20 years ago, China’s entry into the WTO changed the economy forever

The World Trade Organization (WTO) today celebrated the twentieth anniversary of China’s entry into the organization, a fact that had a profound impact on the world economy, accelerating globalization, and unexpected political consequences that continue today.

After 15 years of arduous negotiations, China became the 143rd member of the WTO on December 11, 2001, a fact that “was crucial in the history of the multilateral trading system,” said the organization’s director general, Ngozi Okonjo, today. -Iweala, in the act of commemoration.

His predecessor Pascal Lamy, who in the 1990s starred in some of those complex negotiations as European Trade Commissioner, added that “it was a defining moment, a huge step in the process of rapid globalization that we are now experiencing.”

From starving country to world factory

For China, accessing the great commercial networks of the planet had an undeniable effect: a country that in the mid-twentieth century still suffered from famines with millions of dead was progressively becoming the “factory of the world.”

In the past decade it was already the world leader in exports and went from being the sixth world economic power in 2001 to the second already in 2010, currently threatening the first position of the United States.

In these 20 years, Chinese GDP has multiplied by 11 (to put it in perspective, that of the United States has only doubled) and its exports are 10 times greater, reaching US $ 2.6 billion in 2020, far exceeding the 1.4 billion from the United States and Germany.

“China has become an example of a book on how integration into the global market can help development,” said Okonjo-Iweala, adding that the entry of the world’s most populous country into the WTO also helped the organization become “Truly global”.

An earthquake with shock waves in the West

But China’s accession to the WTO brought profound changes to the economy of other countries that were not always positive: if it gave consumers around the world access to cheaper products, it also contributed to the closure of entire sectors in the West that had lost competitiveness.

The industrial fabric of many countries was severely damaged or directly destroyed, which contributed in part to many economies accelerating the development of their financial sector as compensation, and this led to the speculative excesses that erupted in the 2008 crisis.

A crisis that in turn produced political effects that are still present, from the rise of the protest movements of new generations without opportunities, the rebirth of nationalisms or populisms.

In this context, China’s 20 years in the WTO have been fraught with conflicts between Beijing and its main trade rivals, which at the same time are its most important partners, the United States and the EU.

“The first years of China in the WTO were of a certain ‘honeymoon’, but criticism of Beijing soon began for its breach of intellectual property rules, or its lack of transparency,” analyzed today the then Trade Representative of USA for Asia-Pacific, Wendy Cutler.

Is China a developing country?

One of the points of friction within the WTO revolves around the fact that China continues to enjoy the status of a developing economy, which grants it certain exemptions and advantages before the body, despite the large size of its economy and its commercial power.

“In matters such as the Doha round negotiation … China is still too passive, and has to exercise greater responsibility, in parallel to the great importance it has now,” said Lamy.

The former director general of the WTO recalled on this anniversary his negotiating meetings with the then Chinese Prime Minister Zhu Rongji, who is currently 93 years old and in his opinion showed “great political intelligence” at a time when in China itself there were doubts about access to the organization.

Symbolizing the importance of the Asian country in the WTO and therefore in the world economy, the organization’s headquarters in Geneva has an oriental-style garden on its premises, donated by China in 2012 and which perhaps inspired the final words that the general director delivered today to commemorate the anniversary.

“The tree that China planted 20 years ago gave a great harvest and the country will continue to have an important role to play in maintaining this garden that is the WTO,” he said.