WTO reviews China trade policy a fifth time

Report notes that some government mechanisms aren't always transparent

The World Trade Organization is conducting a three-day trade policy review of China ending on Thursday as the country has grown into the world's largest goods trader over the past two years and now pledges further opening of its domestic market into the world economy.

In a 200-page report prepared by the WTO Secretariat, the world's top trade body evaluated such things as China's trade and investment policies, tariffs, trade remedies and government procurement from the second to the first half of 2014.

The review is the fifth one after China's accession into the WTO in December 2001. China is subject to the review every two years.

The WTO found that China's trade and investment policy is managed and fine-tuned through a number of legal instruments. China has continued its efforts to facilitate trade, which date back to 2006, by launching a series of reforms, including the introduction of paperless customs clearance procedures. In its quest to attract foreign direct investment, China has taken measures aimed at simplifying rules and easing restrictions on the use of capital for direct investments.

The report also found that trade and investment policies are not always clear, as they sometimes overlap and even conflict, reflecting different agendas at the different levels. The layers of regulation add another level of difficulty when trying to unravel specific policy measures in China. Customs procedures around the country still require harmonization. The updated notifications appear to be necessary in the area of subsidies.

The United States Trade Representative's Deputy Chief of Mission Chris Wilson said during the Tuesday review that many aspects of China's trade and investment policies and practices seem to be hidden away in unpublished measures, internal instructions, oral directives and confidential documents - or for some other reason are simply unavailable.

"Similarly, the operations of China's State-owned enterprises, which represent a major part of China's economy, are largely shielded from view by mechanisms such as unpublished government budgets, infrequent WTO notifications and a law that can treat commercial information as state secrets," Wilson said.

Wang Shouwen, China's assistant minister of commerce, headed a delegation to Geneva with representatives from nine Chinese departments for the review. The WTO members posed more than 1,500 written questions regarding China's economic system and trade policies before the review.

"On the whole, the WTO will give China a more positive evaluation compared with that in the previous reviews," said Tu Xinquan, deputy director of the China Institute for WTO Studies at the University of International Business and Economics.

"China outlined many reforms and opening-up policies in the top-level decision reached in November 2013 at the Third Plenum of the 18th Central Committee of the Communist Party of China. The country is also advancing the new China (Shanghai) Pilot Free Trade Zone as a pilot project to test the further liberalization of trade in services. Those are very positive signals, though the implementation still takes time."

Tu added: "China still has many deficiencies regarding its trade and investment policies, intellectual property rights protection and the opening of services. The challenges will be resolved with the implementation of the reform measures."

China has become the world's largest trader, excluding intra-EU trade. During the period under review, both exports and imports of goods expanded rapidly, with exports totaling $2.21 trillion and imports amounting to $1.95 trillion in 2013, the WTO report noted.