China’s WTO accession benefits the US and global growth – Community News
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China’s WTO accession benefits the US and global growth

A container ship of China’s COSCO Shipping docks at a new container terminal at the Port of Long Beach in California, United States, August 20, 2021. [Photo/Xinhua]

China’s accession to the World Trade Organization (WTO) two decades ago “enabled the world to share in the fruits of China’s domestic development successes,” said Albert Keidel, an adjunct doctoral professor at George Washington University.

Over the past 20 years, China’s global ranking of goods trade has risen from sixth to first, while that of trade in services has risen from eleventh to second.

Just as Keidel, also a former senior economist in the World Bank’s Beijing office, put it, the Asian giant’s entry into the WTO, in addition to lower prices due to China’s “powerful productivity gains”, also presented “opportunities and development challenges for the rest of the world .”

It is undeniable that since its accession to the WTO in 2001, China has promoted economic globalization with openness as its hallmark and shared prosperity as its vision.

Benefits to the US Economy

Of all the world’s economies, the United States has benefited significantly from China’s WTO accession in multiple areas, including consumption, investment and trade.

China’s entry into the WTO is “a boon for Chinese producers and American consumers,” Sourabh Gupta, a senior fellow at the Institute for China-America Studies, told Xinhua.

The cost of consumer electronics and numerous daily necessities that impact US households’ wallets have fallen due to China’s exceptional cost competitiveness and medium-technology-intensive manufacturing, Gupta said.

Khairy Tourk, an economics professor at the Stuart School of Business at the Illinois Institute of Technology in Chicago, said American consumers have benefited from the continued reduction in prices of goods made in China.

“If you look at the business here, we see that there are many profitable opportunities for manufacturing and sales in China. Foreign direct investors are now working their way to China’s door,” said Tourk.

China has overtaken the United States as the world’s top destination for new foreign direct investment, explaining why companies like Apple are expanding operations in China and Tesla built a factory in Shanghai, the professor noted.

In a report filed in September with the Office of the United States Trade Representative, the US-China Business Council (USCC) said China’s accession to the WTO was on balance positive for the United States and the world.

“Apart from China itself, the US economy has benefited more from China’s decision to open up, including its decision to join the WTO, than any other economy. China’s WTO accession is certainly not a ‘curse’ for the US, as some US commentators would now have us believe,” said Pieter Bottelier, a visiting scholar at Johns Hopkins University School of Advanced International Studies.

No China connection with hardship in the US

The loss of manufacturing jobs in the United States in recent decades has been severe, causing severe hardship in traditional manufacturing industries.

However, according to studies and experts, the economic difficulties facing the world’s largest economy, such as job losses in the manufacturing sector, have nothing to do with China.

Citing key studies, Bottelier, also a former World Bank mission chief in Beijing, noted that in terms of job losses in manufacturing, “there is no specific link to China’s accession to the WTO.”

The main reason for the loss of manufacturing jobs in the United States is not the transfer of jobs to China, but technological development in the manufacturing industry, such as robots, artificial intelligence and information technology, Bottelier said.

When China joined the WTO in 2001, it marked the beginning of a period when the United States began to experience significant job losses in manufacturing.

The harm to American workers was and is due to the US government’s unsatisfactory performance in transition programs, Keidel said.

“Blaming China is the policy that justifies inaction because unfortunately we haven’t done our homework here,” Tourk said, adding that the workers were not equipped with new skills.

Milestone for the world

The year 2021 will mark the 20th anniversary of China’s accession to the WTO. Over the past two decades, the country’s continued efforts to increase openness have taken its development to a new stage and given new impetus to the global economy.

China has lowered its tariff on goods to 9.8 percent, from 15.3 percent when it joined the WTO 20 years ago. At present, the total import tax stands at 7.4 percent, lower than the average level of developing members of the WTO and approaching the level of advanced members of the organization.

China’s accession to the WTO was “a milestone,” said Robert Lawrence Kuhn, chairman of the Kuhn Foundation.

It has considerably accelerated the country’s involvement with the outside world, starting with trade and developing a manufacturing base in China, which later grew into the manufacturing center of the world, Kuhn said.

Borge Brende, chairman of the World Economic Forum (WEF), also said that China’s accession to the WTO in 2001 is an important step for its economic development and a milestone in globalization.

After joining the WTO, “China is highly integrated into the global economy,” Brende told Xinhua.

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