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Statement by H. E. Mr. Yu Jianhua, Assistant Minister of Commerce, Head of the Chinese Delegation at the Fourth WTO TPR of China


14 June 2012

Distinguished Mr. Chairman Ambassador Munoz,
Distinguished DDG Ambassador Rugwabiza,
Distinguished Discussant Ambassador Smidt,
Excellencies, dear colleagues,

At the meeting on June 12, Members and our review Discussant, Ambassador Smidt, raised a number of objective and insightful views and comments on China’s economic and trade policy development since the last Trade Policy Review. I want to thank these Members and Ambassador Smidt for their valuable contributions to this review.

Today, I want to start my presentation with responses to those issues of common interest among Members.

Some Members seems to have an impression from the Secretariat’s Report that in the past two years, there was little change to China’s policy on import and inbound investment. A few are worried that China’s reform and opening-up process is coming to standstill. But such an impression is not right and may be due to comparing China nowadays with China some years ago when the accession commitments were being implemented, and there were new developments every year.

As a matter of fact, in the last two years when the DDA was in impasse, world trade and investment liberalization was set back. The Chinese government never held back its reform and opening-up process. On the contrary, the Chinese government has firmly and steadily pushed forward reforms in key areas with greater determination and courage.

In my statement at the meeting on 12 June, I already mentioned a host of policies that the Chinese Government has taken in the past two years to deepen reform and further open up. These include reforms in the taxation system, reform of the RMB exchange rate pricing mechanism, steps towards market-based interest rates, voluntary application of interim import tariffs lower than the MFN rates, new market access opportunities in such service sectors as healthcare, tourism, insurance, securities, and revision of the Catalogue Guiding Foreign Investment in Industries.

Today I can add more to illustrate. Reform of China’s budget system has been advanced. The taxation regulations for domestic and foreign-invested enterprises and also individuals were unified at the end of 2010. Reform of state-owned enterprises has deepened, with dividends payment further increased in 2011.

A latest move that Members may be interested in is that the Ministry of Finance released on May 22 the revised Interim Catalogue for the Classification of Government Procurement, which provides for sub-classification of government procurement of goods, services and constructions based on the WTO GPA. This move aims to further reform government procurement system so as to meet the requirement of GPA accession.

For details of the measures to deepen reform and further open up, Members could refer to the Government Report that we submitted. I want to emphasize that China was making these efforts against the backdrop of the global financial crisis and a volatile international environment. It shows that the Chinese government remains committed to reform and opening-up. I must emphasize these are new measures beyond China’s WTO commitments and obligations. Such progress deserves to be recognized and commended by an organization that advocates equity and fairness.

On stimulating domestic demand and economic rebalancing, Mr. Chair, this is one of the key chapters of the Government Report. China has been making arduous efforts to work in that direction.

The past two years witnessed some outcomes of our efforts to rebalance the economy.

First, contribution by domestic and external demand to the GDP, as well as by domestic investment and consumption as a part of domestic demand to the GDP are changing positively (Para. 27 of Government Report). Second, per capita income rise in rural areas have outpaced that in the urban areas in the last two years (Para. 39 of Government Report). Third, shares of trade surplus and current account surplus in GDP are going downward (Para. 56 of Government Report).

On the issue of the transparency of China’s trade and investment regime, Mr. Chairman, improving transparency is an important part of China’s reform on the administrative system. The Chinese government has continued with its efforts since the last TPR.

On the issue of soliciting public opinions on legislative drafts, it is now a common practice in China to solicit public comments through the internet. In particular, those drafts of administrative regulations of the State Council and departmental rules, which may have direct effects on trade or investment, are posted on the official website of the Legislative Affairs Office of the State Council for public comment. Such public comment system is also made available on the website of the Standing Committee of the National People’s Congress.

On specific trade and investment policies and measures, regulations and notices by the Ministry of Commerce regarding import and export administration, trade remedy and FDI are published at our official website in a timely fashion. They are also compiled into the “China Foreign Trade and Economic Cooperation Gazette” together with trade related policies and measures promulgated by other government agencies. On the issue of notification, China has fulfilled almost all of its notification obligations, except for subsidies. Delay in subsidy notification is a universal problem among WTO members. The Chinese government is working hard to overcome various complexities and insufficient capacity, and is building a mechanism that can ensure regular notification of subsidies at both the central and sub-central levels.

On subsidies, as a WTO member, China has a clear position on this issue, that is, to play by the WTO rules.

On the transparency of subsidy policies, a working mechanism of central government subsidy notification has been established and put into use. What we will do next is to extend our efforts to the sub-central level by training local officials and incorporating sub-central subsidies in the notifications.

On China’s standard and accreditation system, Mr. Chair, China has adopted and will continue to adopt international standards during its modernization. Since 1980, China has always made international standards the foundation for technical regulations. By the end of 2011, 68% of China’s national standards had adopted international standards or advanced foreign standards, far above our WTO commitment which is 50%.

According to the TBT agreement, exceptions are allowed in terms of adopting international standards. Developing members are not expected to use the international standards that are inconsistent with their development, fiscal or trade demands. In addition, in certain areas there are still no international standards, or no consensus on what international standards are under the TBT agreement. In this context, we believe that it’s unfair to say that China is developing its own standards and violates the TBT agreement just because it does not follow the standards of some other members in a few areas.

The issue of foreign-invested enterprises’ participation in the formulation of standards was raised. The reality is that foreign enterprises are welcome to participate in national standardization activities in China. Measures on Administration of National Standards and related laws and related regulations and rules do not at all restrict the participation of foreign-invested enterprises in technical committees or in the process of formulation or revision of national standards. At present, foreign-invested enterprises have participated in at least 25% of the technical committees, covering 120 areas of standardization in manufacturing, services, and agriculture, etc.

China is open on the issue of standards and accreditation and is willing to discuss specific cases with other member in detail to build consensus. China also supports more WTO dialogues on international standards under the TBT agreement.

On China’s notification obligations in the area of TBT and SPS, Mr. Chair, though China is among the members that have made the most notifications. Generally speaking, China has properly fulfilled its transparency obligations.

Some members mentioned that certain laws, regulations or measures were not timely notified. I looked into this and found that the main reason is our staff had different opinions on whether the technical regulations should be notified under the TBT agreement. For instance, some general laws and regulations are considered to have no direct impact over trade, while some have adopted recommended standards or international standards. I think these are technical issues.

In order to push SPS and TBT related authorities to better fulfill the notification obligation, we plan to seek technical assistance from the Secretariat and hold training programs on TBT and SPS notification in China next year. In the future, China will have more exchanges with other members on these technical issues, as it will help both China and other members to better honor their transparency obligation in TBT and SPS.

On IPR protection, the Chinese government has taken a clear-cut position, shown a strong determination and taken decisive actions, with Premier Wen Jiabao and Vice Premier Wang Qishan are at the helm. IPR protection is China’s national strategy and is being implemented steadily.

In the past two years, the Chinese government has further improved IPR legislation and promoted the use of legal software. Moreover, it launched a special campaign on IPR enforcement and put in place a permanent mechanism to crack down on IPR infringement. More details can be found in the Government Report.

We made further progress in IPR protection soon after the Government Report for this review was submitted. On May 15, the State Council released the Working Priorities in IPR Enforcement in 2012. Accordingly, China will carry out special IPR enforcement campaigns on trademark protection, copyright protection, patent protection, geographical indication protection, online shopping, exports and imports, drugs and cosmetics, and agricultural supplies, etc. More efforts will be made to fight infringement of trade secrets, and criminal punishment will have an important role to play in IPR protection. Mr. Chairman, the Chinese government will make sustained efforts to improve enforcement of IPR laws and regulations.

On the issue of export control, China indeed maintains such measures for some products, but all of them are consistent with WTO rules.

Export control on highly polluting, energy consuming products and exhaustible natural resources is a part of our effort to protect the environment and achieve sustainable development under the mounting resource and environment pressure, therefore is necessary at present. The Dispute Settlement Body is now looking into cases between China and some members in this area. China will fully assess the final ruling and adopt sound measures in line with WTO rules, with the view to achieve sustainable development.

There is one thing I need to add, to achieve the same policy goals as export control, the Chinese government is advancing related reforms. The resource tax reform has been launched. The collection of environmental tax is under study. The Chinese government will steadily push forward its efforts in this regard.

About the agricultural policies, to address issues related to agriculture, rural areas and farmers is key to ensure long-term, stable and sustainable development of economy and society in China. In recent years, China has increased input in agriculture, rural areas and farmers to accelerate economic restructuring and promote balanced development. Yet, as a point of clarification, these are Green Box measures aiming at increasing farmers’ income, with minimum distortion of agricultural production and trade.

China has noticed some members’ concern about the direction of China’s agriculture supporting policies. These policies are in line with China’s rights and obligations in the WTO, in terms of either implementation method or the amount of the support. Apart from the Green Box, China also has policy space in other boxes. Compared with the subsidies provided by some other WTO members, China’s support measures have little impact on trade. We are willing to keep communication and exchanges with other WTO members so that they can better understand China’s rural areas and agricultural policies.

Mr. Chairman, in addition to common concerns mentioned above, the following questions were also raised by some members on June 12.

About government procurement, China is working hard to speed up the process of joining the Government Procurement Agreement. To this end, China submitted its third offer within two years and included 5 relatively more developed provinces or municipalities in eastern China. By the end of this year, China will try to renew its offer. Meanwhile, the reform of our government procurement system is progressing. As I mentioned just now, Catalogue for the Classification of Government Procurement was revised in line with GPA agreement. All these efforts are a testament to China’s good faith in joining the Government Procurement Agreement.

Nevertheless, China itself is a developing country and its reform of government procurement is not something that can be accomplished within a short time period. The state-owned enterprises are independent market players whose procurement and sales are not a part of government procurement. Therefore, we hope that participants of the GPA can be visionary, flexible and pragmatic, and work with China to accelerate the negotiations.

On trade remedies, China is the biggest target of trade remedy measures, as well as the major victim of abusing trade remedies. China is strongly against such practices. When China has to resort to trade remedies, we always do it through equitable and transparent procedures with utmost discreet and a sense of responsibility. China has established a sophisticated legal system on trade remedies, covering every link of the whole process, including initiation, sampling, questionnaire, disclosure of and access to information, site visit, and price undertakings. This provides legal guarantee for equitable procedures. In practice, China has strictly abided by the WTO rules and its domestic laws in the investigations, adhered to the principles of being fair and equitable, followed proper procedures and ensured transparency. We fully respect the rights of every stakeholder, and make objective, fair and equitable rulings strictly based on laws and facts.

With respect to the concern that some trade remedy cases initiated by China are retaliatory measures, we believe that this statement is purely speculative. Up to now, all China's anti-dumping and countervailing investigations are initiated on the basis of a duly substantiated claim by the petitioners. As in other WTO Members, China's investigating authority is under the obligation to accept petitions that contain sufficient prima facie evidence and will conduct the investigations in an objective and unbiased manner.

On the issue of fair competition between state-owned enterprises and private enterprises, Mr. Chair, China sticks to the policy that public sectors and non-public sectors of the economy can achieve common development with mutual benefits. State-owned enterprises and enterprises of other ownerships are equal players in the market. The Chinese government will continue to build an open, transparent and fair market and legal environment, so as to create a level playing field for harmonious development.

The Chinese government strongly supports the development of non-public sectors. Related measures have been illustrated in our Government Report for this and the last TPR. As I mentioned on June 12, the Ministry of Transport issued a document encouraging private investment in land and water transportation on April 13. The Ministry of Railways also issued a document encouraging private investment in railways transport on May 18. These sectors are confirmed to be open to private capital. In addition, a host of implementation rules to further promote private capital’s participation in certain sectors will be publicized in the near future.

About the further opening up of trade in services, though as a developing country, China started late and remains inexperienced in many service sectors. However, it has been forging ahead with reform and opening up in these sectors.

On January 1, 2012, the Chinese government launched the pilot reform on converting business tax to VAT for the purpose of accelerating the development of services sectors. Detailed information about the further opening up of service sectors is included in my statement on June 12. In the newly revised Catalogue for the Guidance of Foreign Investment Industries, a series of services sectors including rural chain distribution, venture capital enterprises, intellectual property services, technical services for cleaning offshore oil pollution and vocational training are added to the encouraged industries. The proportion of services in encouraged industries is further expanded. Foreign investments in medical institutions and financial lease companies are adjusted into permitted industries. It is China’s established policy to accelerate the development of service sector, improve its level and increase its share in our national economy.

On the issue of aid for trade, the Chinese delegation wants to express its appreciation to other member delegations for your friendly remarks. The mutual assistance between China and other developing countries is an important way to realize common development for the developing world. China will continue to provide aid to other developing partners to the best of its capacity, help them improve the capability for independent development, and promote their economic and social development. In this regard, China will adhere to its principle of putting first partner countries’ own aspirations, and implementing projects through consultation without attaching any string.

Mr. Chair, this is my response to the major questions raised by discussant Ambassador Smidt and other members.
Thank you.

(Second part)

Mr. Chairman, Discussant Ambassador Smidt,
Ambassadors and fellow delegates,

We have just received some questions and comments in the meeting. We will prepare the answers once we receive the questions in written form.

I am pleased to have discussed with you, Ambassador Smidt and other member delegations, the general objectives and specific aspects of China’s economic and trade policies since the last review.

As the review comes to a conclusion, I’d like to express my sincere thanks to you, Mr. Chair, other member delegations and Ambassador Smidt for the candid and extensive exchanges in the past two days.

The Chinese government attaches great importance to the TPR as it is an essential mechanism that allows WTO members to conduct peer reviews and improve the transparency of their economic and trade system and policies. China, as the world’s largest developing country, faces extremely complex challenges on its path to strong, sustained and balanced growth. We wish, through the review, member countries will gain a better understanding of this reality in China and recognize China’s continuous efforts to reform, open up and improve its economic and trade regime and policies. Surely we will never standstill or rollback. We believe standstill or rollback is a dead end for China.

We listened attentively to your comments and questions as well as the messages you wish to convey. Most of these comments and questions are constructive and consistent with our target of deepening reform and opening up. We attach great importance to such questions and comments. For some questions resulted from misconceptions, we will keep in close consultation with Members to expand mutual understanding and build consensus.

TPR is an important function of the WTO, and I believe that it should be based on WTO rules and should not be politicized. However I note with regret that some member labeled China as practicing state capitalism on June 12. The term cannot be found in GATT or WTO documents. It has nothing to do with the TPR or WTO rules. We strongly believe TPR should not be abused for the purpose of domestic politics.

Mr. Chairman, I believe, as long as we carry out the review in a friendly, constructive manner and give constructive comments and raise questions following WTO rules, the TPR can mean far more than the Review itself to the member under review, to other members and the WTO. That’s the belief we held as we came to this review. And this is the belief we will hold as we come to other members’ review.

Here I want to again acknowledge the hard work of the Secretariat staff for the smooth running of the review, in particular, colleagues from the TPR Division, our translators and interpreters, and staff who printed and handed out the heavy volume of China’s replies to the questions. We look forward to continued fruitful cooperation with the Secretariat.

Thank you very much.

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