
Some members think that China should give up its special and differential treatment. I would like to share with you some information. When China joined the WTO, we adhered to the principle of seeking truth from facts and undertook obligations within our capabilities in accordance with the principle of balancing rights and obligations. We actually enjoyed less special and differential treatment than other developing members.
Since its accession to the WTO, China has never used special and differential treatment as a "shield" to impede the progress of the negotiations. In fact, China's position and practices have made important contributions to some WTO negotiations. For example, the WTO has reached the Trade Facilitation Agreement (TFA). There are some class C measures in the agreement, which are measures that can only be implemented after developing members receive financial support from developed members. China insists on completing these by itself and does not need financial support from others. That is, we have not asked for special and differential treatment. There are also some class B measures, which can only be implemented after a transitional period. Developing countries should implement them after a transitional period, while developed countries need to implement them immediately. China is a developing country, but we have few class B measures. Such efforts have contributed to the conclusion and implementation of the agreement. As another example, in the negotiations on the expansion of the Information Technology Agreement (ITA), as a developing country, we demanded terms and made our offers according to the balance of rights and obligations. China contributed significantly to the success of the expansion negotiations. Therefore, in the agreements reached after China's accession to the WTO, we have enjoyed less special and differential treatment.
In future negotiations, as a responsible major country and the largest developing country, we will continue to adhere to the balance of rights and obligations, deal with special and differential treatment in a pragmatic manner according to our own level and ability of economic development, promote WTO reform, safeguard the legitimate rights and interests of developing countries and defend the multilateral trading system. Thank you.
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The Straits Times:
Earlier you mentioned that nearly 20 years after China's accession to the WTO, there have been changes to the market in the form of a foreign investment law and better protection of IP rights, but the fact remains that there are still areas that are out of bounds to foreign investment and there is preferential treatment for state-owned enterprises. And this has come under criticism from other members during the review. So, what is China going to do to rectify this? Thank you.
Wang Shouwen:
Thank you for your question. As I emphasized when answering the previous question, China has fully fulfilled its WTO accession commitments and obligations. There isn't any promised reform left unfulfilled.
You mentioned that China's SOEs receive special treatment. Regarding this question, article 16 of the PRC's Constitution stipulates state-owned enterprises have decision-making power in operation and management within the limits prescribed by law. China's SOEs are independent market entities that engage in independent operation, financing, self-discipline, and self-development. They compete with enterprises of other ownerships in the market on a level playing field, with no preferential treatment attached. In fact, in recent years, we have promoted mixed-ownership reforms at China's state-owned enterprises. So far, mixed-ownership enterprises account for over 70% of all legal entities of central SOEs, with listed companies being the primary carrier for the reforms. According to the statistics, SOE-controlled listed companies account for 67% of the assets of central SOEs and 87% of the profits respectively. Listed companies publish quarterly, semi-annual and annual reports, which serve as a transparent source of information to find out whether they enjoy special treatment or not. To conclude, China's SOEs do not enjoy special treatment. They are market entities with decision-making power in operation and management according to the Constitution.
As you mentioned, China has implemented the Foreign Investment Law, but there are still people criticizing China for keeping some areas off-limits to foreign investment. But I want to stress that China has opened up its market more and more of its own accord, instead of doing it as a WTO obligation. Under the WTO, China has fully complied with the Agreement on Trade-Related Investment Measures (TRIMs). The reason why China still prohibits or restricts foreign investment in some areas is that the WTO does not have relevant regulations, and many countries have similar prohibitions or restrictions. China also hopes that some bans and restrictions can be removed, but this requires WTO or bilateral investment negotiations. For example, China once held bilateral investment treaty negotiations with the United States; China and the EU have already concluded the negotiations for the Comprehensive Agreement on Investment (CAI). In other words, to open up wider and further relax restrictions on foreign investment through bilateral investment treaties or investment chapters in free trade agreements requires channels beyond the WTO. China is willing to address the investment access issue this way. For example, China has formally applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which sets high standards for investment. It is unfair and unreasonable to say that China's investment restrictions violate WTO regulations.
We understand the hope of some countries that China should further relax investment access. However, criticizing China in this way and saying that China has not fulfilled WTO regulations is unreasonable, unfair, and unacceptable.
On the whole, China has fulfilled all the commitments made on its accession to the WTO. China's SOEs are equally-treated market entities that have decision-making power in operation and management according to the PRC's Constitution. China has already fulfilled its investment obligations under the WTO, and has constantly opened wider to the outside world following an independent path. As we know, China's first negative list for foreign investment, initially introduced for the Shanghai FTZ, contained 190 items restricted for foreign investment. Now the list has been shortened to 30 items. So China has taken big strides to open up its investment access. We are willing to further expand market access for foreign investment both of our own accord, and through bilateral investment treaties, free trade agreements, or WTO negotiations. Thank you.
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CNR Business Radio:
The WTO's 12th Ministerial Conference (MC12) will be held about one month later, with fisheries subsidies being a key issue. How is the progress of negotiation? What efforts has China made for the 12th Ministerial Conference to reach an outcome on the issue? Thank you.
Yan Dong:
Thank you for your question. Fisheries subsidies negotiations have long attracted extensive attention. It is one of the objectives of the WTO Agreement to achieve mutual support between trade policies and environmental protection policies and promote sustainable development. To this end, WTO members launched the Doha Round of negotiations in 2001, with fisheries subsidies as one of the negotiated issues.
The fisheries subsidies negotiations aim to formulate new subsidy rules, restrict harmful fisheries subsidies, combat illegal fishing, curb overfishing, and help the sustainable development of marine fishery resources. However, subjected to the overall progress of the Doha round of trade talks and coupled with the large differences in the development stages of each member and different interest demands and different resource endowments, the fisheries subsidies negotiations are still ongoing. So far, the negotiations have lasted for 20 years. In 2015, the United Nations Sustainable Development Summit adopted the 2030 Agenda for Sustainable Development, in which Goal 14.6 set out the goal of integrating fisheries negotiations by 2020. In 2017, the 11th WTO Ministerial Conference reiterated the mandate and goals of the fisheries subsidies negotiations. At present, all parties have agreed to conclude the negotiations before the 12th WTO Ministerial Conference to be held at the end of November.
Reaching an agreement on fisheries subsidies will be an important aspect for the WTO to contribute to the realization of the United Nations' 2030 Agenda for Sustainable Development, which is conducive to the sustainable development of marine fisheries and is also of great significance to strengthening global confidence in the WTO and reviving multilateralism.
At present, the fisheries subsidies negotiations are in the final sprint stage. China has always actively participated in the negotiations, "promoting talks, promoting reconciling, and promoting facilitating," and has successively put forward a number of proposals in the negotiations and jointly promoted the negotiations of fisheries subsidies with all parties to reach an agreement as soon as possible. As a developing country and a major fishery country, China will undertake international obligations in the negotiations that are commensurate with its own development stage and capabilities.
In addition, from a domestic perspective, China has taken the initiative to implement the United Nations Sustainable Development Goals and adjusted domestic fishery management and subsidies policies. For example, we implement total control on the production capacity of fishing vessels and the amount of fishing; we have also taken the initiative to adopt resource conservation measures such as the summer fishing moratorium and the voluntary moratorium on the high seas; we comprehensively strengthen the implementation of international protocols for offshore fisheries; and we severely crack down on illegal fishing with a "zero tolerance" attitude. Meanwhile, we continue to adjust the fisheries subsidies policies. In May this year, the Ministry of Finance and the Ministry of Agriculture and Rural Affairs of China issued a notice on implementing support policies for fisheries development to promote high-quality development of fisheries. This document clearly states that it shall "conform to the general trend of WTO fisheries subsidies negotiations, and promote high-quality and sustainable development of fisheries." One of the major policy highlights of this document is to cancel fuel cost subsidies, change the direction of subsidies, guide fishermen to conserve fishery resources, place more emphasis on green development, ensure people's livelihoods and resource conservation, and promote high-quality fishery development.
China firmly supports the multilateral trading system and the completion of fisheries subsidies negotiations as soon as possible before the 12th WTO Ministerial Conference. As a responsible major fishery country, China will continue to take concrete actions to support the prohibition of harmful fishery subsidies that lead to excess production capacity and overfishing. Thank you.
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The Paper:
China has joined the RCEP and is also seeking to join the CPTPP. How does the Ministry of Commerce view the relationship between regional trade agreements and WTO? In addition, will plurilateral agreements replace multilateral agreements and become the mainstream of international economic and trade relations in the future? Thank you.
Wang Shouwen:
Thank you for your questions. We believe that the arrangements of the multilateral trading system and regional free trade agreements are the two wheels that drive economic globalization and the liberalization and facilitation of international trade and investment. These two wheels promote each other and cannot be partial and negligible. We don't think it's appropriate to leave any of them out.
The multilateral trading system, with the WTO at its core, is the foundation and core platform for promoting the liberalization and facilitation of global trade. As you all know, the WTO has 164 members, and their trade volume accounts for more than 98% of the global trade. No other agreements can reach this level. The vast majority of trade in the world is carried out between WTO members. Take China, for example: last year, our import and export volume was $4.65 trillion, among which our trade volume with WTO members reached 97.9%. That is to say, $4.56 trillion of China's $4.65 trillion foreign trade is conducted with WTO members. Therefore, it is in China's interest to adhere to the development of the multilateral trading system and maintain the effectiveness and authority of the multilateral trading system.
We believe that the regional free trade agreements arrangement is a useful supplement to the WTO's multilateral trading system and is not in conflict with the WTO. Free trade agreements are generally "WTO plus." Free trade agreements include not only the opening of trade in goods and trade in services but also the opening of investment. Moreover, the level of openness in trade in goods and services is much higher than that of the WTO. The WTO has no regulations on investment opening, while free trade agreements do. In terms of market opening and market access, free trade agreements are "WTO plus." In addition, in terms of rules, the free trade agreements also stipulate some areas that the WTO has not yet stipulated, such as in e-commerce, digital economy, etc. So, as we can see, regional trade agreements not only have a higher level of trade liberalization and facilitation but even involve investment aspects and rule aspects and can be regarded as "experimental fields" for these new rules. The results of these "experimental fields," if adopted by the WTO in the future, will be very beneficial to the liberalization and facilitation of global trade and investment. This is the benefit of free trade zones or free trade agreements.
Despite the benefits of FTAs, we should also recognize that they cannot supplant the multilateral trade regimes. FTAs cannot solve every issue. The subsidy issue mentioned by a journalist just now is such a case. The effect of FTA solutions is limited for subsidies, including agricultural subsidies and public reserves for food security, which need to be addressed within multilateral trade regimes.
Moreover, FTAs are negotiated and signed between two or more countries. According to the WTO, there are more than 350 FTAs currently being implemented, creating the spaghetti bowl effect. If the contents of these agreements are stipulated in WTO agreements, they will be universal and convenient. Hence, the spaghetti bowl effect of FTA negotiations can be solved through multilateral trade regimes of WTO agreements. It is evident that FTAs have their advantages, and the WTO agreements also have their own.
Xi Jinping, general secretary of the Communist Party of China (CPC) Central Committee, said in his report to the 19th CPC National Congress that China will support multilateral trade regimes and work to facilitate the establishment of free trade areas, and build an open world economy. In this regard, the MOC has implemented Xi's remarks and upheld the multilateral trading regimes. In June 2018, we released a white paper titled "China and the World Trade Organization." In November 2018, we issued China's position paper on WTO reform. In May 2019, we submitted a proposal on WTO reform to the WTO. In November 2019, we initiated and hosted the Informal WTO Ministerial Meeting in Shanghai. All these practices show China's support for the WTO's development.
Moreover, China is open to FTAs that are open, transparent, inclusive, and consistent with WTO principles. China is also accelerating the move to implement the FTA strategy and is playing an active part in negotiations on regional trade agreements. By October, China had signed 19 FTAs with 26 trading partners. In addition, China signed the Regional Comprehensive Economic Partnership (RCEP) with the other 14 members last year, and it will come into effect early next year. Recently, China has formally applied to join the CPTPP. All these examples reflect China's high regard for the role of regional trading agreements.
In summary, I want to repeat that the multilateral trade regimes and regional FTAs are two important wheels to drive economic globalization and liberalize and facilitate international trade and investment. Furthermore, they are complementary rather than a substitute for each other. You just asked if one of them will become mainstream? Personally speaking, I think the multilateral trade regime will play a significant role in the coming period, and FTAs may play such a role in another period. They are both essential wheels driving world economic growth. Thank you.
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Bloomberg:
My question is that it seems there are a lot more criticisms of China this time at the review than at the seventh review last time. Please tell us your thoughts on these criticisms from Japan, the U.S., the EU, Australia and other nations. Were they justified anywhere? Will you be making any changes in answer to these criticisms? Thank you.
Yan Dong:
Thank you for asking. Mr. Wang has given a detailed answer to your question, especially on China's WTO commitment. The review members raised questions and concerns varying widely. China is a major trading partner of more than 120 economies globally, spotlighting its trade policies. We fully understand it. So, we made written replies before the review meeting to the 2,151 questions raised by WTO members and explained and clarified specific concerns of some members of the meeting. We believe that such two-way interaction is positive and effective and fully demonstrates the value of the trade policy review mechanism.
Of course, we will work on the concerns of relevant members and look forward to further exchanges and communication with them on other occasions. Thank you.
Wang Shouwen:
I'd like to add more. As I mentioned just now, China will take seriously questions, concerns, complaints, and even criticisms raised at the policy review. But I'd like to classify these comments and criticisms into two categories. For the questions in the first category stipulated in the WTO agreements, we will improve what we did not do well following the WTO agreements and sustain what we did well. The questions in the other category, including the criticisms raised by some members, as the journalist mentioned, may have gone beyond the WTO provisions. Therefore, they should be taken as a "wish list" because it is unfair, unreasonable, and unacceptable to make China fulfill obligations beyond the WTO under the remit of the WTO. I'd like to repeat that China will take all concerns seriously as stipulated in WTO agreements to fulfill its WTO obligations. But it is inappropriate to demand China fulfill obligations beyond the WTO boundaries. Thank you.
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Cover News:
Some representatives from WTO members pointed out during the review that China has conducted non-market practices in its global trade and that the government's intervention in economic activities has caused overcapacity and distorted the market. What is your comment on this matter? Thank you.
Wang Shouwen:
Thank you for your question. Some WTO members also talked about this issue on some other occasions. I'd like to answer it from the perspective of our foundation. What is our foundation? It is the Constitution of the People's Republic of China (PRC), where Article 15 prescribes that the state shall practice a socialist market economy. Since the reform and opening up, especially after the 18th National Congress of the CPC, China has committed to deepening all-round reform and continuously improved the socialist market economy. It can be said that China's marketization has been continuously advanced, deepened and intensified. Currently, 97% of prices of products and services are determined by the market. China has formed a relatively complete system of market-based interest-rates, and further improved the market-based RMB exchange rate regime. Reforms have also been advanced on the factor market, including in the areas of land, labor force, capital, technology, and data.
Meanwhile, China is building a high-standard market system and fully implements a nationwide negative list for market access. China has improved the fair competition review mechanism, strengthened the antitrust and unfair competition law enforcement, and the Enterprise Bankruptcy Law is universally applicable to various market entities. China has eliminated all barriers in various areas, including market access and exit, utilization of factors, and protection of intellectual property rights, and as a result, fostered a market environment for fair competition.
In May 2020, we issued a guideline to accelerate the improvement of the socialist market economy in the new era. The guideline points out that China will continue reforms to develop the socialist market economy, and show more respect for the general rules of the market economy. Efforts will be made to minimize the government's direct allocation of market resources and direct intervention in microeconomic activities, so as to give full play to the market's decisive role in resource allocation, as well as bring into better play the government's function in effectively correcting market failures. In such a market economy, how can there still exist many non-market practices or government-interventions in the economy?
You mentioned overcapacity, which is a common, cyclical, and structural problem in economic development. It is a global challenge that calls for joint efforts by all stakeholders to tackle. Taking previous overcapacity in the steel industry as an example, its root cause was the imbalance between supply and demand caused by the 2008 global financial crisis. In order to cope with this issue, China has made tremendous efforts and paid a great price. In fact, China has exerted the greatest efforts and achieved the best outcomes in cutting overcapacity among relevant countries. Since the implementation of supply-side structural reforms in 2015, we have achieved notable progress in reducing overcapacity. During the review, some members raised this issue, and we explained that from 2018 to 2020, China had cut its crude steel capacity by 150 million tonnes. Now, the capacity utilization rate for crude steel and aluminum is over 80 percent and over 85 percent, respectively, demonstrating that there is no overcapacity in these two sectors. We will remain on high alert for possible occurrence of overcapacity in the future and be committed to establishing and improving a long-term mechanism to resolve overcapacity through market-oriented and law-based approaches.
As socialism with Chinese characteristics has entered a new era, we will fully implement the new development philosophy, accelerate the pace in creating a new development dynamic, promote high-quality development, unswervingly deepen market-oriented reforms, and expand high-level opening-up, so as to build a high-level socialist market economy. During this process, we will continue to earnestly fulfil our WTO commitments, treat enterprises under all forms of ownership equally, and create a fair and open business environment for both Chinese and foreign companies. Thank you.
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Xing Huina:
We will have one last question.
CRNTT:
During the WTO's eighth trade policy review of China, members of the organization spoke highly of China's commitment to safeguarding the multilateral trading system and supporting the WTO so that it could play a bigger part. What's China's stand on proactively participating in reform of the WTO in the future? Thank you.
Wang Shouwen:
Thank you for your question. As I've mentioned, China attaches great importance to enhancing the authority and efficacy of the WTO and has paid great attention to its reform. President Xi Jinping noted that China supports necessary reform of the WTO; that the reform should seek to keep up with the times so that the WTO can better facilitate market opening-up and promote growth; and that the reform should be conducive to safeguarding free trade and multilateralism and narrowing development gaps. This is China's fundamental stand on the reform of the WTO.
In terms of specific fields of the reform, I'd like to expound on the following aspects. First, regarding the agenda of the reform, we believe that the WTO should not only address conventional and unresolved issues left from the past but also develop outlines for emerging issues and update the relevant rules in keeping with modern society. For example, issues concerning the agriculture sector are one of the important conventional topics. We believe that there are highly unfair rules on agriculture and that relevant subsidies have severely distorted international trade in the sector. Some developed member states of the WTO have received a huge amount of aggregate measurement of support (AMS), which requires more attention from the media. For example, for some countries, the AMS on sugar accounts for more than 65% of its price, and the AMS on cotton is 2.8 times the value of the output of cotton. It is unreasonable that developed countries are entitled to such a huge volume of subsidies.
However, developing member states of the WTO can only subsidize up to 10% of the product output value. There is a special term called "de minimis," which stipulates that subsidies provided to developing countries can only account for up to 10% of the product output value. The 10% subsidy has very little impact on trade. Yet, it is of paramount importance and indispensable to the supply of agricultural products as well as the security of agricultural industry and food. It is especially crucial for the small-scale agricultural economy and farmers' livelihoods. Therefore, China advocates canceling the huge amount of AMS, which severely distorts international trade, while maintaining the small number of subsidies that are necessarily needed for the small-scale agricultural economy, so as to protect agriculture and food security.
In addition, the public and safe reserve of food is also a conventional issue, and we need to come to an agreement on this through negotiation as soon as possible. In the meantime, we think that some emerging issues should also be considered, such as e-commerce, investment facilitation, as well as fisheries subsidies just mentioned by a journalist. We should reach agreements on these issues as soon as possible.
Second, dispute settlement is one of three important functions of the WTO. The dispute settlement mechanism is very important, and it can help safeguard the norms of global trade. If a country thinks that another country is doing something wrong, then it can file a lawsuit. If the latter is wrong indeed, then it will need to rectify the situation. If there is no such dispute settlement mechanism, then disputes between countries will be handled via the "law of the jungle," which means that the standard of right and wrong will be determined by those with the most strength. This is destructive to international trade. Unfortunately, due to the obstruction of some member states, the dispute settlement mechanism of WTO is facing a crisis, and its Appellate Body hasn't been functioning. We believe that WTO reforms should address issues related to its Appellate Body as soon as possible. China has placed great emphasis on this issue and has been advocating to restore the normal operation of WTO's Appellate Body. Given the current problems facing the Appellate Body, China, the European Union, and other WTO member states have agreed to a multi-party interim appeal arbitration arrangement. Of course, this arrangement would only be temporary. We hope that trade disputes could be settled through the two tiers trial methods of these third parties rather than through economic bullying.
The third aspect is about the methods that WTO can take to carry out reform. For conventional issues and those concerning the majority of member states, we uphold the principles of consensus to carry out reforms. For emerging issues such as e-commerce, we think that the principles of consensus cannot be accepted by every WTO member for now. We hold an open attitude and propose issuing joint statements. This means that a group of member states can first reach plurilateral agreements to address specific issues in these fields, and the rest of the members can join in once all conditions are favorable in the future.
In general, China has placed great emphasis on the reform of the WTO, and we are willing to participate in the course in a fairly proactive and constructive way so to enhance the WTO's authority and efficacy and contribute to global economic growth, especially the liberalization and facilitation of global trade and investment. Thank you.
Xing Huina:
Thank you to all speakers and friends from the media. Today's briefing is hereby concluded. Goodbye.
Translated and edited by Wang Qian, Duan Yaying, Xu Xiaoxuan, Yuan Fang, Cui Can, Wang Yanfang, Yang Xi, Li Huiru, Yan Xiaoqing, Huang Shan, Xiang Bin, Liu Qiang, Dong Qingpei, Zhang Rui, Zhang Tingting, Zhang Junmian, Zhu Bochen, Wang Yiming, David Ball, Drew Pittock, Jay Birbeck, and Tom Arnstein. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.
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