Executive summary
Since launching its reform and opening-up policy, China has viewed participation in international economic institutions such as the IMF and GATT/WTO as a means of advancing its own development objectives. Since joining the WTO in 2001, it has evolved from a discreet observer into an active member, contributing to both rulemaking and dispute settlement. Now, as the multilateral trading system faces attacks from one of its founders, China has officially positioned itself as an active defender.
Yet its stance is more nuanced. On one hand it has supported efforts to preserve the WTO’s arbitration function. In pursuing a proactive agenda through bilateral and minilateral agreements, including RCEP, China more broadly seeks to preserve the existing order and is strongly supporting various plurilateral agreements under the WTO. Yet, as Beijing formally advocates reforms to improve the organization’s effectiveness, it remains hesitant to adapt its own domestic policies that are not aligned with the liberal logic underlying WTO rules. In other words, China pays lip service to the need to reform the WTO but its actions are not fully in line with its declarations. In parallel, it pursues the creation of alternative governance frameworks such as the Global Governance Initiative (GGI) or the International Organization for Mediation.
Ultimately, China is best understood not as a straightforward status quo power, but as a selectively revisionist one — defending the parts of the system that serve it, while resisting reforms, such as disciplines on subsidies and state intervention, that would touch the core of its economic model.
This creates a mixed picture for the EU. The two sides converge on the priority of restoring the WTO’s dispute settlement function but increasingly diverge substantially in a number of areas. Divergences touch on subsidies and the level playing field that include the very definitions of these terms, the unconditionality of most favored nation (MFN) rules, and more broadly on what “reform” itself should mean.
Recommendations:
In negotiating efforts to reform the WTO, the EU should:
- Agree on the objective of reform before negotiating specific rules;
- Address definition gaps;
- Ensure that Chinese initiatives such as GGI do not run counter to WTO reform or Europe’s broader interests;
- Build coalitions with like-minded partners to gain leverage that bilateral dialogue with China cannot provide alone.
Stay tuned with us by reading more: ReConnect China Policy Brief 41-China and the WTO