SONG CHEN/CHINA DAILY
China's accession to the WTO has not only promoted domestic economic growth but also made it a key driver of global development
This year marks the 20th anniversary of China's accession to the World Trade Organization. Over the past two decades, China has fulfilled its commitments to the WTO. Through deepening market reform and continually opening up wider, it has embraced the opportunities of globalization and with its growing economic power injected impetus into the economic development of the world.
Accession to the WTO has enabled China to integrate more fully into the global market. In 2020, China's international trade volume expanded 6.6 times to 32.2 trillion yuan ($5.1 trillion) from 4.2 trillion yuan ($0.7 trillion) in 2001.
The 20 years since China's entry into the WTO have witnessed the continuous upgrading of the country's trade structure, which has provided vital support for Chinese manufacturing to raise its quality and added value. In 2020, the proportion of primary products in China's exports dropped from 9.9 percent in 2001 to 4.5 percent, while manufactured goods increased from 90.1 percent to 95.6 percent. In terms of commodities, exports of machinery and transportation equipment increased by 12.9 percent, and miscellaneous products decreased by 10.2 percent.
At the same time, the share of primary products in imports increased by 14 percent to 33.8 percent, while the share of manufactured goods decreased by 14.6 percent to 66.3 percent. The improving industrialization empowers domestic manufactured goods, including machinery and transportation equipment, to be more competitive in the global market. Accompanying the rising exports of capital and technology-intensive commodities, imports of similar products decreased, significantly optimizing China's trade structure.
China's status in global trade has been significantly enhanced since it acceded to the WTO, as well as the quality of its trade development. However, compared to the comprehensive strength of some developed countries, China is still on the path of becoming a trading power.
Although it had the largest share of the trade in digital products last year, its trade specialization coefficient, an index indicating trade competitiveness, was minus 19 percent. The coefficients of integrated circuits, industrial robots and semiconductor manufacturing equipment were minus 49.7 percent, minus 62.2 percent and minus 84.1 percent, respectively. Such data demonstrate that China still needs to strengthen domestic innovation and make breakthroughs in core technology bottlenecks to deal with the supply chain risks, the only way to grow to be a major trading power.
Highlighting foreign trade's contribution to China's economic development, the ratio of the country's total amount of foreign trade to its GDP was 38.1 percent in 2001. Increasing year by year, it peaked at 64.2 percent in 2006.
In response, the Chinese government has adopted moderately tight macroeconomic policies and established policies to balance international payments. As a result, its foreign trade export growth has tapered off, and the imbalance problem has gradually improved, with the dependence on foreign trade returning to the reasonable range of between 30 and 40 percent. Trade growth, an engine for economic development, plays a positive role in macroeconomic stability through measures to balance trade.
From the perspective of global economic growth, China's share of world trade increased from 4.1 percent to 13.3 percent during the two decades since 2001. According to estimates from the WTO, the volume of world goods trade has increased 1.8 times over the past two decades, of which China has facilitated 0.4 times to global exports and 0.3 times to imports, contributing to 20.8 percent and 16.8 percent of their global growth, respectively, showing the country plays an indispensable role in global trade prosperity.
Most importantly, China's openness to international trade promotes global economic development. In 2020, its total imports exceeded $2 trillion, an increase of 7.5 times over 2001.During the same period, exports of the rest of the wold rose by 1.51 times, with China's imports driving 0.52 times of that, contributing 20.6 percent to the growth of its trading partners' exports.
Data from China's General Administration of Customs show the country's import demand has created a total of $26.3 trillion in export earnings for other economies in the past 20 years, which is equivalent to 2.6 percent of their cumulative total nominal GDP.With the global supply chains undergoing profound changes, China has grown to be a major stabilizer and driver of the global economy.
Today, the world faces many challenges, such as the uncertainties of economic recovery amid the pandemic and the fierce headwinds of anti-globalization. It is the common responsibility for WTO members to uphold multilateralism, promote necessary reform of the organization and negotiations on new issues under a multilateral mechanism. China has made and will make unremitting efforts for the WTO's progress. It will also make more contributions to the world, striving for development opportunities with the WTO.
The author is chief economist of the Development Research Think Tank of China and former director-general of the Research Department of Foreign Economic Relations at the Development Research Center of the State Council. The author contributed this article to China Watch, a think tank powered by China Daily.
The views do not necessarily reflect those of China Daily.