Next 10 years call for more reforms

PUBLISHED : Thursday, 24 November, 2011, 12:00am
UPDATED : Thursday, 24 November, 2011, 12:00am


The defining economic events of the last decade were the global financial crisis and the shift of power to Asia. The first accelerated the second. But the catalyst for Asia's emergence as the driver of world growth came at the beginning of the decade - China's accession to the World Trade Organisation. This newspaper described it at the time as the next step on the long road back to national greatness after 200 years of isolation. Few could have anticipated it would be such a huge leap. The timing was not propitious. A stagnating global economy was reeling from the 9/11 terrorist attacks on the United States. China's entry to the WTO added impetus to global economic growth by opening up the world's largest untapped market. Ten years later, it has reshaped world trade and geopolitics, with the mainland now the world's largest exporter and second-largest importer.

Accession to the WTO on its own did not make China's rise a certainty. To keep its side of the bargain, Beijing has had to rewrite thousands of trade and investment laws, cut tariffs, progressively abolish export quotas and import permits and strengthen legal protection for property rights. Yet the integration of the biggest nation into the world trading system very much remains a work in progress. Reform of the domestic economy must continue if its full potential for world growth and prosperity is to be realised.

Just as China's membership of the multilateral trading community and financial strength was to boost global growth and prove a tower of strength in the financial crisis, hopes for fresh impetus to growth lie in Beijing pushing ahead with further reforms needed for recognition by the WTO as a market economy. After the crisis slowed growth delivered by WTO membership, Beijing revived it with massive stimulus spending. But it cannot be sustained forever without more pro-market reforms. Ten years after accession, the man who negotiated it for Beijing over 15 years, Long Yongtu , has been frank about it. The mainland, he said, still needed to improve, for example, in equal treatment with state-owned enterprises and small private companies, and in the transparency of policymaking in trade and commerce.

He echoed complaints from other trading powers about a range of multilateral trading issues, including China's progress in opening up its huge markets and government procurement contracts; the opaque, state-controlled domination of the mainland economy, and protection of intellectual property rights.

China has reached a watershed in the reform process and its rise as an economic power at a sensitive time - in the run-up to a leadership transition. The way forward calls for clear vision and confidence in the country's capacity to take the next step forward on level terms.