China’s Trade Policy: Dominance without the Will to Lead

In less than thirty years China has gone from being a marginal player in world trade to become the largest trading nation of all. But despite its growing dominance China still lacks the will and ability to lead, and has yet to find its role in international trade politics. On the one hand, it sometimes breaks the rules, for example concerning its WTO accession obligations. On the other, it operates like an established actor, adhering to the status quo and placing greater importance on its own interests than on the survival and stability of the system as a whole. China remains reserved and passive in the multilateral Doha process, but pursues a vigorous bilateral trade policy.

A survey of the actors, institutions, interests and debates reveals that the simplistic idea of a monolithic Chinese trade policy cannot be upheld. Any sweeping characterisation of China’s trade politics as liberal or mercantilist, as compatible or incompatible with WTO rules, can easily be contradicted in the complexities of Chinese reality. Alongside the central government agencies, regional and business interest groups determine the course of negotiating and implementation processes.

Despite numerous external economic controversies and conflicts, Germany and the European Union should not lose sight of the strategic objective of integrating China into the rule-based world trade system. Multilateral negotiations under the auspices of the WTO offer the best chances of opening Chinese markets and improving the enforcement of non-discrimination, transparency and rule of law. China, too, depends on an open world economy and a functioning WTO.