WJS: China shuns leading role in WTO talks
By Murray Hiebert (The Wall Street Journal)
Updated: 2005-12-06 13:13

Few nations have enjoyed bigger and quicker benefits from the global trading system than China has since it joined the World Trade Organization four years ago. Yet few major countries are taking a lower profile than China in the diplomatic wrangling ahead of a critical WTO meeting next week.

The Dec. 13-18 meeting in Hong Kong will seek to break a stalemate among developed countries over how to cut agricultural subsidies and proceed with trade liberalizations that were proposed at the so-called Doha Round of talks in 2001. Beijing has a giant stake in the success of these talks because many of its farmers and factories would greatly benefit from a cut in agriculture subsidies and increased market access in general.

China's reluctance to take a leadership role apparently stems from the delicate balancing act necessary to maintain its trade relationships without losing its competitive advantages. The surging volume of China's international trade gives it growing clout with both developing and developed countries. But Beijing seeks to avoid alienating its major trading partners, its allies in the developing world and the domestic constituencies left behind in China's rush to modernize, trade analysts say. China also worries that a prominent role at the talks will serve as a reminder of the economic threat it poses.

"The current leadership does not want to be seen leading the charge for even more liberalization," says Nicholas Lardy, an economist at the Institute of International Economics in Washington.

China so far has declined to help Washington in lobbying the European Union to reduce its agricultural tariffs, even after U.S. Trade Representative Rob Portman visited Beijing in mid-November to press China to do so. EU reluctance to cut subsidies is a key reason why global trade talks have stalled, many trade experts say.

A U.S. official who regularly deals with Chinese negotiators says he believes they are keeping their heads down to avoid reminding foreign countries about China's low-cost competitiveness and booming exports.

While China has been invisible in trade discussions, it has taken a more assertive role globally, pushing forward the six-party North Korea denuclearization talks and seeking to define industrial standards. Beijing is acutely aware of growing concerns abroad over the country's rise as a global power. As China's economic interests shift, Beijing must also grapple with how to position itself in relation to longtime allies in the developing world and interest groups at home.

At the same time as Beijing is seeking to burnish its leadership role in Asia, China's trade policies are sometimes straining relations with developing nations. In Thailand, a traditional friend of China, farmers complain they can't compete with the low-cost Chinese onions and garlic flooding into the country. And Thai exporters grumble that China uses nontariff barriers such as long delays in customs clearance to keep out perishable Thai tropical fruit such as mangoes and papayas.

At home, two-thirds of China's 1.3 billion people are farmers, and the country's annual per-capita gross domestic product in 2004 was 10,561 yuan ($1,307), well within the ranks of developing nations. While some Chinese farmers have benefited greatly from the WTO's market-opening policies, exporting large volumes of apples and fresh produce to parts of Asia, many remain mired in poverty.

Some Chinese textile companies, meanwhile, say Beijing made too many concessions to secure rapid WTO entry, including granting the U.S. and Europe the right to impose so-called safeguard quotas on China-made garments if such imports disrupt local markets.

Both the U.S. and EU this year imposed this class of quotas on select categories of Chinese textiles, resulting in losses for many producers in China. To bring more certainty to the market, China signed agreements in recent months with the U.S. and EU to cap annual growth of certain textile exports to those huge markets.

Zhang Hanlin, a trade expert at the University of International Business in Beijing, says China has "diversified interests" in the global trading system. He notes that even though China is a developing country, it would benefit as much as most developed countries from further cuts in import tariffs.

China remains a member of the Group of 20, which includes developing countries that assert that industrialized nations should do more than poorer nations to cut trade barriers. But unlike India and Brazil, China doesn't play a pivotal or leadership role in the group. "We will not lead developing countries to oppose developed countries and set up two different camps," Mr. Zhang says.

Robert Sutter, a China specialist at Georgetown University in Washington, says that in the run-up to the Hong Kong WTO meeting, the "risk averse" style of Beijing's leadership in global affairs is prompting China to "wait for the consensus to form, and then join the consensus."