Chair, let me join others in welcoming Vice Minister Li Fei and his delegation, as well as the team here in Geneva so ably led by my good friend Ambassador Li; to you Chair, as ever; and to our Discussant for his comments. Whilst all Trade Policy Reviews require preparation, to review China’s trade policies is to review more than one tenth of global trade. So I take my hat off to the Secretariat for their report. And, of course, to the Chinese delegation for answering over eleven hundred questions.
Since we last convened to review China’s trade policy in 2021, strains on the global trading system and, consequently, economies, have only increased. We have seen new stresses on supply chains and global inflation, and national security has once again come to the fore. If such challenges are not managed in all our interests, there is potential for long-term damage to the rules-based global trading system.
Indeed, our shared prosperity and security depend on greater predictability and confidence in global trade – the benefits of which have powered China’s own economic development. As the world’s largest trading economy, China’s actions carry particular significance. It must lead by example. That means transparency. Taking action to tackle unfair discrimination. And addressing bilateral trade imbalances that stem from a lack of reciprocal market access. All issues we raised three years ago, and which remain salient today.
We recognise and welcome China’s leadership here at the WTO, whether it be supporting dispute settlement reform and the preservation of the e-commerce moratorium; spearheading the declaration on Technical Barriers to Trade and promoting the Investment Facilitation for Development Initiative at MC13, or working constructively to deliver for developing countries. China has made a positive difference.
And as one of the three co-Chairs of the Informal Working Group on Trade and Gender, let me also welcome China’s efforts to increase women’s economic participation in trade activities, particularly in the fields of science, technology, and financial services.
It is precisely this sort of leadership that we encourage China to demonstrate in other areas too, for instance in our discussions here at the WTO on industrial policy and subsidies. The UK looks to cooperate with China on these and other global issues that need our urgent attention and which it is in all our interests to address, recognising that there will also be areas where, at times, we will need to compete and must challenge.
Within China’s domestic market, we recognise where the government has responded to Members’ concerns since China’s last Review. We welcome promised improvements to the foreign investment environment, recent updates to data regulations, and pledges to further reduce the Foreign Investment Negative List.
In implementing these policies, it is imperative that China consults with foreign businesses of all sizes to ensure the improvements they implement meet their needs.
Indeed, there is much more we want to see China do to improve market access for foreign investors and importers, and to restore business confidence. First and foremost, legal commitments to a level playing field must be complemented by putting appropriate institutions and processes in place to ensure that regulations are enforced with accountability, transparency and fairness across China.
The current situation is that that in China, laws and regulations are sometimes published with little prior notice or are ambiguous in scope, leaving foreign businesses uncertain about how to comply. Where China has agreed to open market access, long delays in administrative approvals can appear arbitrary. Some UK pork producers are still unable to export to China, despite COVID restrictions being lifted 18 months ago. The Chinese government has affirmed that companies should not be forced to hand over technology, but how this is policed and discouraged is unclear.
Chair, the UK’s comments today stem from a belief that to restore confidence in the benefits of global trade, Members must fundamentally support the mutual viability of each other’s industries. It is therefore with the very aim of supporting global trade that we urge China to consider where its domestic support and protection for certain industries might be harmfully impacting others. And to commit to changing its policies.
In particular, with 98 central State Owned Enterprises affiliated with 32,000 legal entities and responsible for an estimated 4% of global GDP, it remains crucial that China implements fully its Accession Protocol commitment that the government will not influence State Owned Enterprises operations, if we are to ensure fair competition.
Despite China having implemented some corporate governance reforms, we note that some State Owned Enterprises have been tasked to make advances in strategically important sectors and that political oversight has been strengthened through Party committees. We continue to hear of foreign businesses facing difficulties in accessing procurement opportunities in sectors dominated by State Owned Enterprises. China could and should be more transparent about its management of State Owned Enterprises, and to demonstrate that they act as truly independent, commercial entities.
We also ask China to undertake further reforms to show Members that it is committed to transparency and to regulating the provision of subsidies, including those provided to and through its State Owned Enterprises; to disincentivizing overinvestment; and to taking further action to avoid oversupply in international markets. As Chair of the Global Forum on Steel Excess Capacity, we call on China to rejoin international efforts to remove market-distorting subsidies which support excess capacity in steel making.
Chair, in September 2023, President Xi spoke of the need to reaffirm free trade and genuine multilateralism – a principle that implies governments working together to promote trade reciprocity and the free flow of goods and services across borders. We agree. But we ask China to consider where efforts for self-reliance and security may conflict with that fundamental idea.
For example, despite committing, on accession to the WTO, to join the Government Procurement Agreement, China’s government procurement remains closed to imported goods. We have welcomed changes to data regulations in China, but significant restrictions remain on information moving out of the country, with businesses feeling pressed to localise production to unlock market access in China. Such measures to onshore supply chains undermine trade reciprocity.
That said, all Members have the right to take legitimate measures to protect their national security, but this must not be abused to justify arbitrary discrimination. At the WTO, we have questioned China’s restrictions on some exports of critical minerals. If not transparently enforced, the 2023 amendments to the Anti-Espionage Law and broad national security exemptions in domestic legislation undermine the predictability of the trading environment that businesses need.
And the opaque and arbitrary use of economic measures for political reasons to undermine the legitimate choices of WTO Members undermines trust in China as a reliable trading partner. Such actions also undermine confidence that China is indeed committed to the open, rules-based, transparent, and non-discriminatory system that it says it wants and that we so passionately want to see.
Chair, to conclude, the UK’s engagement with this Trade Policy Review has been motivated by the belief that the WTO remains indispensable but is challenged by the ways in which its Members are operating as they seek to cope with global challenges. We need to remember the collective benefit we all receive from adherence to a rules-based and codified trading system. We are confident that China is willing and able to listen to trading partners’ concerns, and we want to continue working constructively with China to restore predictability and confidence in the multilateral system.