China could be forgiven for feeling aggrieved after the World Trade Organization (WTO) ruled against its curbs on audio-visual imports this week. Far from it. An emergent China is increasingly relying on the WTO to make sure its exporters have fair access to global markets. After China entered the WTO in 2001, it was usually on the defensive as other countries sought to dismantle the many barriers to entering the world's fastest growing major economy. Times have changed. “Our understanding of the rules has evolved. We have learned that opening is good for competitiveness,” said a Chinese government trade official. “We think markets around the world should open up.” China's Ministry of Commerce - which said it may appeal Wednesday's WTO ruling on Beijing's import and distribution regime for books and films - enthusiastically champions export industries that are threatened by anti-dumping actions in Europe and the United States. China has filed only five complaints to the WTO - versus 16 in which it was respondent - but three of the five were in the past 11 months. “I believe the WTO is very important in stabilizing the global economy,” said Fu Donghui, managing partner of Allbright Law Offices in Beijing. “Without it, we might revert to 1930s-style trade wars,” added Fu, who represents Chinese fastener exporters in a European dispute. The Ministry of Commerce has already warned the European Union that a pending anti-dumping investigation against Chinese aluminium wheel imports is not in line with the WTO rules. It expects the EU to announce the investigation this week. In July it brought a WTO complaint against European duties on Chinese steel fasteners, which exempted two European invested manufacturers based in China. The next “hot spot” of China-Europe trade tensions is likely to be leather footwear, as Europe seeks to stem the tide of cheap Chinese-made shoes. Beijing is also fighting US duties on steel products. If the Obama administration grants more duties on other products, including tyres and cars, those could also be taken to the WTO. Internal dynamics China agonised for years over the terms of its entry to the WTO, which took effect in 2001. Beijing sought in negotiations with foreign officials to retain as much control as possible over its industries, while domestically, pro-trade reformers battled to convince a skeptical old guard that membership would not gut China's uncompetitive sectors or throw millions of workers out on the streets. The Ministry of Commerce was the original supporter for WTO entry, cajoling other ministries that were unwilling to give up control or special privileges. “It ended up being a good thing for the whole economy, although not necessarily for some interests within the economy,” said Anne Stevenson-Yang, director of Asian research for Wedge MKI, a specialist equity analysis firm. “It made a big difference in Chinese competitiveness and Chinese ability to attract investment.” Part of China's new willingness to resolve disputes through the WTO is a shift in how it views the organisation, and international bodies generally. “Before, people viewed a WTO case as a political move, but actually since the WTO is rule-based, it allows us to keep from politicising,” Fu said. “Now we see the multilateral stage as a legal issue and bilateral relations as politicised.” Because the WTO is so useful, China is likely to ultimately implement the panel ruling that import and distribution monopolies on books, films, games and CDs do not meet its WTO commitments. Opening the distribution channels would be a boon for private distributors and retailers, although they would still have to fight competition from cheap copies. But China could still censor - and frustrate outsiders who want to access the market - by setting up an approval process for imported materials, which it previously did not have.
