WT/GC/W/74 5 
 
16 July 2018  
(18-4397) Page: 1/14 
General Council  
26-27 July 2018  Original: English  
 
CHINA' S TRADE -DISRUPTIVE ECONOMIC MODEL  
COMMUNICATION FROM T HE UNITED STATES  
The following communication, dated 11 July 2018, is being circulated at the request of the 
delegation of the United States . 
 
 
_______________  
 
 
Table of Contents  
1   NON-MARKET ORIENTED COND ITIONS SET BY THE GO VERNMENT AND THE 
PARTY  ................................ ................................ ................................ ..............................  2 
A. Fundamental Objectives of Control  ................................ ................................ ...............  2 
B. Control at the Firm Level  ................................ ................................ .............................  3 
2   NON-MARKET ALLOCATION OF  RESOURCES  ................................ ................................  4 
A. Non-Market Allocation of Key Means of Production  ................................ ..........................  4 
B. Industrial Policies  ................................ ................................ ................................ ....... 5 
C. Law as an Instrument of the Party -State  ................................ ................................ ....... 6 
3   COSTS TO WTO MEMBERS  OF CHINA'S ECONOMIC MODEL  ................................ ..........  6 
A. Non-Reciprocal and Protected Market  ................................ ................................ ............  6 
B. Excess Capacity  ................................ ................................ ................................ .........  6 
C. Forced Technology Transfer  ................................ ................................ .........................  7 
4   BENEFITS TO CHINA OF  ITS ECONOMIC MODEL  ................................ ..........................  7 
5   CONCLUSION ................................ ................................ ................................ ...............  8 
 
  WT/GC/W/745  
 
- 2 - 
 
  The Marrakesh Declaration confirmed the p rinciple that Members were to participate in a 
multilateral trading system, "based upon open, market -oriented policies[.] " When China acceded 
to the WTO in 2002, members of the Working Party noted that "China was continuing the process 
of transition toward s a full market economy. "  It was further hoped that China 's agreement to join 
the WTO, reflected in China 's Protocol of Accession and other documents, would dismantle policies 
and practices incompatible with an international trading system expressly based  on the principles 
of non -discrimination, market access, reciprocity, fairness and transparency.  
 
However, China today maintains a state -led, trade -disruptive economic model not based on those 
fundamental principles and that imposes substantial costs on an d presents severe challenges to 
WTO Members.  This paper (1) sets forth the fundamental aspects of China 's trade -disruptive 
economic model; (2) elaborates upon the costs it exacts; and (3) describes the benefits that China 
receives.  
 
1  NON-MARKET ORIENTED CONDITIONS SET BY TH E GOVERNMENT AND THE  PARTY  
A. Fundamental Objectives of Control  
1.1.  At its core, the framework of China 's economy is set by the Chinese government and the 
Chinese Communist Party (CCP or the "Party"), which exercise control directly and in directly over 
the allocation of resources through instruments such as government ownership and control of key 
economic actors and government directives.  
1.2.  The Chinese government, including the Party, has a constitutional mandate, echoed in 
China 's broader le gal framework, to develop the "socialist market economy. " Article 6 of the 
Constitution of the People 's Republic of China provides that "[i]n the primary stage of socialism, 
the state upholds the basic economic system in which public ownership is dominant and diverse 
forms of ownership develop side by side […]. " Article 7 provides that "[t]he state -owned economy, 
that is, the socialist economy with ownership by the whole people, is the leading force in the 
national economy.  The state ensures the consolidat ion and development of the state -owned 
economy. "1  
1.3.  To fulfil these mandates, the Chinese government and the CCP direct and channel economic 
actors to me et government planning targets.  The government and the CCP permit market forces to 
operate only to the e xtent that such activity accords with the objectives of national economic and 
industrial policy.2  
1.4.  That is why China 's leading companies, state -invested and non -state invested, attest to the 
fundamental non -market nature of China 's economy today.  For examp le, the technology firm 
Alibaba has stated:  
The PRC economy differs from the economies of most developed countries in many 
respects, including the extent of government involvement, level of development,  growth 
rate, control of foreign exchange and allocation of r esources. Although the PRC 
government has implemented measures emphasizing the utilization of market forces for 
economic reform, the reduction of state ownership of productive assets, and the 
establishment of improved corporate governance in business enterprises, a substantial 
portion of productive assets in China is still owned by the government. In addition, the PRC 
government continues to play a significant role in regulating industry developme nt by 
imposing industrial policies.  The PRC government also exercises significant control over 
China 's economic growth by allocating resources, controlling payment of foreign currency -
denominated obligations, setting monetary policy, regulating financial s ervices and 
institutions and providing preferential treatment to particular industries or companies.3 
1.5.  At the same time, China has made clear that it has no foreseeable plans to change its 
funda mental approach to the economy.  As China explained in the repor t that it circulated in 
connection with its 2018 WTO trad e policy review:  "While socialism with Chinese characteristics 
has entered a new era, the basic dimension of the Chinese context – that China is still and will 
long remain in the primary stage of soc ialism – has not changed […] "4 China is committed to a 
"socialist market economy " and to improving "the relationship between the government and the 
market. "5 In China 's view, that means that "the government plays its role better " in managing the WT/GC/W/74 5 
 
- 3 - 
 
  economy, n ot that the government ceases to intervene and allows market forces to determine 
business outcomes.6 
1.6.  Aside from the government 's and the CCP 's role in managing the economy, there also are 
serious concerns over how they exercise influence over the operation s and investment decisions of 
state-owned enterprises (SOEs) and private enterprises, including  foreign -invested enterprises. 
This influence appears to be growing following a "Party building " push by the CCP, as detailed 
below.  
B. Control at the Firm Level  
1.7.  China frequently claims that Chinese enterprises make economic decisions independently and 
based on market principles.7 However, the government and the CCP have for decades exercised 
control over SOEs through, inter alia, (1) the control and appointm ent of key executives through 
the CCP Organization Department,8 and (2) receipt of preferential access to important inputs (e.g., 
land and capital) and other competitive advantages unavailable to non -state firms.9 SOEs, in turn, 
play an outsized role in Ch ina's economy; for example, in terms of their share of total credit,10 
their market dominance in key industries,11 and their share of total market capitalization on 
China 's stock market.12 
1.8.  In October 2016, China 's President Xi Jinping, who also serves as General Secretary of the 
CCP, described the role of SOEs as extensions of the Party -state, and clarified that SOEs are 
"important forces to implement decisions of the [CCP] Central Committee " and "major strategies 
such as the 'going out ' strategies and the Belt and Road Initiative, as well as to enhance overall 
national power, economic and social development and people 's wellbeing. "13  At the 2017 Central 
Economic Work Conference, an annual meeting on economic policy, China 's top leadership stated 
that one of six priorities for China 's economy in 2018 is to "promote state -owned capital to 
become stronger, better, and bigger, " a task that entails "strengthen[ing] Party leadership and 
Party infrastructure in state -owned enterprises. "14  
1.9.  In addition, both SOEs and nominally private enterprises host internal Party committees 
capable of exercising government and CCP influence over these enterprises ' economic 
decision -making and corporate governance.  This arrangement is codifi ed in Chinese law under 
Article 19 of the Company Law of the People 's Republic of China.15 
1.10.   Recently, the Party has taken demonstrated steps to increase the strength and presence of 
CCP entities within all economic organizations.16 As part of these "Party bui lding" activities, SOEs 
as well as nominally private enterprises are being pressured to amend their articles of association 
to ensure Party representation on an enterprise 's board, usually as Chairman of the Board, and to 
ensure that important company deci sions are made in consultation with the enterprise 's Party 
committee.17 
1.11.   For example, China Pacific Insurance Group is a state -owned insurance firm with assets 
worth RMB 1.1 trillion ( US$182 billion).18 In the first half of 2017, the company amended its 
Articles of Association to insert a new Article 8 stating, in part, that "[i]n making decision for 
material issues of the Company, the Board of Directors shall first seek for the opinion of the 
Leading [Communist] Party Group of the Company.19 The Article 8 amen dment also promotes a 
"cross-appointment " system, under which the secretary of the Party committee shall serve as 
Chairman of the Board, and other senior executives and board personnel are encouraged to 
overlap with members of the Party committee.20  
1.12.   Accord ing to an August 2017 report in Nikkei Asian Review, 288 of the 3,314 companies 
listed on the Shanghai and Shenzhen stock exchanges had changed their articles of association to 
ensure that their management policy reflected CCP dictates, with 197 of these c hanges occurring 
between April and July 2017.21 This number is reported to have continued to increase into 2018.22 
1.13.   In the last year, a number of reports indicate that the CCP is, via these Party committees, 
now looking to influence the managerial and investm ent decisions of foreign -invested enterprises 
in China.23 These efforts are so pervasive that the Delegations of Germany Industry and 
Commerce released a public statement in November 2017 pushing back against attempts by the 
CCP "to strengthen their influen ce in wholly foreign -owned German companies in China. "24  WT/GC/W/745  
 
- 4 - 
 
  Similarly, in November 2017, the European Union Chamber of Commerce in China published its 
official stance, noting that China 's efforts to codify Party influence in Sino -Foreign joint ventures 
(JV) w as a matter "of great concern to foreign JV partners as it significantly changes the 
governance of the JV and undermines the authority of the JV board. "25 The Chamber stated that it 
is unaware of any legal basis for such actions by China.26 
1.14.   Reinforcing CCP i nfluence is the "Social Credit System, " a new tool endorsed by the CCP27 
that the government uses to monitor, rate and condition the conduct of all enterprises in China 
based on firm -level data collected by government agencies and other institutions.28 
1.15.   By these and other actions, the CCP is increasing its control over key actors in China 's 
economy, and not, as hoped, enabling China 's transition to a market economy.  
2  NON-MARKET ALLOCATION OF  RESOURCES  
A. Non-Market Allocation of Key Means of Production  
2.1.  China remains a non -market economy in which the means of production are not sufficiently 
allocated or priced according to market princi ples. The government and the CCP continue to 
control or otherwise influence the price of key factors of production, including l and, labor, energy 
and capital.  
2.2.  All land in China is property of the state, as either collect ively-owned rural land or 
state-owned urban land.29 Because the government controls rural land acquisition and monopolizes 
the distribution of urban land -use rights , the government remains the final arbiter of who uses the 
land and for what purpose.30 Land-use rights holders, in turn, face limits with respect to the tenure 
and the scope of use.31 The result of these dynamics is an inefficient land market in which rural  
and urban land are segmented and large swathes of land are misallocated either to small farm 
plots or to underutilized urban infrastructure.32   
2.3.  There are significant institutional constraints on the extent to which wage rates are 
determined through free b argaining  between labor and management. The Chinese government 
prohibits the formation of independent trade unions to represent labor,33 and workers do not have 
the legal right to strike,34 which is an important lever in collective action and negotiati on wit h 
management over wages. Labor  unions are under the control and direction of the All -China 
Federation of Trade Unions (ACFTU), a government -affiliated and CCP organ.35 China has 
implemented legislation such as the Labor Contract Law and the Labor Dispute La w that provide 
employees with a cause of action to challenge particular aspects of an employee 's labor contract, 
but they do not advance the fundamental rights of freedom of association and collective 
bargaining.36 In addition, government restrictions on labor mobility imposed by the household 
registration system continue to inhibit and guide labor flows, causing distortions on the supply side 
of the labor market.37 
2.4.  The Chinese government also exerts a high degree of control over energy and other input 
prices . Its ability to set and guide factor input prices, in particular, results in distorted costs and 
prices throughout the economy. In the electricity sector, for example, the government owns the 
largest power generation and grid operating companies,38 control s downstream prices,39 and 
employs "differential pricing " as a policy tool to achieve capacity shedding and other industrial 
policy objectives.40 
2.5.  The influence of the government and the CCP is particularly acute in the financial sector.41  
Five large commercial banks that are majority state -owned operate large branch networks on a 
nationwide basis and account for nearly half of total bank assets.42 There are also scores of city 
commercial banks and credit unions under local government contr ol, as well as three state -owned 
policy banks.43 
2.6.  Foreign -owned banks and bank branches, in contrast, accounted for less than 2  per cent  of 
bank assets in 2015.44 For years, China has limited the sale of eq uity stakes in existing 
Chinese -owned banks for a sin gle foreign investor to 20  per cent , while the total equity share of all 
foreign investors is limited to 25  per cent .45 While China recently took action to remove these 
foreign equity caps, it remains unclear whether foreign -owned banks will be accorded ful l national WT/GC/W/74 5 
 
- 5 - 
 
  treatment and will be able to expand their business scopes to match the business scopes of 
domestic banks.  
2.7.  In addition to outright ownership, the government exercises other forms of inf luence over 
banking decisions. The CCP, through its Organiza tion Department, appoints executive officials in 
state-owned banks and financial institutions.46  The PBOC meets frequently with large banks to 
ensure that their lending decisions align with PBOC and government objectives.47 The Law of the 
People 's Republic of China on Commercial Banks provides that "commercial banks are to conduct 
their business of lending in accordance with the needs of national economic and social 
development and under the guidance of the industrial policies of the state. "48   
2.8.  The overall o wnership and control of the government and the CCP over China 's financial 
sector has been confirmed b y independent credit analysts. A 2016 analysis by the ratings agency 
Fitch Ratings states:  
China 's commercial banks […] are still expected to support polic y objectives and align their 
strategies with the State 's broad economic goals, and  are frequently urged to do so.  That 
suggests China remains a centrally planned economy despite financial reforms and effort 
at rebalancing the economy that had implied a gre ater role for market forces .49 (emphasis 
added)  
B. Industrial Policies  
2.9.  In China 's economic framework, government planning through industrial policies conveys 
instructions regarding sector -specific economic objectives, particularly for those sectors dee med 
strategic and fundamental. China is currently in its 13th five -year planning cycle, a hallmark of a 
planned economy that has become more, not less, salient  over the past 20 years.  China retains 
formal mechanisms of plan formulation, tasking, and review , and has expanded the scope and 
specif icity of sectoral -level plans. Various institutions participate in plan formulation and execution, 
including central agencies with legislative and regulatory authority, thousands of local government 
authorities, vario us organs of the CCP and the enterprise sector.50 
2.10.   China 's approach is materially dif ferent from other WTO Members. China provides massive, 
market -distorting subsidies and other forms of state support to its domestic industries, which too 
often leads to seve re excess capacity.51 At the same time, China also actively seeks to impede, 
disadvantage and harm foreign competition by using a wide array of policies and practices to skew 
the playing field against imported goods and services and foreign manufacturers an d services 
suppliers.  
2.11.   As one example, a number of official publications of the government and the CCP set out 
China 's ambitious technology -related industri al policies. The industrial policies reflect a top -down, 
state-directed approach to technology develo pment, and are founded on concepts such as 
"indigenous innovation " and "re-innovation " of forei gn technologies, among others. The Chinese 
government regards technology development as integral to its economic development and seeks 
to attain domestic dominan ce and global leadership in a wide range of technologies.52 In pursuit of 
this overarching objective, China has issued a large number of industrial policies, including the 
National Medium - and Long -Term Science and Technology Development Plan Outline (2006 -2020), 
the State Council Decision on Accelerating and Cultivating the Development of Strategic Emerging 
Industries, and, more recently, the State Council Notice on Issuing "Made in China 2025. "53 
2.12.   Increasingly, China has also used new types of state -controll ed financial institutions, such 
as the National Integrated Circuit Fund ( "National IC Fund "), to implement its industrial policies.  
The National IC Fund was established under the guidance of two government ministries, and 
funded by several prominent SOEs and state -owned financial institutions.54 It is part of an 
"integrated Circuit Industry Technological Innovation Strategic Alliance " established in March 2017 
"in conformity with […] the guiding spirit of General Secretary Xi Jinping.55 The objective of the 
alliance is to "implement the 'Strong Internet Nation ' strategy, a chieve breakthroughs in 
cutting -edge core technologies, and establish  secure and controllable info rmation technology [IT] 
systems ".56 WT/GC/W/745  
 
- 6 - 
 
  C. Law as an Instrument of the Party -State  
2.13.   China 's legal system continues to function as an instrument by which the Chinese 
government and the CCP can secure discrete economic outcomes, channel broader economic 
policy, and p ursue industrial policy goals. Key legal institutions, such as the courts, are structured  
to respond to the CCP 's direction, both broadly and on a case -specific basis.57 Individuals and firms 
are constrained in their ability to have meaningful independent input into administrative 
rulemaking or to challenge administrative decisions.58 As a gener al matter, to the extent that 
individuals and firms seek to act independently of government or CCP direction, the legal system 
does not provide the venue for them to achieve these objectives on a  systemic or consistent basis. 
In addition, firms continue to  face challenges in obtaining impartial outcomes, either because of 
corruption or local protectionism.59 
2.14.   The United States also notes the larger issue of China 's restrictions on the freedom of 
information, including its Internet firewall and the government 's regular censorship of audio -visual 
and print media, which among many other negative effects, creates distortions in China 's economy 
and impacts the ability of foreign companies to operate  and compete in China 's market.60 
3  COSTS TO WTO MEMBERS  OF CHINA 'S ECONOMIC MODEL  
A. Non-Reciprocal and Protected Market  
3.1.  The WTO is rooted in fundamental principles of market access, non -discrimination, 
reciprocit y, fairness and transparency. It is important to recall that WTO members are supposed to 
be moving toward mark et-based outcomes voluntarily. China has pursued policies and practices 
that not only conflict with its WTO obligations, but which also manifest a disregard for the WTO 's 
fundamental principles.  
3.2.  As the Office of the US Trade Representative has demonstrate d in its annual Report to 
Congress on China 's WTO Compliance, China helps its domestic industries by skewing the playing 
field against imported goods and services and foreign manufacturers and services suppliers in 
myriad ways, not only through market acce ss limitations, investment restrictions and massive, 
market -distorting subsidies that lead to severe excess capacity, but also through preferential 
treatment for state -owned enterprises and other favoured  Chinese companies, discriminatory 
regulatory requir ements, unique national standards, technology transfer requirements, inadequate 
protection and enforcement of intellectual property rights, cyber theft, overly broad and 
discriminatory cybersecurity measures, cross -border data restrictions and data localiz ation 
requirements, and the use of competition law for industrial policy purposes.  Exacerbating this 
situation is the regular abuse of administrative licensing and approval processes by Chinese 
government officials.  
3.3.  Moreover, China 's opaque governing and regulatory system is inconsistent with the 
commitments it made when it joined the WTO and defeats the WTO 's principle of transparency.  As 
a result, it is difficult – and often impossible – for Members to assess China 's compli ance with its 
WTO obligations.  For example, since joining the WTO 16 years ago, China 's three WTO subsidy 
notifications, covering only central government subsidy programs  have generally been submitted 
years after the deadline and have consist ently been grossly incomplete. Furthermore, China did 
not provide a sub -central government subsidy notification until July 2016, whi ch was also grossly 
incomplete.  Moreover, contrary to its commitments when it joined the WTO, China has not 
published all trade -related measures issued at the central a nd sub -central levels of government in 
a single official journal and has not made translations of these measures available in one of the 
WTO languages.  As a result, Members have resorted to submitting multiple counter -notifications 
in a number of WTO bodi es in an attempt to fill in gaps when China does not disclose all of the 
information required under its WTO notification obligations.  
B. Excess Capacity  
3.4.  Excess capacity in China hurts the global economy not only through direct exports from 
China, but also  because lower global prices and a glut of supply make it difficult for even the most 
competitive producers to remain viable.61 Many WTO Members, including Canada, Australia, India, 
and the EU, have continued to respond to the trade -distortive effects of Ch ina's excess capacity by WT/GC/W/74 5 
 
- 7 - 
 
  imposing trade remedies such as antidumping and countervailing duties in response to petitions 
from their domestic industries.62 
3.5.  China today is the w orld leader in excess capacity.  For example, China 's large increases in 
steel capac ity since it joined the WTO in 2001 have led to similarly large  increases in steel 
production.  China 's annual steel production rose from 152 million MT in 2001 to 808 million MT in 
2016, by far the largest in the world, and China 's steel industry now accou nts for 50  per cent  of 
global steel production.63  China 's steel exports have also grown to be t he largest in the world, at 
108 million MT in 2016, compared to 66 million MT a decade earlier.64  Examples of numerous 
other excess capacity industries are discussed in the European Union Chamber of Commerce in 
China 's 2016 report, Overcapacity in China: An Impediment to the Party 's Reform Agenda.  Indeed, 
China 's State Council, in its 2013 Guiding Op inions of the State Council on Resolving the Conflict of 
Serious Overcapacity, acknowledged excess capacity in industries including steel, cement, 
electrolytic aluminium , flat glass and shipbuilding.65   
3.6.  Excess capacity leads to in jury in other trading memb ers. For example, China 's excess 
capacity in solar panels was a key reason why US imports of solar cells and modules from China 
increased by 500  per cent  from 2012 to 2016, while prices for solar cells and modules fell by 
60 per cent , to a point where most  US producers ceased domestic production, moved their 
facilities to other countries, or declared bankruptcy.  By 2017, the US solar manufacturing industry 
had almost disappeared, with 25 companies closing since 2012.66 
3.7.  Excess capacity is driven to a large d egree by actions of the Chinese government, including 
massive, market -distorting subsidies and a variety of other policies and practices.  According to a 
2017 report by the Economist Intelligence Unit, "[f]or years [China 's] authorities had tolerated 
expan sions in capacity across a variety of industries, despite capacity utilization rates dipping 
below 75  per cent  (normally a threshold for indicating a balanced relationship between supply and 
demand). "67 According to the aforementioned European Union Chamber  of Commerce in China 
report, key recurring factors include the protection of local industries, weak enforcement of 
regulations, price controls for key inputs, and fiscal imbalances that create a perverse incentive to 
attract excessive investment.68 China i ssued guiding measures in 2016 to reduce excess capacity 
in the coal and steel sectors as part of the so -called "supply -side structural reform " initiative.  
These solutions to excess capacity, however, continue to reflect a high level of government 
interve ntion rather than market -based principles.69 
C. Forced Technology Transfer  
3.8.  As members are aware, the United States has issued a detailed factual report that illustrates 
how China  has pursued unreasonable acts, policies and practices that harm US intellectual 
property rights, innovation and technology development.70 The report details, for example, how 
the Chinese government uses foreign ownership restrictions, such as formal and informal JV 
requirements, to require or pressure technology transfer f rom US companies to Chinese entities. 
The report also details how the Chinese government directs and unfairly facilitates the systematic 
investment in, and acquisition of, US companies and assets by Chinese entities, to obtain 
cutting -edge technologies and  intellectual property and generate large -scale technology transfer in 
industries deemed import ant by state industrial plans. Moreover, the report illustrates how the 
Chinese government has conducted or supported cyber intrusions into US commercial network s 
targeting confidential business information held by US firms.  China 's unfair acts, policies and 
practices injure not only the United States, but also the rest of the WTO membership.   
4  BENEFITS TO CHINA OF  ITS ECONOMIC MODEL  
4.1.  China considers  itself to be "the largest developing country in the world. "71  In fact, China has 
seized on the benefits of WTO membership to rapidly develop its economy.  Between 2005 and 
2016, China averaged annual real GDP growth rates of 9.5  per cent ,72 and rose from the world 's 
fifth-largest to second -largest economy.73 In 2001, China was the world 's sixth -largest goods 
exporter; by 2016, it ranked number one, exporting more than all of North America combined.74  
As of December 2017, China maintained foreign exchange reserves upwards of US$3.1 trillion.75 A 
prominent Chinese economist has remarked that China 's rapid economic growth in the first decade 
after joining the WTO "was unique in the economic history of any country. "76 WT/GC/W/745  
 
- 8 - 
 
  4.2.  China  also insists it is a developing country in need of technol ogy upgrading.77 In fact, China 
has already achieved major gains in high -technology fields, including:  
 China has the largest number  of supercomputers in the world;78 
 China has the fastest high -speed trains in operation and the "longest [high -speed rail 
network] in the world ";79 
 
 "A successful US$600 million funding round has catapulted Chinese artificial intelligence 
company SenseTime into the position of the most va luable AI start -up in the world "80; and  
 
 "Chinese solar -panel manufacturers are estimated to have a 20  per cent  cost advantage 
over their US peers, owing to economies of scale and more adva nced supply -chain 
development. And Chinese wind -turbine manufacturers, having gradually closed 
technology gaps, now account for more than 90  per cent  of the Chinese domestic market 
[...]."81 
4.3.  Numerous  other facts illustrate the extent of China 's economic development.  China spent 
approximately US$228 billion on defence  in 2017.82 China is the world 's largest automotive 
market,83 the world 's largest oil importer84 and the world 's largest meat consumer.85  China has six 
megacities with over 10 million residents.86 Not least, China has overtaken the UK as the "second 
biggest art market after the United States, " with a 21  per cent  global art market share by value.87 
4.4.  While China undoubtedly struggles with poverty -related challenges in some areas of its 
economy, the claim that it is a developing country on par with many others, and therefore exempt 
from contributing to progressive liberalization of global trade rules, is si mply not sustainable when 
measured against numerous indicators of China 's rapid developme nt and accumulation of wealth.  
4.5.  The United  States would remind Members that China 's Protocol of Accession questioned 
China 's claim to be a developing country and expre ssly denied China 's right to self -elect 
developing country status under several of the WTO agreements.  
5  CONCLUSION  
5.1.  Since joining the WTO, China has repeatedly signalled  that i t is pursuing economic reform. 
For example, in November 2013, at the Third Plenary  Session of the 18th Central Committee of the 
CCP, the CCP endorsed a number of far -reaching economic reform pronouncements, which called 
for making the market "decisive " in allocating resources and reducing Chinese government 
intervention  in the economy.88 And as China reminded us at the last General Council meeting in 
May, this year marks the 40th anniversary of China 's self -described "reform and opening up " 
policy.  
5.2.  Unfortunately, China 's use of the term "reform " differs from the type of reform that a coun try 
would be pursuing if it were embrac ing market -oriented principles.  For China, economic reform 
means perfecting the government 's and the Party 's management of the economy and 
strengthening the state sector, partic ularly state -owned enterprises.  As long as China remains on 
this path, the implications for this organization are decidedly negative.  
 
__________  
                                                
1 Constitution of the People 's Republic of China  (adopted by the National People's Congress on 
4 December 1982, amended 12 April 1988, further amended 29 March 1993, 15 March 1999, 14 March 2004, 
and 11 March 2018.)  See also, Constitution of the People 's Republic of China , Art.  1.  ("[…] The socialist 
system is  the basic system of the People' s Republic of China. The leadershi p of the Communist Party of China is 
the defining feature of socialism with Chinese characteristics […] "). 
2 See Property Law of the People's Republic of China , Art. 3  (adopted by the National People's Congress 
on 16 March 2007, 2007 Order No. 62, effectiv e 16 March 2007). ("The State consolidates and develops the 
public ownership sector of the economy, and encourages, supports, and guides the development of the non -
public ownership sector of the economy. ") Similar language is enshrined in the Constitution of the Chinese  
Communist Party, Preamble  (Central Committee  of the Communist Party of China , issued  6 September  1982, 
amended 1 November 1987, further amended 18 October 1992, 19 September  1997, 14 November 2002, 
21 October 2007, 14 November 2012, and 24 October 2017) . ("The Communist Party of China leads the people WT/GC/W/74 5 
 
- 9 - 
 
                                                                                                                                                    
in developing the socialist market economy.  It is firm in consolidating and developing the public ownership 
sector of the economy and remains steadfast in encouraging, supporting, and guiding the development of the 
non-public ownership sector of the economy .") These provisions illustrate how the private sector, or "non -
public ownership sector", of the economy is treated differently than the "public ownership sector."  
3 Alibaba  Group Holding Lim ited, Amendment No. 7 to Form F -1 (Filing with the US Securities and 
Exchange Commission (2014)).  
4 World Trade Organization, Trade Policy Review – Report by China, WT/TPR/G/375 ( 6 June 2018), 
Paragraph 2.2.  
5 World Trade Organization, Trade Policy Review  – Report by China , WT/TPR/G/375 ( 6 June 2018), 
Paragraph 2.4.  
6 Id.  
7 See, e.g., Regular Press Conference of the Minist ry of Commerce (April 12, 2018)  (MOFCOM, published 
13 April  2018) , available at 
http://english.mofcom.gov.cn/article/newsrelease/press/201804/20180402733489.shtml.   ("With regard to 
government -led systematic acquisition of and investment in US companies  […] [t]hese are independent 
decisions to explore the international market and enha nce innovation capability. "); Regular Press Conference of 
the Ministry Of Commerce ( 1 February 2018)  (MOFCOM, published 2 February 2018) , available at 
http://english.mofcom.gov.cn/article/newsrelease/press/201802/20180202711566.shtml .  ("Second, Chinese 
companies ' investment and acquisitions in Europe are autonomous corporate acts based on market principles, 
bringing Europe capital, jobs and access to Asian markets and creating a mutually beneficial and win -win 
situation. ") 
8 Liwen Lin and Curtis Milhaupt, "We Are the (National) Champions: Understanding the Mechanisms of 
State Capitalism in China ," Stanford Law Review  65(4) (May 2013): 737 -38. ("Party and corporate leadership 
appointments take place in a highly institutionalized sharing arrangement between t he Party and SASAC. In 
fifty-three central enterprises, the occupants of top positions, including board chairmen, CEOs, and party 
secretaries, are appointed and evaluated by the Organization Department of the Party's Central Committee.") 
See also  Zheng Yon gnian, The Chinese Communist Party as Organizational Emperor: Culture, Reproduction, 
and Transformation  (London: Routledge, 2010), 103 -104. ("The CCP's most powerful instrument in structuring 
its domination over the state is a system called the 'Party management of cadres' ( dangguan ganbu ), or more 
commonly known in the W est as the nomenklatura system.  The nomenklatura system 'consists of lists of 
leading positions, over which Party units exercise the power to make appointments and dismissals; lists of 
reserves or candidates for these positions; and institutions and processes for making the appropriate perso nnel 
changes.'")  
9 See, e.g., Markus  Taube and Christian Schmidkonz,  Assessment of the Normative and Policy 
Framework Governing the  Assessment of the Normative and Policy Framework Governing the Chinese Economy 
and Its Impact on  International Competition , Final Extended Report for AEGIS Europe (Think!Desk China 
Research & Consulting, 13 August 2015),  331.  (" The Chinese financial sector is not operating independently 
from the Chinese state, but is subjected to far reaching governmental intervention in its o perations. […]  One 
major underlying reason for this reality clearly lies in the still incomplete marketisation of China 's state -owned 
enterprise sector.  For as long as these SOEs  enjoy a privileged, shielded existence, the financial sector cannot 
mature into a normal market economy financial sector.  This is one of the reasons the IMF recommends China 
to push state -owned enterprise reforms forward, take further steps in establishing a more commercially 
oriented financial system and establish an underlying  market -based monetary policy framework .") 
10 The IMF reports that the "SOE share in credit stock " was 55.6  per cent  in 2014 .  Kang et al ., People 's 
Republic of China: Selected Issues , IMF Country Report No. 16/271 (International Mo netary Fund, 
7 July 2016) , 9. See Table 1: Rebalancing Scorecard.  See also World Bank, China 2030: Building a Modern, 
Harmonious, and Creative Society , Repo rt No. 96299 (March 2013), 125.  (The World Bank notes the inherent 
tension between the poor performance of the SOE sector and its access to credit, stating "The weighted 
average return on assets of SOEs is […] significantly lower than that of other firms […] On the other hand, the 
avera ge debt to equity ratio of SOEs is substantially higher […]")  
11 See, e.g., WTO, Trade Policy Review – Report by the Secretariat – China , WT/TPR/S/342 
(15 June 2016), 95.   (Noting that " sectors of strategic importance (e.g. energy; utilities; and transport,  
financial, telecom, education, and health care services) remain only partially open to private investment.  
These sectors are often dominated by large SOEs. ") 
12 As of July 2018, the top ten firms listed on the Shanghai Stock Exchange accounted for approxi mately 
one-quarter of total market c apitalization.  These firms included the state -owned commercial banks Bank of 
China and Agricultural Bank of China; two of the major state -owned oil companies, Petrochina and Sinopec; 
and the sta te-owned automaker SAIC Mo tor. Shanghai Stock Exchange website, available at  
http://www.sse.com.cn/market/stockdata/marketvalue/, accessed 12 July 2017.  
13 Xinhua,  "Xi Stresses CPC Leadership of State -owned Enterprises," 11 October 2016, available at 
http://www.xinhuanet.com/english /2016 -10/11/c_135746608.htm.  
14 Xinhua  [via Ministry of Finance website], "Central Economic Work Conference Draws Key Points: Six 
Major Priorities for the Economy Next Year," [Chinese] 21 December 2017, available at 
http://www.mof.gov.cn/zhengwuxinxi/caijin gshidian/xinhuanet/201712/t20171221_2785496.html.   
15 Company Law of the People's Republic of China , Art. 19 (adopted by the National People's Congress 
on 29 December  1993, amended 25 December  1999, further amended 28 August 2004, 27 October 2005 and 
28 December  2013) .  See also Delegations of German Industry and Commerce, Press Statement: Increasing 
Business Challenges – Delegations of German Industry and Commerce in China Concerned About Growing 
Influence of Chinese Communist Party on Foreign Business Oper ations  (24 November 2017).  ("According to WT/GC/W/745  
 
- 10 - 
 
                                                                                                                                                    
Article 19 of the Company Law of the People 's Republic of China, the establishment of party cells of the  
Communist Party of China in a company is permissible as long as at least three party members decide to form 
a party cell.   This law applies to Chinese state -owned enterprises and Chinese -foreign invested Joint Ventures 
as well as Wholly Owned  Foreign Enterprises. ") 
16 At a press conference following the 19th National Congress of the Chinese Communist Party in 
October 2017, Qi Yu, the vice head of the Chinese Communist Party  Organization Department noted:  "Since 
the 18th National Congress of the Communist Party of China, we have increased our efforts  to establish Party 
organizations and carry out Party building and Party activities in enterprises , and  continued promoting the 
reach of Party organizations and Party work.  This is our focus ." China.org.cn, Press Briefing: Party Building, 
Self-Governance  (19 October 2017), available at  http://www.china.org.cn/china/2017 -
10/20/content_41765343.htm.  In February 2018, the Central Committee of the Chinese Communist Party 
released the Decision on Deepening Institutional Reform of the Party and the State , which calls for 
"[a]ccelerating the establishment and improvement of all Party organizations and institutions in new types of 
economic organizations and social organizations, such that where the Party 's work progresses, there is 
coverage of Party organizations. " Decision of the Central Commi ttee of the Communist Party of China on 
Deepening Institutional Reform of the Party and State , Section III (2) (Central Committee of the Communist 
Party of China , issued 28 February 2018).  
17 See, e.g. , Sinopec, Proposed Amendments to the Articles of Associa tion and the Rules of Procedure 
for the Board of Directors' Meeting , Art. 109 ( 27 April 2017). ("When making decisions on significant matters 
such as direction of reform and development, key objectives, and priority operational arrangements of the 
Company,  the board of directors should seek advice from the Party organization. When the board of directors 
appoints the management personnel of the Company, the Party organization shall consider and provide 
comments on the candidates for management positions nomi nated by the board of directors or the president, 
or recommend candidates to the board of dir ectors and/or the president.").  See also Yu Nakemura, "Chinese 
Enterprises Write Communist Party's Role into Charters," Nikkei Asian Review , 17 August 2017; Michae l 
Martina, "Exclusive: In China, the Party's Push for Influence inside Foreign Firms Stirs Fears," Reuters, 
24 August 2017; Jude Blanchette, To Ensure Harmonious Relations with Party Organizations, Proactively 
Establish Boundaries  (The Conference Board Chi na Center, February 2018).  
18 China Pacific Insurance Group, 2017 Annual Report , available at  
https://www.cpic.com.cn/upload/resources/file/2018/04/23/47593.pdf (accessed 26 June 2018).  
19 China Pacific Insurance (Group) Co., Ltd, Articles of Association , Art. 8, available at  
http://www.hkexnews.hk/listedco/listconews/sehk/2018/0201/LTN201802011653.pdf 
(accessed  26 June 2018).  
20 Id. 
21 Yu Nakemura, "Chinese Enterprises Write Communist Party's Role into Charters," Nikkei Asian 
Review , 17 August 2017.  See als o Michael Martina, "Exclusive: In China, the Party's Push for Influence inside 
Foreign Firms Stirs Fears," Reuters, 24 August 2017.  
22 See, e.g., Jude Blanchette, To Ensure Harmonious Relations with Party Organizations, Proactively 
Establish Boundaries  (The Conference Board China Center, February 2018).  
23 See, e.g., Alexandra Stevens, "China 's Communists Rewrite the Rules for Foreign Businesses, " New 
York Times , 13 April 2018 (noting that "…several of his clients in joint ventures had received explicit reque sts 
to give their internal Party organizations a greater say in the company 's operations. At some companies, the 
requested language requires a board of directors to consult with the committee befo re making business 
decisions.") See also Tom Mitchell, "China's Communist Party Seeks Company Control Before Reform, " 
Financial Times , 14 August 2017; Yu Nakemura, "Chinese Enterprises Write Communist Party 's Role into 
Charters, " Nikkei Asian Review , 17 August 2017 ; Michael Martina, "Exclusive: In China, the Party 's Push for 
Influence inside Foreign Firms Stirs Fears, " Reuters, 24 August 2017.  
24 Delegations of German Industry and Commerce, Press Statement: Increasing Business Challenges – 
Delegations of German Industry and Commerce in China Concerned About Growing Influence of Chinese 
Communist Party on Foreign Business Operations  (24 November 2017).  
25 The European Union Chamber  of Commerce in China, Chamber Stance on the Governance of Joint 
Ventures and the Role of Party Organizations  (3 November 2017).  
26 Id. 
27 A key measure governing the Social Credit System was issued in the "spirit of" of the CCP's recent 
plenary sessions and the speeches of "General Secretary Xi Jinping." See State Council Guiding Opinion on 
Establishing and Improving the System of Jointly Incen tivizing the Maintenance of Credit, Jointly Punishing the 
Loss of Credit, and Accelerating the Promotion of Social Integrity Development (State Council, Guo Fa [2016] 
No. 33, issued 12 June 2016),  available at http://www.gov.cn/zhengce/content/2016 -
06/12/c ontent_5081222.htm.  
28 Individuals and enterprises with deficient credit scores may, for example,  find their access to  financial  
credit or their ability to travel diminished or prohibited.  See Kirsty Needham, "If You Get on China's 'Blacklist,' 
You Can Be Banned from Travel," The Sydney Morning Herald , 6 March 2018. For other reports on the Social 
Credit System, see Andrew  Browne, "China's Big Brother Is Watching You Do Business," Wall Street Jo urnal, 
23 May 2017; The Economist , "China Invents the Digital Totalitarian State," 17 December 2016;  Mirjam 
Meissner, China Social Credit System: A Big -Data Enabled Approach to Market Regulation with Broad 
Implications for Doing Business in China (Mercator  Institute for China Studies, 24 May 2017).   
29 Constitution  of the People's Republic of China , Arts. 9 and 10.  
30 Li Zhang and Xianxiang Xu, Land Policy and Urbanization in the People 's Republic of China , ADBI 
Working Paper Series No. 614 (Asian Developmen t Bank Ins titute, 11 November 2016), 7. ("With its monopoly WT/GC/W/74 5 
 
- 11 - 
 
                                                                                                                                                    
on land expropriation and transaction, local governments have held down land expropriation prices to acquire 
large amounts of rural land and turned them into urban lands, which directly led to the  excessive expansion of 
urban land area, as in the massive construction of development zones a nd new towns.")  Dwight Perkins, 
"China 's Land System: Past, Present, and Future ," in Property Rights and Land Policies , edited by Gregory K. 
Ingram and Yu -Hung Ho ng (Cambridge, Ma: Lincoln Insti tute of Land Policy, 2009), 89.  ("Formally, rural land 
[in China] is collectively owned by the local village or township, and urban land is owned by the state. In both 
cases, local officials play the primary role in deciding  whether a piece of land under their jurisdiction can be 
leased for commercial uses.")  Samson Yuen, China 's New Rural Land Reform? Assessment and Prospects , 
China Perspectives  2014/1 (2014), 61. ("[…] while the Third Plenum reforms point in the direction of reducing 
state monopoly on rural land transfer and restoring land -use rights to farmers, they are nothing very new. 
More importantly, these reforms cannot enjoy much success  unless more drastic reforms are undertaken. Such 
reforms include reconfiguring the power relations between local governments and farmers in a way that owners 
of collective land will truly secure their land -use rights, as well as a thorough fiscal and tax reform that reduces 
the reliance of local government on land sales.")  
31 See Property Law of the People 's Republic of China , Chapters XI -XIV (adopted by the National 
People's Congress on 16 March 2007, 2007 Order No. 62 , effective 1 October 2007) ; Interim R egulations of the 
People 's Republic of China Concerning the Assignment and Transfer of th e Right to the Use of the State -owned 
Land in Urban Areas  (State Council, 1990 Order No. 55, issued 19 May 1990); Law of the People 's Republic of 
China on Administrati on of Urban Real Estate  (adopted by the National People's Congress on 5 July 1994, 
amended 30 August 2007, further amended 27 August 2009); Rural Land Contracting Law of the People 's 
Republic of China  (adopted by the National People's Congress on 29 August  2002, 2002 Order No. 73, effective 
1 March 2003, amended 27 August 2009).  
32 According to the OECD, in 2010 the average size of farm plots in China was 0.6 hectares. OECD , 
OECD Economic  Survey s: China  (Paris: OECD Publishing, 2015), 106.  Land designated for industrial use is also 
underutilized; a nationwide survey suggests that 70  per cent  of the total land within China 's 6,866 
Development Zones is unused ; Jinfeng Du and Richard Peiser, "Land Supply, Pricing and Local Governments ' 
Land Hoarding in China ," 
Regional Science and Urban Economics  48 (2014) : 183.  
33 Trade Union Law of the People 's Republic of China , Art. 10 (adopted by the National People's 
Congress on 3 April 1992, amended 27 October 2001, fu rther amended 27 August 2009).  See also Bloomberg, 
"Beijing Wants One Union to Rule Them All," 10 November 2016.   
34 Kai Chang and Fang Lee Cooke, " Legislating the Right to Strike in China: Historical Development and  
Prospects ," Journal of Industrial Relations  57(3) (2015): 444 and 448.  See also  Dongtao Qi, Progress 
and 
Dilemmas of Chinese Trade Unions , East Asian Policy Background Brief 537 (East Asian Institute, 
National  
University of Singapore, 2010), 21.  
35 Trade Union Law of the People 's Republic of China , Arts. 9 and 10 (adopted by the National People's 
Congress on 3 April 1992, amended 27 October 2001, further amended 27 August 2009).  See also  Cynthia 
Estlund, A New Deal for China 's Workers?  (Cambridge: Harvard University Press, 2017), 47.  
36 Hualing Fu, "Bringing Politics Back In: Access to Justice and Labor Dispute Resolution in China, " in 
Justice: The China Experience , edited by Flora Sapio et al. (Cambridge: Cambridge University Press, 2017), 
356-78. 
37 See Kam Wing Chan, "The Chinese Hukou System at 50 ," Eurasian Geography & Economics  50(2) 
(2009) : 201-02; Charlotte Goodburn, The End of the Hukou System? Not Yet , China Policy Institute Policy 
Paper  (China Policy Institute, University of Nottingham, September 2014), 2 -3.  
38 Jack Perkowski, "Cracking China 's Power Sector," Forbes , 12 January 2011, available at 
https://www.forbes.com/sites/jackperkowski/2011/01/12/cracking -chinas -power -sector/#63a210e31a8e . ("Of 
the more than 4,300 power generation companies in China that have capacity of 6,000 kilowatts and  above, 
approximately 90 percent are state -owned, or companies with a majority of their shares controlled by the 
state.  Among them, five corporations directly under the central governme nt account for approximately 
45 percent of China' s installed capacity.  The big five are: China Huaneng Group; China Datang Corporation; 
China Guodian Corporation; China Huadian Corporation; and China Power Investment Corporation […] In order 
to transmit electricity around the country, there are 38 power transmission companie s at the central 
governm ent and provincial levels. […] The State Grid Corporation of China covers provinces, municipalities and 
autonomous regions, while the China Southern Power Grid Co., Ltd. covers five.")   
39 See, e.g. , Zhong Xiang Zhang, " Energy Prices , Subsidies, and Resource Tax Reform in China ," Asia & 
Pacific Policy Studies  1(3) (September 2014 ): 440. ("To respond to electricity generators' concerns, NDRC 
proposed in May 2005 a coal electricity price 'co -movement' mechanism that would raise electric ity tariffs if 
coal prices rose by 5 per cent or more in no less than six months, and allowed electricity generators to pass up 
to 70 per cent of increased fuel costs on to grid companies, and grid companies to pass costs on to consumers.  
However, because  of fears of inflation, the co -movement policy had not been implemented as the conditions 
met, and power tariffs continue to remain flat while coal prices rise.") See also , Ryan Rutkowski, Rebalancing 
and Rising Electricity Prices in China , China Economic Watch  (Peterson Institute for International Economics, 
18 February  2014).  ("If coal prices rise once again, the state still has complete control over end user pricing , 
thus can limit pass -through of rising on -grid tariffs. The 5 percent threshold for annu al adjustment to on -grid 
tariffs also leaves plenty of room to squeeze thermal power producers once again.")  
40 National Development and Reform Commission Opinion on Comprehensively Deepening Price 
Mechanism Reform (National Development and Reform Commissio n, Fa Gai Jia Ge [2017] No. 1941, issued WT/GC/W/745  
 
- 12 - 
 
                                                                                                                                                    
8 November 2017) (provid ing at Section  V(9) for "improving differential pricing mechanisms" for electricity and 
water to target, inter alia , "excess capacity industries," and encouraging each locality across China t o expand 
its use of this policy.) See also Markus Taube and Christian Schmidkonz,  Assessment of the Normative and 
Policy Framework Governing the  Assessment of the Normative and Policy Framework Governing the Chinese 
Economy and Its Impact on  International Competition , Final Extended Report for AEGIS Europe (Think!Desk 
China Research & Consulting, 13 August 2015), 196.  ("By 2015, the practice [of differential energy pricing] has 
not only been implemented nationwide, it has also been generally accepted as a w ay to guide corporate 
decision -making. While the actual contribution of differential energy pricing is hard to gauge and has been 
overshadowed by changing economic trends and policy strategies, differential pricing has become a mainstay 
of the industrial p olicy tool box.")  
41 See Markus Taube and Christian Schmidkonz,  Assessment of the Normative and Policy Framework 
Governing the  Assessment of the Normative and Policy Framework Governing the Chinese Economy and Its 
Impact on  International Competition , Final  Extended Report for AEGIS Europe (Think!Desk China Research & 
Consulting, 13 August 2015),  17. ("In the Chinese capital markets the price signals generated on the markets 
are subjected to government induced distortions first of all due to a repression  of interest rates and a 
manipu lation of the exchange rate. Both factors result in a constellation where capital is made available at too 
low prices and is utilised excessively by those ha ving access to the formal finan cial system – which are China 's 
state-owned enterprises and those actors upholding close relationships to local government agencies. 
According to calculations by IMF staff , this has resulted in an investment ratio ten percentage points above its 
equilibrium value and costs to the economy in a ran ge of about 4  per cent  of GDP per year (Lee/Sy ed/Liu 
2012, Geng/N'Diaye 2012) .") 
42 Moody's Investor Service, Chinese Banking System Overview  (2017), available at 
https://www.moodys.com/sites/products/ProductAttachments/Infographics/chinese -banking -
system.p df?WT.z_referringsource=tb~lp~bkg~20170724~chinesebanks . 
43 Douglas Elliott and Kai Yan, The Chinese Financial System: An Introduction and Overview , Monograph 
Series Number 6 (The Brookings Institution, John L. Thornton China Center, July 2013), 13.  
44 Id. 
45 Financial Times , "China Pledges to Open Finance Sector to More Foreign Ownership ," 
10 November  2017, available at https://www.ft.com/content/d4a85422 -c5d5-11e7-b2bb-322b2cb39656 ; 
Nikkei Asian Review , "China to Abolish Foreign Ownership Caps in Finance in 2021," 30 June 2018, available at  
https://asia.nikkei.com/Economy/China -to-abolish -foreign -ownership -caps-in-finance -in-2021; Xinhua,  "China 
to Scrap Limits on Foreign Holdings in Banks, asset manag ement companies," 8 June 2018, available at  
http://www.xinhuanet.com/english/2018 -06/08/c_137240212.htm . 
46 Douglas Elliott and Kai Yan, The Chinese Financial System:  An Introduction and Overview , Monograph 
Series  Number 6  (The Brookings Institution, John L. Thornton China  Center, July 2013), 3. ("U nlike in the 
West, the careers of the most important bankers are determined by the Party  […].").  
47 See Aidan Shevlin  and Lan Wu, China: The Path to Interest Rate  Liberalization (J.P. Morgan Asset 
Management, 2015), 7; PRC Macro , "Bailing China 'in' to the Great State Refinancing ," 19 February 2016, 3.  
48 Law of the People' s Republic of China on Commercial Banks , Art. 34 (adopted by the National People's 
Congress on 10 May 1995, effective, 1 July 1995, amended 27 December 2003, further amended 
29 August 2015).  
49 Katie Chen and Grace  Wu, China: State Support for Ban ks Intact Amid Financial Reform (Fitch 
Ratings, 8 January 2016 ), 1. 
50 See, e.g., Sebastian Heilmann and Oliver Melton, " The Reinvention of Development Planning in China, 
1993-2012," Modern China  39(6) (2013): 586. ("The five -year plan begins with brief, fairly general guidelines 
approved by the [CCPCC] in the fall of the year before the start of the plan period, and with a more detailed – 
but still fairly broad – outline approved by the Nati onal People's Congress the following March.  Collectively, 
they set national priorities and outline how they will be met, but these documents —which are commonly 
referred to as the five -year plan —are only executed through a network of thousands of sub -plans  that evolve 
into detailed execution instructions for all levels of government.  This web of plans evolves over the entire five -
year period, and is better thought of as a planning coordination and evaluation cycle rather than a cohesive, 
unified blueprint.   The planning system's layered and nested programs can be found in almost every single 
policy domain in China and across three core levels of government: the center, provincial -level jurisdictions, 
and cities or counties.")  
51 See Markus  Taube, Analysis of  Market -Distortions in the Chinese Non -Ferrous Metals Industry , 
Think!Desk for WirtschaftsVereinigung Metalle e.V.  (April 2017); Usha C.V. Haley and George T. Haley, 
Subsidies to Chinese Industry: State Capitalism, Business Strategy, and Trade Policy (Oxfo rd: Oxford 
University Press, 2013); Markus Taube and Christian Schmidkonz,  The State -Business Nexus in China 's Steel 
Industry —Chinese  Market Distortion in Domestic and International Perspective, Think!Desk prepared for the 
European  Confederation of Iron an d Steel Industries (January 2009 ). 
52 See US Chamber of Commerce, Made in China 2025: Global Ambitions Built on Local Protections  
(2017);  
European Union Chamber of Commerce in China, China Manufacturing 2025: Putting Industrial Policy 
Ahead of Market Force s (2017); Jost Wübbeke, Mirjam Meissner, Max J. Zenglein, Jaqueline Ives, and Björn 
Conrad, Made in China 2025: The Making of a High -Tech Superpower and Consequences for Industrial 
Countries , Papers on China No. 2 (Mercator Institute for China Studies, Dec ember 2016).  
53 Notice on Issuing the National Medium - and Long -Term Science and Technology Development Plan 
Outline  WT/GC/W/74 5 
 
- 13 - 
 
                                                                                                                                                    
(2006 -2020) (State Council, Guo Fa [2005] No. 44, issued 26 December 2005); Decision on 
Accelerating the Cultivation and Development of Stra tegic Emerging Industries  (State Council, Guo Fa [2010] 
No. 32, issued 10 October 2010); Notice on Issuing "Made in China 2025 " (State Council, Guo Fa [2015] No. 
28, issued 8 May 2015).  
54 These entities include : (1) China Development Bank Capital, a subsidiary of China Development Bank , 
a state -owned policy bank ; (2) China Mobile Communications Corporation, a central SOE and market leader in 
China 's telecommunications sector; and (3) Beijing E -Town International Investment and Development Co., 
Ltd. (B eijing ETown), an investment company owned by the municipal government of Beijing.  See Zhejiang 
Wansheng Co., Zhejiang Wansheng Co., Ltd. Public Notice In Response to a Letter from the Shanghai Stock 
Exchange Requesting Information Disclosure Regarding the  Company 's Issuance of Shares to Acquire Assets 
and Raise Supporting Funds in a Related Party Transaction (Code 603010, Public Notice 2017 -042) [Chinese] . 
55 China National Science and Technology Major Project  (Press Release) , Integrated Circuit Industry 
Technological Innovation Strategic Alliance Official Established  [Chinese], (March  22, 2017 ), available at 
http://www.nmp.gov.cn/gzxgz/jcdl/201703/t20170323_5031.htm . 
56 Id. 
57 Ling Li, " The Chinese Communist Party and People 's Courts: Judicial Dependence in China ," American 
Journal  
of Comparative Law  64(1) (2016): 59 -72. 
58 See Administrative Litigation Law of the People 's Republic  of China (adopted by the National People 's 
Congress on 4 April 1989, amended 1 November 2014, further amended 27 June 2017)  (This law strictly limits 
the sorts of administrative acts that members of the public can challenge under the law.  In particular, the law 
specifically enumerates the types of administrative actions subject to judicial review under the law and 
excludes an y administrative acts not so -specified from court review.  While the 2014 version of the law 
expands the list of permissible subject matter from eight to twelve types of administrative actions, it remains 
unclear whether courts have any authority to review  administrative actions beyond those specifically 
enumerated.  In addition, the law prohibits courts from conducting challenges to an administrative regulation 
or departmental rule that is generally binding.)  See also  Decision of the Standing Committee of  the National 
People 's Congress on Amending the Administrative  Procedure Law of the People' s Republic of China  (NPC 
Standing Committee, Order No.15 of the President, issued 1 November 2014); Jianfu Chen, Chinese Law: 
Context and Transformation  (Leiden, Th e Netherlands: Brill Nijhoff 2016), 333; Qianfan Zhang, "From 
Administrative Rule of Law to Constitutionalism? The Changing Perspectives of the Chinese Public Law," Asia 
Law Review  3(1) (2006): 56.  
59 See Craig Charne and Shehzad Qazi, Corruption in China: What Companies Need to Know  (Charney 
Research, January 1, 2015), 1 -2.  (The report finds that over one -third of Chinese firms surveyed noted having 
to pay bribes or unofficial fees, or provide gifts to public officials.)  See also Freedom House, Freedom in  the 
World 2016 , available at  https://freedomhouse.org/report/freedomworld/2016/china .  (The report notes that 
foreign companies continue to contend with "arbitrary regulatory obstacles, demands for bribes and other 
inducements.")  See also  Daniel C.K. Cho w, "How China's Crackdown on Corruption Has Led to Less 
Transparency in the Enforcement of China's Anti -Bribery Laws," U.C. Davis Law Review  49 (2015): 694.  
60 See, e.g., Freedom House, Freedom on the Net 2017 – China Country Profile  (accessed July 6, 2018) .  
(China's overall score is 87 out of 100, with 0 = Most Free and 100 = Least Free.)  
61 See, e.g., Reuters, "China Steel Glut: Years in the Making, Years to Resolve," 12 April 2016, available 
at https://www.reuters.com/article/us -china -steel-overcapacity/ch inas-steel-glut-years -in-the-making -years -
to-resolve -idUSKCN0XA033 . 
62 See, e.g. , in 2016 -2018: (1) Canada 's AD and CVD Investigations of Certain Fabricated Industrial 
Steel Components from China  (final affirmative determi nations issued 25 April 2017) , (2) Australia 's AD and 
CVD Investigations of Ferrous Grinding Balls from China  (final affirmative AD and CVD determinations issued 
1 September 2016) , (3) the European Union 's AD Investigation of Certain Corrosion -Resistant Steels from 
China  (final affirmative determination issued 7 February 2018) , and (4) India's CVD Investigation of Hot Rolled 
and Cold Rolled Stainless Steel Flat Products from China  (final affirma tive determination (attached) issued 
4 July 2017) . 
63 See data on "Total Production of Crude Steel"  from World Steel Association, Steel Statistical Yearbook 
2010 (2010) and Steel Statistical Yearbook 2017 (2017).  
64 See data on "Exports of Semi -Finished and Finished Steel Products" from World Steel Association, 
Steel Statistical Yearbook 2017  (2017).  
65 Guiding Opinions of the State Council on Resolving the Conflict of Serious  Overcapacity , Art. 1 (State  
Council, Guo Fa [2013], No. 41, issued 6 October 2013).  
66 Office of the US Trade Representative, Fact Sheet – Section 201 Cases: Imported Large Residential 
Washing Machines and Imported Solar Cells and Modules  (January 2018), available at 
https://ustr.gov/sites/default/files/files/Press/fs/201%20FactSheet.pdf . 
67 The Economist Intelligence Unit, China 's Supply -Side Structural Reforms: Progress and Outlook  
(2017), 5.  
68 European Union Chamber of Commerce in China,  Overcapacity in China: An Impediment to the 
Party's Reform  
Agenda  (2016), 2-14. (The EU Chamber report further states: "Despite then National Development and 
Reform Commission (NDRC) Chairma n Zhang Ping 's statement in 2009, that 'there won 't be a penny spent on 
enlarging mass production or highly polluting and resource -intensive sectors ', the [2009] stimulus package 
resulted in a massive expansion of the production capacities of many state -owned enterprises (SOEs).  This 
situation was perpetuated by a surge in lending – encouraged by the government, to meet the needs of the WT/GC/W/745  
 
- 14 - 
 
                                                                                                                                                    
thousands of infrastructure investment projects that were being approved around the country – in conjunction 
with the eas e with which producers were able to secure such loans. ") 
69 The State Council issued guiding opinions for coal and steel capacity shedding in February 2016.  Both 
documents instruct authorities to limit approvals of capacity in creases. To downsize existing capacity, the State 
Council assigns a series of tasks to lower -level authorities, including: (1) forcing capacity -shedding "according 
to the law" by enforcing stricter standards regarding environmental protection, energy consumption, quality, 
safety, and t echnology; (2) encouraging firms to "proactively" shed capacity by relocating production, 
engaging in mergers and acquisitions, lowering output targets in firm -level strategic plans, and other means; 
and (3) disabling production facilities by demolishing s teel smelting equipment, or alternatively, resorting to 
means such as cutting off supplies of water and electricity.  See Opinion on Shedding Excess Industrial 
Capacity in the Coal Industry to Achieve Development out of Difficulty  (State Council, Guo Fa [2 016] No. 7, 
issued 1 February 2016);  Opinion on Shedding Excess Industrial Capacity in  the Steel Industry to Achieve 
Development out of Difficulty (State Council, Guo Fa [2016] No. 6, issued 4 February 2016).   
70 Office of the US Trade Representative, Findings of the Investigation into China's Acts, Policies, and 
Practices Related to Technology Transfer, Intellectual Property, and Innovation under Section 301 of the Trade 
Act of 1974 (22 March 2018), available at https://ustr.gov/sites/default/files/Sec tion%20301%20FINAL.PDF . 
71 World Trade Organization, Trade Policy Review – Report by China, WT/TPR/G/375 (June 6, 2018), 
Paragraph 2.2.  
72 The World Bank, "GDP Growth (Annual per cent ) (2018), " available at  
https://data.worldbank.org/indicator/NY.GDP.MKTP.KD .ZG.   
73 The World Bank , "GDP (current US$), " available at  
https://data.worldbank.org/indicator/NY.GDP.MKTP.CD . 
74 The World Bank, " Merchandise Exports (Current US$) ," (Source Organization: WTO).  See also The 
Guardian , "China Surpasses US as World 's Largest Trading Nation ," 10 January 2014, available at  
https://www.theguardian.com/business/2014/jan/10/china -surpasses -us-world -largest -trading -nation .   
75 People's Bank of China, 2017 Financial Statistical Data Report  (2018 ), available at 
http://www.pbc. gov.cn/goutongjiaoliu/113456/113469/3461233/index.html .  
76 Long Guoqiang, "Overview, An Emerging Power 's New Strategy of Opening Up to the Outside: Entry 
into the WTO: A Look Back over the Past Ten Years and a Look Forward, " in China 's WTO Accession 
Reasse ssed, edited by  Wang Luolin  (New York: Routledge, 2015), 2. 
77 Xinhua,  "China Remains Largest Developing Country: Economist ," 15 April 2018, available at  
http://www.xinhuanet.com/english/2018 -04/15/c_137113119.htm .  See also  World Bank, China Overview  
(last updated 19 April 2018), available at http://www.worldbank.org/en/country/china/overview .  
78 Joseph Hincks, " China Now Has More Supercomputers Than Any Other Country ," Time, 
14 November  2017, available at  http://time.com/5022859/china -most-supercompu ters-world/ . 
79 World Economic Forum, These Are the World's Fastest Trains (29 September 2017), available at  
https://www.weforum.org/agenda/2017/09/these -are-the-world -s-fastest -trains/ . 
80 World Economic Forum, China Is Now Home to the World's Most Valuable  AI Start-up (11 April 2018), 
available at  https://www.weforum.org/agenda/2018/04/chart -of-the-day-china -now-has-the-worlds -most-
valuable -ai-startup .  
81 World Economic Forum, How China Is Leading the Renewable Energy Revolution (29 August 2017), 
available at https://www.weforum.org/agenda/2017/08/how -china -is-leading -the-renewable -energy -
revolution . 
82 Stockholm International Peace Research Institute, SIPRI  Military  Expenditure  Database , available  at 
https://www.sipri.org/databases/milex . 
83 Wall Street Journ al, "China 's Auto Market Slips Into Slow Lane —Except for EVs ,"11 January 2018, 
available at https://www.wsj.com/Articles/chinas -auto-market -slips-into-slow-laneexcept -for-evs-1515669639 .  
84 US Energy Information Administration, China Surpassed the United States as the World's Largest 
Crude Oil Importer in 2017  (February 5, 2018), available at  
https://www.eia.gov/todayinenergy/detail.php?id=34812 .  
85 Reuters,  "China 's Pork Demand Hits a Peak, Shocking Producers, as Diets Get 
Healthier ,"19 June 2017, available at  https://www.reuters.com/ Article /us-china -meat-demand -insight/chinas -
pork-demand -hits-a-peak-shocking -producers -as-diets-get-healthier -idUSKBN19A31C .  
86 World Economic Forum, You Knew China 's Cities Were Growing. But the Real Numbers Are Stunning  
(20 June 2016), available at  https://www.weforum.org/agenda/2016/06/china -cities-growing -numbers -are-
stunning/ .  
87 World Economic Forum, China Has Overtaken the UK as the World's Second -largest Market for Art (19 
March 2018), available at https://www.weforum.org/agenda/2018/03/china -is-second -largest -art-market -in-
world .  
88 CCP Central Committee Decision on Several Major Issues for Comprehensively Deepening Reform  
(CCP Central  
Committee, issued 12 November 2013).