US Blasts China at WTO

The United States blasted China’s “predatory” trade practices yesterday as the World Trade Organization launched its ninth trade policy review of Beijing.

China has not lived up to the commitments it made in joining the WTO in 2001 and the challenges have gotten worse, US Deputy Representative to the WTO David Brisbee stated.

China is not the only WTO member that remains a non-market economy. “But what sets the PRC apart from them is that Beijing operates its non-market economy in a ‘predatory’ manner. That is, because of the size of its economy and the volume of its trade, the PRC is uniquely positioned to be able to use its state-directed approach to the economy to eliminate foreign competition and amass market power,” he said.

In its intervention, the United States also highlighted Beijing’s use of “economic coercion” against other WTO members.

China “has doubled down on its state-led, non-market approach to the economy, to the detriment of workers and businesses in the United States and other countries, including emerging and developing economies,” the US envoy said.

“Through state-led industrial plans like Made in China 2025, the PRC targets key industries for domination, both in the PRC-based market and globally, and the full weight of the PRC state is deployed in support of this goal of domination. It means that foreign companies are not competing against individual PRC companies; they are competing against the PRC state and PRC companies acting in concert.”

Industrial Subsidies

Washington accused China of using “constantly evolving non-market policies and practices to achieve the domination objectives in its industrial plans,

• including not only massive and pervasive – and often non-transparent – subsidization, but also
• market access limitations,
• investment restrictions,
• forced or pressured technology transfer,
• state-sponsored cyber theft,
• preferential treatment for state-owned enterprises and other favored PRC companies,
• discriminatory regulation,
• unique national standards, data restrictions,
• inadequate protection and enforcement of intellectual property rights,
• the use of competition law enforcement for industrial policy purposes, and
• unfair labor practices, including forced labor.”

These practices encourage Chinese companies to produce too many products that then flood other markets at below-cost prices. This “does not merely harm other developed economies with mature industries,” the US envoy said. “It especially harms emerging and developing economies, as too often they cannot successfully develop their own competing industries and, instead, become more dependent on the PRC, something economists call “premature deindustrialization.”

Washington continues to urge Beijing to comply with WTO rules, but “at the same time, we are realistic, as the PRC has shown no interest in pursuing fundamental changes,” Mr. Brisbee concluded. “As a result, as Ambassador Tai recently explained, ‘The People’s Republic of China remains the biggest challenge to the international trading system.’”

While the United States and other industrialized countries criticized China’s trade practices, many developing countries praised China for its role in the global trading system, including South-South cooperation and being a market for imports of agriculture and other raw materials.

On the first day of China’s ninth trade policy review meeting, the comments and questions raised by the participants seem to have revealed a growing divide between the Northern countries’ overall targeted policy perspectives against China, said people familiar with the discussions.

China’s vice minister, Li Fei said that China is engaging “fully and deeply” in the WTO,