Chinese Ambassador to WTO Says Industrial Subsidies Can Be Discussed in Geneva

The Chinese ambassador to the World Trade Organization, Zhang Xiangchen, said his country is willing to discuss the effects of industrial subsidies on trade -- a topic he called contentious and complex -- but he rejected the outlines of an approach the European Union, the U.S. and Japan agreed to in trilateral statements (see 1901090063).

“To launch negotiations in the WTO to amend the current subsidy code as proposed in the trilateral process is a nonstarter,” Zhang said on a Peterson Institute for International Economics webinar July 15.

While he said China “will consider the externalities of its economic policies,” it cannot accept putting the burden of proof on the country being accused of distorting subsidies. He said only importing companies can document the damage done when they compete with a subsidized company. “Shifting to the respondent will increase injustice,” he said, as the respondent would have to prove a negative.

He said it's true that some sectors have lost their advantages as globalization progressed, and said some politicians have searched for scapegoats in the WTO, or in China. “We cannot deny uneven distribution of the benefits brought about by trade liberalization is a big problem; it is a problem for us all, not only in the United States,” he said. Scapegoating China or the WTO “may be effective for a certain period of time, but the structural problems at home still remain.”

He said U.S. talk of raising tariffs to mirror other countries' most-favored-nation rates is contrary to the WTO mission, and “the idea that WTO undermines U.S. sovereignty is a straw man.”

Zhang expressed confidence that binding dispute settlement will return to the WTO, and that countries will agree on tweaks to the appellate body rules.

PIIE Reginald Jones Senior Fellow Chad Bown asked Zhang what China's interest would be in liberalizing trade of protective gear, ventilators and the like, and whether China would reveal how much production it has. Bown said part of the reason for panicked export restrictions in the first wave of the COVID-19 pandemic was because countries don't know what the global production is, only how much is traded. Zhang agreed strengthened collaboration is needed as the disease continues to spread around the world, and said he's very interested in discussing medical trade.

“I couldn’t say that China would like to play a leadership role, but would like to play a collaborative role,” he said.