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World Trade Organisation (WTO)

China sends Donald Trump a message about free trade and the WTO

Beijing issues white paper saying it ‘faithfully’ honoured its promises and will continue to open up markets in ‘a more comprehensive, profound and diversified way’

PUBLISHED : Thursday, 28 June, 2018, 9:24pm
UPDATED : Wednesday, 01 August, 2018, 4:04pm

The Chinese government issued a white paper on Thursday saying it has “faithfully” honoured the promises it made when it joined the World Trade Organisation and wants the free trade system to continue.

It comes after US Secretary of State Mike Pompeo called Beijing’s rhetoric on economic openness and globalisation “a joke” earlier this month, and at a time when Washington is losing faith in a system it sees as favouring China at the cost of the US.

But Beijing is not giving up its efforts to send the message that it is sincere about opening up its markets and committed to doing business with the rest of the world.

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The cabinet endeavoured to drive home these points in the 27-page white paper, titled “China and the World Trade Organisation”, delivered in four sections: “China has faithfully fulfilled its WTO accession commitments”; “China firmly supports the multilateral trading system”; “China’s significant contribution to the world after accession to the WTO”; and “China is actively advancing opening up to a higher level”.

While the State Council makes no mention of US President Donald Trump in the white paper, its main statements read like a defence against many of his complaints about China.

Trump tweeted in April, for example, that: “China, which is a great economic power, is considered a developing nation within the World Trade Organisation. They therefore get tremendous perks and advantages, especially over the US. Does anybody think this is fair. We were badly represented. The WTO is unfair to US.”

Wang Shouwen, vice-minister of commerce and a key member of the Chinese team involved in trade talks with the US, said at a news briefing about the white paper that “no WTO member has suffered losses because of China’s entry into the organisation” in 2001.

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According to the white paper, China has actually made “tremendous efforts” to honour its promises, at the cost of domestic companies.

It gives the example of Beijing lowering duties on imported cars to 25 per cent from a previous level of 100 per cent in 2006 – China negotiated a grace period when it joined the WTO so that it could maintain high import tariffs for five years. As a result, the white paper says, the country’s carmakers were “hit hard by cheaper imported cars”.

Trump has also complained about Chinese vehicle tariffs. In another tweet in April, the US president said: “When a car is sent to the United States from China, there is a tariff to be paid of 2.5 per cent. When a car is sent to China from the United States, there is a tariff to be paid of 25 per cent. Does that sound like free or fair trade. No, it sounds like STUPID TRADE – going on for years!”

The white paper was released as Beijing and Washington remain locked in a tariff battle, with the US set to start on July 6 levying 25 per cent duties on Chinese products worth US$34 billion and China expected to retaliate with 25 per cent tariffs on US imports, including cars, valued at US$34 billion.

The government also said in the white paper it would continue to open up markets in “a more comprehensive, profound and diversified way”.

China is expected to issue a new “negative list” this week that sets out which of its industries are open to foreign investors, which sectors are open with conditions, and which are closed. It was first drawn up in 1995, and had been revised seven times.

In the new list, due to be announced by Saturday, China will either abolish or loosen foreign ownership restrictions in sectors such as energy, resources, infrastructure, transport and professional services, in addition to previously announced changes for the financial and vehicle sectors.

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The country has also been looking for support from Europe to seek common ground against the United States, which is locked in a separate trade dispute with the European Union.

China told France on Monday that it would buy more of its farm produce, hinted at future Airbus purchases, and pledged to work on market access.

Britain’s finance minister said on Wednesday that Britain hoped to seize “unlimited opportunities” brought by China’s “Belt and Road Initiative”.

Additional reporting by Reuters