INTRODUCTION

So much has changed since China joined the World Trade Organisation (WTO) in late 2001. In the past decade China has become the leading regional power in Asia, and is on its way to becoming a “great power” in the wider world, alongside the USA. These trends have clearly accelerated in the wake of the global economic crisis.

China is now one of the Big Three in the global economy. Until recently, it imported “global order”: it absorbed policies, rules and institutions that materialised from decisions made elsewhere. China still imports global order; but, given its market size, and like the USA and EU, it now exports global order as well. But, given the speed and scale of this transformation, China has evident difficulty in acting like a rule-setter and system-shaper — in other words, like a leader (or co-leader) of the world trade order.

TRENDS UP TO WTO ACCESSION; TRADE AND FDI PATTERNS

China's “Reform” and “Opening” started in 1978. But its decisive external opening, and with it sweeping industrial and agricultural restructuring, belong more to the post-Tiananmen phase, especially since 1994. China undertook enormous trade and FDI liberalisation during the 1990s — before WTO accession in 2001 — followed by another big dose of liberalisation in line with its WTO commitments.

It is important to note that the primary liberalisation thrust, especially in the 1990s, was domestic and unilateral, coming from the Beijing leadership. China's WTO commitments, and its participation in the WTO after accession, can be read as more the consequence than the cause of its sweeping unilateral reforms.

China's weighted average tariff is just over 4 per cent — low-ish by developing-country standards and the lowest among large developing countries (e.g. compared with other BRIICS — Brazil, Russia, India, Indonesia and South Africa). Trade liberalisation also whittled down the impact of border non-tariff barriers (NTBs) to about 5 per cent on the eve of WTO accession. Overall, border barriers on goods trade have come down to Southeast-Asian levels, and have been locked in by much stronger WTO commitments. China's GATS commitments are very strong.

China has climbed up the world rankings for trade and FDI with lightning speed.