Ten years after accession, US firms have embraced the progress that China’s membership in the WTO has made possible.
A Changed Landscape and Future Portents: Reflections on China, American Business and US-China Relations 10 Years After WTO Accession
At 10 years’ remove from the sturm und drang in American policy circles over China’s accession to the WTO, the entire episode rests more quietly. So much has happened in China, in the world economy and in US-China economic and political relations since 2001. The burning questions that surrounded discussions in the run-up to China’s accession to the WTO seem, to many observers, muted and diminished. The multi-year “phase-in” process accompanying some of China’s most far-reaching adjustments has expired.
Look Forward, Why Fret about the Past?
Though surveys of broad American business communities have not asked the question: “Ten years after WTO accession, are you happy/neutral/unhappy that China is in the WTO?” there is no doubt in my mind that the overwhelming majority of US companies active with China would say either “happy” or “neutral.”
However, most would add: “What a useless question. China is in the WTO. The world has moved on. Our job is to pursue our goals in today’s world, not crow or fret about what happened 10 years ago.” US businesses today operate in a world very different from that of a decade ago. Beyond the issues that US companies defined prior to accession, and beyond the changes that China has fully or partially implemented in the past 10 years, the implications of these changes for the future now matter as much to US firms as do continuing concerns over the complete fulfillment of the accession requirements defined in 2001. Looking backward to assign “praise and blame,” as the traditional Chinese historiographical concept posits, is not the point — looking ahead at the implications of these global changes is.
Ten years after accession, US firms have embraced the progress that China’s membership in the WTO has made possible, but they temper their enthusiasm with the sober realization that China’s increased domestic economic prowess and enhanced international economic impact have neither eliminated certain deep-rooted characteristics of the Chinese business environment, nor forestalled the emergence of new short- and longer-term challenges.
Concerns in the US
Even as China moves inexorably from urgently accommodating itself to externally-imposed norms to the strategic assertion of Chinese interests in norm-setting arenas, the old dichotomy between “Chinese” and “foreign” businesses continues to inform and shape the work of US companies in the People’s Republic and, on occasion, to raise serious issues. That is the front line of concern among American businesses today. They do not expect altruism or charity from China in the global economy, any more than the Chinese expect such gifts from the United States. American companies are heartened by the advances they have made in entering the flow of Chinese economic growth, especially since WTO accession, but they remain alert for continually emerging signs of Chinese efforts to shield the Chinese economy from unwanted — and no longer so urgently needed — international intrusion. Moreover, US firms — and the US government — understand that as China’s relative strength in the world economy and in multilateral bodies such as the WTO continues to grow, China will understandably seek to shape global norms in line with its perceived self-interest, at times and in ways that international businesses might not welcome.
The financial and economic crisis that has gripped much of the world since 2008 erupted first and foremost in the United States, which continues to labour through a prolonged period of economic stagnation or worse, accompanied by alarming levels of political dysfunction. The full dimensions of the material and psychological changes — in the United States, China and elsewhere — wrought by the economic crises in the United States and Europe have yet to emerge.
Meanwhile, in spite of the marketization of a great deal of domestic economic activity, the role of the state in guiding Chinese economic development, in strengthening and protecting ever-larger state-owned industries and would-be “national champions,” and in providing and funnelling investment capital, remains central to the operation of the Chinese economy, and forms a core element of the much-discussed but imperfectly defined “China model.”
Guided by decisions and policies of the central government, China now vigorously pursues a global economic role that is primarily defined not by limitless supplies of cheap labour, but by ascending positions on the value-added chain, Chinese ownership of essential intellectual property in sectors critical to its domestic and global growth, and market power rooted in enormous domestic demand. With its lengthening string of annual 10 percent growth rates and the accompanying huge expansion of its export power, domestic markets, dollar reserves and other strengths, Chinese authorities work to sustain a virtuous circle whose overall goal is the continuous reinforcement of “comprehensive national power,” including the power and reach of globally-active Chinese enterprises.
The Changing Mood in America
China’s WTO membership is today of interest not only to US companies, but also attracts attention from much wider segments of American opinion. Major American labour organizations continue to voice concerns about Chinese economic behaviour and demand that the relevant US government bodies act against China’s alleged transgressions. Within the US Congress, a small number of members have made an effort to understand China more deeply, but a large number are always ready to advance legislation critical of Chinese economic, military or human rights behaviour. The major US media and a growing army of full-time bloggers and China observers writing online weigh in daily on China’s domestic and international actions and on US-China relations, economic and otherwise. China pops up frequently in the rhetoric of US political campaigns.
The formerly deep-seated American view of China as an impoverished and disorganized society desperately needing American charitable assistance and guidance has, in the past five years, definitively evaporated.
China and the United States face each other on a constantly shifting stage, especially in the multilateral organizations in which they both play significant roles. The WTO is most assuredly one of those. Even a passing glance at the documents that China presents in Geneva — for example, its recent appeal of a WTO dispute settlement panel’s decision supporting US claims against China — shows that Chinese diplomats at the WTO are now intensely professional players of a global game to which they came late. China is no longer “entering” the world arena; it is a core factor in scripting the dramas of the world stage.
American companies are heartened by the advances they have made in entering the flow of Chinese economic growth. Would they be in a different place today if the United States had unilaterally managed to keep China out of the WTO until the present? Certainly. But it would be a much uglier and threatening place for the United States, China and the entire world than the one in which they all find themselves now.
Robert A. Kapp is president of Robert A. Kapp & Associates, Inc., Port Townsend, Washington, United States. He took his doctorate in modern Chinese history at Yale University and served on the history faculties of Rice University and the University of Washington before entering a lengthy career as a business association executive. From 1994 through 2004, he served as president of the US-China Business Council, the principal organization of American companies engaged with the People's Republic of China. He was closely involved in the effort to establish "Permanent Normal Trade Relations" for China, by Congressional action, in the two years between US-China bilateral agreement on China's WTO accession terms and the formal Chinese accession in December 2001. Currently, he consults for businesses and non-profit organizations focused on China, and is senior China adviser to a leading global law firm.
Series: Looking Back, Looking Forward: China and the World Trade Organization 10 Years after Accession
After more than 15 years of intensive negotiations, China joined the World Trade Organization in December 2001. This was a major advance for the global trading regime. In this exclusive commentary series, a select group of experts discuss what China’s accession has meant for the global trade system, examine how it has impacted China and consider the challenges to come in the next decade.
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