China needs to be 'more proactive' in WTO

(China Daily)
Updated: 2009-04-01 07:58

Jean-Pierre Lehmann

As the G20 summit opens tomorrow, Jean-Pierre Lehmann, professor of International Political Economy at the world-renowned business school IMD, talks to China Daily reporter Fu Jing about protectionism and his expectations from the summit.

Q: Regarding protectionism, how do you feel about the performance of developed countries, especially the US?

A: Protectionism has been on the rise over the past year. There is conventional protectionism, which is raising barriers, tariff or non-tariff, on the import of goods, agricultural goods or manufactured goods. There is financial protectionism, which is blocking overseas investments or discouraging national banks from lending to foreign clients. This is taking place in a significant way in Europe. Then there is the protectionism that emanates from stimulus plans. In the case of the US, there is a 'buy American' clause that was included as part of the stimulus package and insisted upon by the Congress. One thing, which the Chinese will obviously be aware of, is green protectionism, which is when environmental or climatic change issues can be used as measures to try to discourage imports.

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Seventeen of the 20 G20 countries, committed to reducing protectionism, have taken various forms of measures since the G20 meeting in November last year.

Q: China has done a lot in encouraging trade openness. What else can China do in your opinion?

A: China's record on trade over the course of the last couple of decades is indeed quite remarkable. Unilaterally, China has reduced barriers and it has become a major global trading power. The fact that it became a member of the WTO in 2001 is very important. What concerns people the most at this stage is not protectionism in the conventional sense of the term, but in terms of finance. China has faced discrimination when its companies have sought to make foreign acquisitions, but it is also blocking acquisitions of Chinese firms by foreign enterprises. This is a form of protectionism. What else can China do in this context? Probably the most important thing is to play a more decisive role in the WTO trade negotiations. China tends to be rather silent and reactive. As a major trading power, it should be ideally more vocal and proactive.

Q: What role will China play in rebuilding a new global financial order? How much contribution should China make to the IMF? Why?

A: It is clear, firstly, that we need a new global financial order. The question assumes that there is going to be one. There should be one.

In order to either prevent chaos or financial conflict over exchange rates, there is a need for an institutional structure that is going to reflect different developments that have occurred in the first decade of the 21st century. China should be a very, very active player in that respect for many obvious reasons. And the world financial system is now moving into a very different kind of environment and China has to lead in this situation.

China's contribution to the IMF is obviously welcome. At the same time China is concerned, justifiably, about the voting rights that it has at the IMF in comparison to European countries. I think one of the things that needs to be reflected upon is whether some of the institutions, set up 60 years ago in the wake of World War II, are the right institutions to take us through the next 60 years. One of the things China should push for is another so-called Bretton Woods that would really be serious. In other words, China needs to do two things - stop the global system from sinking and to work on a robust architecture for the 21st century.

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