WORLD TRADE  
ORGANIZATION  WT/TPR/M/161 
6 June 2006 
 (06-2701) 
Trade Policy Review Body 
19 and 21 April 2006  
 
 
 
TRADE POLICY REVIEW 
 
PEOPLE'S REPUBLIC OF CHINA 
 
Minutes of Meeting  
 
Chairperson:  H.E. Mrs. Claudia Uribe (Colombia) 
 
   Page 
 
I.
 INTRODUCTORY REMARKS BY THE CHAIRPERSON 3  
II. OPENING STATEMENT BY THE REPRESENTATIVE OF THE PEOPLE'S 
REPUBLIC OF CHINA 4  
III. STATEMENT BY THE DISCUSSANT 8  
IV. STATEMENTS BY MEMBERS 11  
V. REPLIES BY THE REPRESENTATIVE OF THE PEOPLE'S REPUBLIC OF CHINA AND ADDITIONAL COMMENTS 31
 
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 41 
 
 
     
 
    
 
    
 
 
Note:   Advance written questions by WTO Members and the replies provided by the People's 
Republic of China are reproduced in document  WT/TPR/M/161/Add.1 and will be available 
online at http://www.wto.org/english/tratop_e/tpr_e/tp_rep_e.htm. WT/TPR/M/161 
 Page 3 
 
 
  I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
1. The first Trade Policy Review of the People's Republic of China was held on 19 and 
21 April 2006.  The Chairperson (H.E. Mrs.  Claudia Uribe) welcomed the delegation of China, led by 
Vice Minister Yi Xiaozhun and Ambassador Sun Zhenyu, and the discussant Ambassador Burhan 
Gafoor  (Singapore).  As usual, the discussant would speak in his personal capacity and not as a 
representative of his country.  In accordance with th e established procedures, the discussant had made 
available, in advance, outlines of the main i ssues he intended to raise (document WT/TPR/D/137). 
2. The Chairperson recalled the purpose of the Trad e Policy Reviews and the main elements of 
the procedures for the meeting.  The report by the Government of China was contained in document 
WT/TPR/G/161 and that of the WTO Secretariat in WT/TPR/S/161.  As indicated in 
WT/TPR/6/Rev.1, the Member under review should pr ovide written answers, by the beginning of the 
review meeting, to questions submitted at least two weeks before the meeting.  Questions posed 
subsequently should be answered, to the extent possi ble, before the start of the second session of the 
meeting.  Questions left unanswered at the end of the second session should be answered in writing no 
later than one month after the meeting.  Questions by the following delegati ons had been submitted in 
writing at least two weeks in advance of the mee ting and had been transmitted to the delegation of 
China:  the United States;  Switzerland;  Japan;  Chile ;  Australia;  New Zealand;  Republic of Korea;  
India;  Canada;  Hong Kong, China;  Mexico;  Turkey;  Malaysia;  Chinese Taipei;  Argentina;  
Brazil;  Bolivia;  Colombia;  the European Communiti es;  Costa Rica;  and the Philippines.  Copies of 
these questions and of the answers provided by the de legation of China were available in the meeting 
room.  Norway, Thailand, and Indonesia had submitted  written questions after the two-week deadline.  
These questions had also been transmitted to the Chinese delegation and copies were available in the 
meeting room.  Copies of all advance questions, as well as the responses received from the delegation 
of China, are reproduced in WT/TPR/M/161/Add.1. 
3. The Chairperson noted, from the two reports, China’s rapid economic growth since reforms 
were initiated in 1978, and a dramatic improvement  in other development indicators, such as per 
capita income and poverty.  Econ omic reforms, although gradual, ha d also permitted the development 
of the private sector, which now accounted for around 60% of GDP.  In part due to its WTO Membership, China had reduced major barriers to tr ade, including the tariff and other import, export, 
and foreign investment restrictions.  The result wa s rapid growth in trade and foreign investment:  
China's trade in goods was 64% of its GDP in 2005, and almost 7% of world trade in 2004.  China was also one of the world's largest  recipients of FDI.  China had begun to introduce flexibility in its 
exchange rate, which would permit it to maintain a more independent monetary  policy.  Both reports 
also gave details about structural reforms, incl uding public sector and sectoral reforms, which had 
introduced market mechanisms to en sure better allocation of resources. 
4. Nevertheless, a number of challe nges had emerged, which were be ing tackled.  In particular, 
income disparities were rising, especially between  coastal and inland areas and between urban and 
rural areas, as was unemployment, especially as structural reforms were continued.  The Report by 
China noted that while, in 1980, per capita GDP in the east was 1.53 and 1.89 ti mes that of the central 
and western regions, respectively, by 2002 that gap ha d widened to 2.03 and 2. 57, respectively.  Other 
challenges included land, water, and energy cons traints and environmental problems due to rapid 
economic growth and subsidized resources, and th e continued misallocation of resources.  The 
authorities were introducing measures to improve labour market flexibility and competition, and 
stressed that trade and other structural reforms w ould be continued, while efforts would be made to 
ensure more balanced growth.  According to the Secretariat Report, however, absorbing the 
100 million or so unemployed that were expected to  result from further struct ural changes was likely 
to require a change in policy, which had so fa r stressed the development of capital-intensive 
manufacturing.  There was also a need to continue  efforts to reform the financial sector and capital 
markets to address the misallocation of resources, including "overinvestment" in certain sectors. WT/TPR/M/161 
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  II. OPENING STATEMENT BY THE REPR ESENTATIVE OF THE PEOPLE'S 
REPUBLIC OF CHINA 
5. The representative of China
 stated that his delegation had prepared initial responses for 
around 400 of the over 1,100 questions received;  th ese would be circulated shortly.  His delegation 
would endeavour to respond to the remaining questi ons in the coming month.  In preparation for 
China's first Trade Policy Review, almost all of th e Central Government bodies had been mobilized.  
Dozens of government officials had participated in th e face to face discussions with the Secretariat in 
their three visits to Beijing, explaining the rationale  for China's policies, which were aimed at meeting 
the challenges for its future sustainable development.   Officials had also been working in China to 
respond to Members’ questions.  Through this pro cess, he hoped a genuine picture of China could be 
presented to Members, so that its trade policies could be better understood. 
6. China had acceded to the WTO on 11 December 2001, after 15 years of lengthy negotiations.  
In the four years after its accession, China had c ontinued the basic policy of reform and opening up 
initiated in 1979, and had implemented a range of  commitments made upon its accession.  China had 
set up a market economy with an open market , which had led to rapid economic growth. 
7. China had made tremendous efforts to join the WTO and had fulfilled its extensive accession 
commitments.  It had worked so hard because it was convinced that the objectives of reform and 
opening up and building a socialist market economy coincided with WTO principles and objectives 
based on open and market-oriented policies.  In the increasingly globalized world, China could not 
develop in isolation, while the world could not ignore China on its path to prosperity.  
8. China's rapid economic growth, maintained since its WTO accession, had made a major 
contribution to stable world economic growth.  Its GDP had increased from roughly US$1.3 trillion in 
2001 to US$2.2 trillion in 2005, an average annual growth rate of 9.5%, and per capita GDP had 
grown from US$1,042 to US$1,700.  This economic  growth had not only improved livelihoods, but 
was also an engine for the growth and stability of the global economy.  China was currently one of the 
fastest growing and liberalizing markets in the wo rld.  Improved living standards were stimulating 
consumption of cars, tourism, education, comm unications, and housing in China, and purchasing 
power was growing rapidly.  Large-scale infrastructure projects, industrial transformation, and upgrading also provided opportunities for China’s trad ing partners to increase their exports to China.  
Aggregate sales of consumer and capital goods in Ch ina had increased from US$1.1 trillion in 2001 to 
US$2.6 trillion in 2005.  During the same period,  China had imported goods valued at nearly 
US$2.2 trillion, an annual growth rate of 28%. 
9. While China’s export growth over the past four  years had provided jobs and added dynamic 
to its economic growth, it had also  brought enormous benefits to investors from all over the world.  
China had always welcomed foreign investment.  With the effective implementation of its accession 
commitments, China’s foreign inv estment policies had become more open and more predictable.  By 
the end of 2005, there were 280,000 foreign invested  enterprises registered in China.  The stock of 
FDI was over US$270 billion. Foreign funded enterp rises contributed over US$440 billion to China’s 
exports, representing 58% of its total exports in 2005.  They also acc ounted for a net trade surplus of 
US$84.4 billion, or up to 83% of China’s total trad e surplus.  China’s economic growth had also 
prompted outbound investment.  Following the "goi ng global" strategy, the Government had taken 
measures such as relaxing foreign exchange cont rol on outbound investment, to encourage Chinese 
entrepreneurs to invest abroad, particularly in  developing countries. In 2005, outbound direct 
investment was US$6.92 billion, an increase of 53.6%  over 2004.  Developing countries in Asia and 
Africa accounted for 67.2% of China’s total annua l outbound investment.  He hoped this investment 
could contribute to the economy of host countries, especially developing Members.  WT/TPR/M/161 
 Page 5 
 
 
  10. While making significant progress in its own deve lopment, China had taken on international 
responsibilities consistent with its commitments a nd level of development.  To fulfil its WTO 
accession commitments, China had undertaken ma ny capacity-building programmes on WTO-related 
subjects, as well as publicity and educational camp aigns to enhance general awareness of WTO 
principles to generate greater public support.  Since accession, the Government had carried out WTO 
training programmes for senior public servants, as  well as educational programmes targeting the 
business community and other sections of society.  These efforts had made the WTO a household name in China and had won extensive support fo r China’s accession commitments.  These extensive 
commitments had been comprehensively and fully im plemented.  China’s aver age tariff for industrial 
goods had fallen from 14.8% before accession to 9. 1% in 2005 and for agriculture from 23.2% to 
15.3%.  Its tariff lines had been 100% bound, based on the applied rates.  As a result China had 
become a relatively low-tariff Member of the WTO.  China had phased out all quantitative restrictions 
on imports.  Its tariff quota system had been improved in line with its commitme nts.  Over ten service 
sectors and 100 sub-sectors including banking, insurance, distribution, telecoms, legal services, and accounting, had been liberalized.  Trade-related la ws, regulations, and rules had been extensively 
reviewed and brought into full compliance.  Efforts by China to enact or modify its trade laws and 
regulations were listed in an annex table in the Secretariat Report.   
11. China had made tremendous efforts to protect IPRs, which was a global issue and a challenge 
also faced by many developed Members.  He adm itted that there remained a gap between China and 
developed Members in IPR protection;  there were  several reasons for this including the level of 
economic development and technological competence.  However, he pointed out that within only 
20 years, a complete legislative and enforcement sy stem for IPR protection had been put in place in 
China, and public awareness about IPR protection had been increased dramatically.  All its IPR-
related laws and regulatio ns had been amended to conform to the TRIPs Agreement, and efforts to 
enforce IPRs had been intensified.  In addition,  since 2004, China had designated a week in April 
every year to campaign for IPR protection, to remind every citizen that IPR violation was a crime and 
would be punished by law.  All these concrete  measures had produced positive results.  China was 
determined to constantly improve  IPR protection in the long run. 
12. China believed strongly in the principle of mutual  benefits for win-win results.  As a result of 
globalization, international investment in China ha d been growing steadily.  International industrial 
restructuring had been taking place on the basis of comparative advantage.  One feature of China’s 
trade was the large share of processing trade, wh ich generated relatively little added value and 
moderate processing fees for China.  This trade pattern  reflected China’s need for more job creation.  
At the same time, China had been providing overseas consumers with high qua lity goods at very good 
prices, which had helped to keep inflation rates low in importing countries, and had contributed to job creation and economic growth in Members that expor ted equipment, materials, and other inputs to 
China.  China had a trade surplu s with some Members but deficits with others;  these shifted along 
with foreign investment flows.  He believed that  China’s surplus was limited; it was not China's 
policy to pursue a trade surplus but to maintain an overall balance in trade, and it was ready to work 
with its trading partners toward that end.  He ur ged Members to relax their export restrictions and do 
more to facilitate exports by their firms to the Chinese market. 
13. China had lifted hundred of millions of people out of poverty and had also made efforts 
commensurate with its capacity to help other de veloping nations, especially the LDCs and heavily-
indebted poor countries (HIPCs).  China had over 2, 000 aid programmes directed at 110 countries and 
regional organizations, and had written off Y 16.6 billi on in debts owed by 44 developing countries.  
In September 2005, the President had announced  five measures to increase assistance to other 
developing countries:  China would give duty-free tr eatment to imports from 39 LDCs with which it 
had diplomatic relations, covering most  of their exports to China;  it would expand its aid programmes 
to the HIPCs and LDCs, and aimed to write off all its concessional loans to the HIPCs with which it 
had diplomatic relations, over the next two years.  China would provide US$10 billion in WT/TPR/M/161 
Page 6  
 
  concessionary loans and preferential credits over the next three years, to developing countries to 
improve infrastructure development and promote business partnerships;  it would increase medical assistance to developing countries, including by pr oviding anti-malaria drugs and other medicines, 
medical facilities and by training medical staff.  Specific programmes would be implemented through, 
for example, the China-Africa Cooperation Forum, and bilaterally;  and China would contribute to 
human resources development by training 30,000 pe rsonnel in developing countries over the next 
three years.  These measures were all currently being implemented.  According to a recent WTO 
document  (WT/COMTD/LDC/W/38 and TN/MA/S/19), sin ce 1999 China had been the third largest 
export market for LDCs, after the EC and the United States.  In 2003, 93.3% of LDC exports to China 
entered duty free, and China absorbed 50.1% of all developing country imports from LDCs.  In 
September 2005, China increased duty-free market access to LDCs, which would eventually cover 
95.2% of their exports.  
14. China believed that trade disputes should be a ddressed through dialogue on an equal footing, 
and in accordance with WTO rules and principles.  In this spirit, China had properly accommodated 
and resolved many issues with its trading partners and maintained the stability of international trade 
relations.  China was opposed to protectionism and discriminatory measures that ran counter to the 
basic WTO spirit.  As a firm proponent of the WT O’s mission and principles, China had played a 
constructive role in the multilateral trade negotiati ons.  It attached great importance to the DDA 
negotiations, and had tabled over 40 proposals and position pa pers, covering many sectors.  It had also 
hosted a "Mini-Ministerial" WTO conference in Dalian  in July 2005 to facilitate in-depth discussions 
and negotiations on difficult issues.  China believe d that the Doha Round must place development at 
its heart.  Developed members should take on more  responsibilities so that the multilateral trading 
system could reflect the trade interests of all Memb ers in a more balanced manner.  Despite China's 
extensive accession commitments and the numerous  difficulties in fulfilling them, it was fully 
committed to the DDA and was willing to work with ot hers to make appropriate  contributions in the 
negotiation process, compatible with its own capacity. 
15. China intended to promote economic growth by expanding domestic demand.  Between 1998 
and 2004, it had maintained an expansionary fi scal policy aimed at expanding domestic demand, 
whereby long-term treasury bonds on infrastructure had been issu ed to increase investment and 
growth.  During this period, investment in, and de velopment of, infrastructure had been very high.  
Private investment had picked up substantially a nd foreign investment had stayed vigorous, resulting 
in a rapid increase in China’s overall fixed asset inv estment.  Investment thus had become a critical 
driving force behind China’s economic growth.  Between 2001 and 2005, China had registered a 
cumulative total of Y 29.5 trillion (US$3.6 trillion) in fixed assets investment, higher than the aggregate of such investment between 1981 and 2000 .  While investment continued to fuel economic 
growth, the Government also sought to expand co nsumer demand, especially among farmers and the 
rural markets. 
16. Premier Wen Jiabao's work report to the fourth plenary session of the 10
th National People's 
Congress held in March 2006 stated that the governme nt would continue to expand domestic demand 
so that consumption could play a bigger role in economic growth.  For this the Government would 
take policy measures including to increase income s of residents, to improve consumption, to 
streamline credit policy and impr ove consumer expectations. 
17. The 11th Five-Year Programme for National Economic  and Social Development was designed 
to reflect the scientific outlook on development a nd the philosophy of building a harmonious society 
in China’s pursuit of socio-economic development.   It laid out the expected objectives of socio-
economic development during 2006-10.  The two fundame ntal goals for the next five years were to 
maintain an average 7.5% annual GDP growth rate , and to reduce energy consumption per unit GDP 
by 20% and the discharge of major pollutants by 10%.  More attention was to be paid to agriculture, 
rural development, and farmers.  During Chin a’s past two decades of economic development,  WT/TPR/M/161 
 Page 7 
 
 
  agriculture had increasingly been left behind;  it still relied on small- scale farming with low 
productivity.  On average, the quantity of grains, meat, and fruit produced per farmer per year was 
less than 10% that in a developed country.  Farm ers had very low incomes with nearly 200 million 
still earning less than one dollar a day.  Underd eveloped rural infrastructure was an increasing 
problem.  Other problems included weak educati on, backward social welfare, and tremendous 
pressure resulting from surpluses in agricultural popula tion.  Over the next five years, China would 
intensify rural infrastructure development to im prove the rural landscape and increase farmers’ 
incomes.  More support was to be given for reform in rural institutions, compulsory education in the 
countryside, and for fiscal management systems in counties and villages, to push forward the building 
of the socialist "new countryside". 
18. Technological innovation, energy conservation, and environmental protection were priority 
areas in China’s further economic restructuring.  Economic growth had taken a heavy toll on energy 
and resources, put mounting pressure on the environm ent, and weakened innovative capabilities.  If 
this situation were not reversed , long-term economic stability and su stainable growth would be hard, 
and it would be difficult for China to make lasting contributions to the world economy.  In the next 
five years, China would optimize the industrial structure, and pay more attention to resource and 
environmental conservation in its development proc ess.  This would mean the introduction of more 
rigorous environmental, safety, energy, water, and resource-use standards, as well as stricter quality, 
technology, and scale criteria to improve the industria l structure.  Businesses would be encouraged to 
play a bigger role in technological innovation driven  by market forces, and more emphasis would be 
placed on combining the forces of industries and acad emics in research and innovation so as to raise 
China's overall technological competence. 
19. Greater importance would be attached to bala ncing regional development:  the imbalance of 
social-economic development be tween different regions was a serious challenge to China’s 
development.  To close the gap and promote harmonious development,  the Government had 
implemented regional development strategies over the past few years:  support to underdeveloped 
regions had been increased, and strategies had be en launched for western region development and 
revitalizing the old industrial bases in the north east.  An overall strategy for coordinated development 
was taking shape and over the next five years develo pment policies would be tailored to the resources, 
environmental capacity and potential of each region. 
20. China would continue to deepen its refo rm and opening up by balancing domestic 
development with the needs of opening up, under the pr inciple of mutual benefits for win-win results.  
He believed that China and its trading partners  had a common aspiration to realize sustainable 
development and improve living standards in the lo ng run, which was also the fundamental mission of 
the WTO.  To this end, China would work closely with all Members and was prepared to do whatever 
it could to strengthen trade and economic exchange w ith its partners.  The multilateral trading system 
represented by the WTO had played an irreplaceable role in improving the stability and predictability 
of the international trading environment.  It had made a major contribution to world economic growth.  
China’s positive experience since accession had illu strated the point.  Thus, China was firmly 
committed to the multilateral trading system and would continue to participate in all WTO undertakings in a constructive and steadfast manner.  China urged all WTO Members to redouble efforts to move forward the DDA negotiations, and to  deliver the development mandate faithfully and 
comprehensively in order to bene fit people all over the world. WT/TPR/M/161 
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  III. STATEMENT BY THE DISCUSSANT 
21. The discussant
 (H.E. Mr Burhan Gafoor) quoted a Chinese official who, in November 2003, 
noted that in China every problem was multiplie d by 1.3 billion, and every success divided by 
1.3 billion, suggesting that problems became magn ified and achievements diluted.  Despite their 
limitations, statistics told a powerful story for Chin a.  China was the fastest growing economy in the 
world.  Since economic reforms be gan in 1978, economic growth had averaged over 9% per year.  Per 
capita GDP had increased 11-fold, from US$148 in  1978 to US$1,700 in 2005, and 400 million 
people had been lifted out of poverty.  In 2004 China's share of world trade was 6.7%, overtaking Japan to become the third largest trader after the EU and the United States.  China was the largest 
trading partner for many countries, including Japan a nd Korea.  It had become the largest developing 
country recipient of foreign direct investment, some US$60 billion in 2004, making it the third largest 
recipient in the world, after the United States and th e U.K.  These statistics sh owed that China was an 
open economy that had been integrated into, and was increasingly shaping, the global economy.  He 
wondered whether the emergence of the Chinese eco nomy was a new phenomenon, or a return to a 
historical equilibrium. 
22. By joining the WTO in December 2001, China ha d officially returned to the modern trading 
system.  China had done well in many areas of econom ic and trade policy, and he highlighted three of 
its important contributions to th e world economy and the trading system.  First, China's economy was 
open to international trade and investment as a result of reforms begun in 1978.  WTO membership had given added impetus to this reform process.  A China that was open to trade and investment was 
good for the WTO and the world economy.  Second, there was a clear political  commitment in China 
to fulfil the obligations of WTO membership, evid ent especially from tariffs.  Since accession, China 
had progressively lowered its MFN tariff to 9.7%  in 2005;  all of its tariffs were bound at ad valorem  
rates;  and applied rates were generally at, or close to, bound rates, contributing to a stable and 
predictable system.  Services had generally been liberalized according to China’s GATS schedule, 
which was extensive by developing country standards.   China had made specifi c commitments in nine 
out of the 12 sectors in the WTO classification list, again contributing to stability and predictability.  
Third, China had been an important source of growth for the world economy.  According to a 2004 IMF paper, China accounted for about 24% of world economic growth.  It was also a major importer 
of goods and services, especially from other developing countries.  
23. There was a tendency to overlook China's importa nce as an importer.  While its exports had 
grown by 28% in 2005, imports had grown by 18%, f aster than import growth in the United States, 
Germany, and Japan.  In 2005, China was the worl d’s third largest importer, after the U.S. and 
Germany and the third largest market for LDC expor ts, after the EU15 and the United States in 2004.  
It absorbed almost 18% of LDC exports.  Accordi ng to the IMF, China had also contributed to the 
recent strength in world commodity prices, as the largest importer of copper and steel, and among the 
largest for other raw materials. 
24. China's challenges were as numerous as its ach ievements, and for many of the challenges, 
there were no simple solutions.  Chinese leader Deng Xiaoping had described reforms in China as a 
process of crossing the river by feeling the stones unde r the feet.  One of the biggest challenges was to 
maintain and deepen the reforms.  While gradual an d incremental reform had worked well in the past, 
a more comprehensive approach might be necessary to maintain high growth in the future.  He 
identified five challenges in the reform process.   
25. First, there was growing public debate on reform s in China:  everyone agreed on the need for 
reform but there were different sc hools of thought about the best appr oach to make the transition to a 
market economy.  Discussion on the Property Rights Law during the recent National People's Congress had revealed different viewpoints and led to a decision on the Law being postponed.  This 
was not the first time there had been such a debate on reforms in China, as the current debate had been  WT/TPR/M/161 
 Page 9 
 
 
  called the "third wave of rethink on reforms".  It  would be a big challenge for the Government to 
manage this internal deba te and continue and deepen the reforms.     
26. Second, there was a need to shift from an investment-driven to a consumption-driven 
economy.  Investment and consumption accounted, respectively, for 44% and 53% of GDP.  China's consumption relative to GDP was lower than the wo rld average and many economists believed that its 
future growth would have to be based on domestic  demand rather than on exports.  This challenge 
was recognised by the Chinese government and the expansion especially of domestic consumption 
had become a major government priority.  He w ould welcome China's views on any specific steps 
taken to encourage domestic demand. 
27. Another challenge was the growing inequalities in the distribution of income, especially 
between the urban and rural populations and the co astal and inland regions.  The government had a 
plan called "the New Socialist Countryside", an d there were programmes for rural development, 
including one that would make transfer payments from the centre to county-level governments, to make up for the abolition of the agriculture tax.  He  asked for details of ex isting rural programmes and 
budgetary resources committed to them, and whether mo re transfers to rural areas were envisaged. 
28. The fourth challenge was rising unemploymen t.  Between 1998 and 20 03, 16 million workers 
were laid-off by state owned enterprises. The offi cial urban registered unemployment rate had been 
rising, and reached 4.2% in 2004.  An estimated 100 million jobs needed to be created during the next 
decade to absorb the workers la id-off as a result of economic restructuring.  The focus on 
manufacturing meant that job creation in the services and agricultural sectors had been given less emphasis.  He asked about steps to deal with  job creation in the rural and services sectors. 
29. The fifth challenge was China's business envir onment, which touched on three inter-related 
issues:  competition policy, corporate governance, and property rights laws.  As the public sector remained critical in the economy, it was a challenge to ensure a level playing field for the public and 
private sectors.  He asked about progress in the proposed Anti-Monopoly Law.   The challenge was 
not just to adopt the law, but also to effectively implement it.  He also requested an update on the 
Property Rights Law.  Noting that several changes ha d been made to legislation to improve corporate 
governance, he would welcomed any update in this area. 
30. Members had submitted a record number of writte n questions for this review;  the largest 
number focused on contingency measur es, standards, and intellectual pr operty rights.  On contingency 
measures, in particular anti-dumping, it was clear that China was a target as well as a user.  From 2002 to 2004, China initiated 79 anti-dumping actions and took final measures in 52 cases;  
152 actions were initiated against imports from Chin a, and final measures were taken in 99 cases.  
These numbers were not encouraging:  greater use had an inevitable impact on market access and he hoped that the measures targeted against China and those imposed by China, would decline in the 
future.  
31. China had done much work to review its standards:  around 32% of China’s national 
standards were based on international ones;  it planned to revise around 44% to bring them into 
conformity with international st andards and abolish another 11.6%.  However, the system was 
complex with national, sectoral, local, and enterp rise standards.  He asked how China planned to 
increase the number of national standards based on in ternational standards.  China had also made 
important changes to legislation on IPRs and had taken steps to im prove enforcement.  There had 
been some important recent announcements, in the context of China's bilateral discussions.  China's 
challenge was to improve coordination and enforc ement of IPRs but also to keep up with the 
expectations of businesses and foreign investors.  Chinese companies also had a growing interest in 
greater IPR protection as they became global.  WT/TPR/M/161 
Page 10  
 
  32. China's Membership of the WTO had strengthened the WTO and the world trading system.  
Since its accession, China had played a very cons tructive role in the WTO.  He commended the 
Chinese Government for convening an informal WT O Ministerial Meeting in June 2005 in Dalian.  
As the WTO moved towards the conclusion of the Doha  Round, China's role be came  more important.  
China had the political weight to move things fo rward, the credibility to  build bridges between 
different sides, and the wisdom to help build a con sensus.  He was confident that China would play its 
part in concluding the round and building a strong rules-based multilateral trading system.  WT/TPR/M/161 
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  IV. STATEMENTS BY MEMBERS 
33. Members welcomed the delegation of China and thanked the Government and the Secretariat 
for their reports.  They looked forward to recei ving any outstanding replies to their advance written 
questions.  They also thanked the Discussant for his comments.  Members commended China’s 
economic reforms that had led to ra pid economic growth over the last 20 years, as well as significant 
declines in poverty and an increase in  per capita GDP.  They noted that China had become one of the 
world’s largest recipients of FDI, and that its rapi dly increasing trade had made it an important player 
in the world, and its accession to the WTO had made it an important Member of the multilateral 
trading system.  Members called on China to play a leading role in promoti ng an open and rules-based 
system, and encouraged its active role in the DDA negotiations. 
34. The representative of the United States  noted that China was now the world's third largest 
trader, and its role as a major international player  had redefined the global trading system with far-
reaching impact on economies in the world, includi ng the United States.  A review by USTR in 
February 2006 on U.S.- China trade policy had conc luded that the benefits for the United States 
included access by U.S. consumers to a wider variet y of less costly goods from China, which had 
helped to spur U.S. economic growth while helpin g to keep inflation under control;  and access to 
Chinese inputs had helped make U.S. companies a nd workers more competitive.  Since 2001, when 
China joined the WTO, U.S. exports to China had grown five times faster than to the rest of the world, 
and China had advanced from the ninth to the fourth  biggest export market for the United States.  U.S. 
exports to China increased by 21% in 2005. 
35. Over the last four years China's economy had grown at roughly 10% per year, and its growth 
had been closely tied to the open trade and investme nt regimes of the world's major economies, which 
increased the importance of a successful Doha Round for China's continued economic growth.  
Exports accounted for 40% of China's GDP, as China had depended on the growth of its export sector 
to spur modernization of its economy.  This ha d demonstrated that trade could support improved 
standards of living and lift millions of people in Chin a out of poverty.  China’s data showed that the 
United States market had been the direct recipien t of 21% of China's export growth since 2001.  The 
United States and China had accounted for nearly half of global economic growth in the past 
four years. 
36. When China acceded to the WTO, it had committed  to extensive commitments to change its 
trade regime, at all levels of government;  most  of these key commitments should have been phased 
in.  China had made important progress in implementing specific commitments and in adhering to 
ongoing obligations as a WTO Member;  however, it had not yet fully embraced the key WTO 
principles of non-discrimination and national treat ment, nor had it fully institutionalized market 
mechanisms or made its trade regime predictable and transparent.  Despite many positive reforms, 
China still used an array of industrial policy tools to  promote or protect favoured industries, which at 
times appeared to collide with  its ongoing WTO obligations. 
37. One example was the 2005 Steel Industry Development Policy.  Although many aspects of 
this policy had not yet been implemented, it incl uded objectives and guidelines that raised serious 
WTO concerns, such as calling for the use of do mestically produced steel-manufacturing equipment 
and domestic technologies, whenever domestic supp liers existed, and impos ing de facto technology 
transfer requirements.  The policy was troubling b ecause it attempted to dictate industry outcomes and 
involved the government in making decisions that shoul d be made by the markets.  For example, it 
prescribed the number and size of steel producers in China, where they should be located, the types of 
products that could be produced, and the technology that would be used.  This reflected a high degree 
of government direction and decision-making regard ing the allocation of resources into and out of 
China's steel industry.  This was of concern, as China committed in its  WTO accession that the WT/TPR/M/161 
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  government would not influence, directly or indir ectly, commercial decisions by state-owned or state-
invested enterprises. 
38. The Automotive Industrial Policy, issued in May 2004, included provisions discouraging 
imports of auto parts and encouraging the u se of domestic technology, while requiring new 
automobile and automobile engine plants to include substantial investment in research and 
development facilities.  However, China committed in its WTO accession not to condition investment 
rights on the conduct of research and development.  Th is policy had also led to new measures, such as 
the auto parts regulations that went into effect  in April 2005.  He believed that these regulations 
unfairly discriminated against imported auto pa rts by assessing an additional charge on imported 
parts, if they were incorporated into a vehicle that  did not meet minimum levels of domestic content.  
The United States intended to resolve such issues through negotiation whenever possible, as it would 
provide a more satisfactory result for the parties and the affected exporters.  However, in this case, it 
had been unable to make progress and had therefor e requested formal WTO consultations, together 
with the European Union and Canada. 
39. He was concerned that China's use of i ndustrial policy tools, including government 
subsidization, to promote and protect industries app eared to be on the rise.  China faced significant 
challenges, such as the need to create over 100 milli on new jobs over the next decade.  Nevertheless, 
the Government's increasing efforts to dictate outco mes in the market were beginning to overshadow 
China's many positive reforms in connection with its  accession to the WTO.  He was pleased to see in 
China's Report a commitment to deepen economic reform and to let the market play more of a role in 
resource allocation.  However, he was also concer ned with the contradictor y pledge to strengthen 
government guidance of  industrialization. 
40. One area of specific concern was China's subsidies practices.  He welcomed the submission of 
China's first subsidies notification.  The United St ates was reviewing it carefully and would address 
any questions or concerns bilaterally and in the Subsidies Committee.  China's inadequate 
enforcement of laws, particularly in intellectual property rights, continued to generate significant 
problems.  The Secretariat Report noted that en forcement remained weak and IPR infringement 
remained widespread;  China's Report discussed actio ns taken to improve IPR enforcement, but these 
efforts had not significantly reduced infringement levels .  He requested clarification in this regard.  
The United States appreciated the recent adoptio n of a broad action plan for improving IPR 
protection, and looked forward to its implementa tion.  Another area of concern was services, in 
particular financial and telecommunications ser vices, where the United States had encountered 
protectionist and non-transparent policies, delays in the issuance of regulatory measures, and the use 
of entry threshold requirements – particularly capital requirements – that exceeded international 
norms.  He requested clarification from the authorities. 
41. Despite rapid progress since its WTO accession, China had not fully embraced international 
SPS standards and science-based rulemaking.  Howe ver, he was pleased by China's commitment to 
make improvements.  He also appreciated China' s efforts to notify its food safety standards and 
requirements to the WTO, although he remained concerned that many Chinese regulatory agencies 
continued to implement and enforce new or revised  SPS measures without prior notification or public 
comment periods. 
42. Transparency concerns cut across sectors:  many of China's regulatory regimes remained 
opaque, which frustrated efforts by foreign and dom estic businesses to achieve the potential benefits 
of China's accession to the WTO.  He urged China to  continue its efforts to improve transparency.  
The United States was working with China bilatera lly and in the WTO to resolve these and other 
concerns.  He looked forward to further coopera tive and constructive enga gement with China, 
including through completing the Doha Development Agenda negotiations in 2006 with a timely and 
ambitious package.  He was pleased to note from the China's report that it supported further  WT/TPR/M/161 
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  liberalization of the international trading system, and pledged to work with other WTO Members to 
conclude the Round by end 2006.  China's su ccess as a WTO Member carried with it the 
responsibility to take a leadership role in the ne gotiations, and he looked forward to working with 
China during the remainder of the Round. 
43. The representative of Switzerland  stated that China's recent economic performance had made 
it an important player in the world economy.  Its WTO accession had provided a major impulse to 
market opening, contributed to the improvement of its economic framework, and created significant 
additional opportunities for foreign products and services.  He noted with satisfaction that bilateral 
trade, which had been balanced for several year s, had multiplied eight-fold since 1990.  China was 
also a major destination of Swiss direct invest ment, with approximately 300 joint ventures or 
subsidiaries in a range of sectors. 
44. IPR protection was essential for attracting investment and encouraging research and 
development, and he welcomed China's efforts to adapt its legal framework on IPRs.  At the same 
time, ensuring the efficiency of enforcement me asures against counterfeiting and piracy was also 
important.  Noting the information on the number of prosecuted cases, in China's report, he requested 
details on the quantity and the value of seized c ounterfeited goods and the m easures taken to combat 
IPR infringement more effectively. 
45. Switzerland noted with satisfaction that China had fulfilled its tariff re duction obligations up 
to January 2005, and asked for clarification on th e use of interim tariffs.  The introduction of new 
internal taxes was of concern, as this would likely affect certain goods including imported luxury 
watches and contradicted the progress made in tariff reductions and quota elimination.  Moreover, he 
hoped that provincial protectionist measures w ould not act against the central government's 
commitments towards an open economy. 
46. He recognized the significant improvement in technical requirements and certification, and 
encouraged China to pursue its revision of standard s to conform to international norms.  However, 
Swiss industry had serious concerns about the Chin a Compulsory Certification (CCC) mark, applied 
to 139 types of products.  He asked about plans to eliminate the CCC mark for low-risk products, as 
the import procedures were complex and time c onsuming.  China had taken into account the 
experiences of other countries in public procurement,  to assure consistency of its national legislation 
with the WTO Government Procurement Agreement.   He requested more information on how the 
national law on public procuremen t applied at the local level. 
47. The Secretariat report noted that there had been  a shift from direct intervention to indirect 
policy tools, to channel resources into certain ac tivities, which the Government considered to be 
important for China's continued gr owth and development.  He asked about the criteria on which 
decisions were made to guide certain activities. 
48. The representative of Japan  considered China's accession to the WTO to be the most 
important trade event of the century;  he comme nded China’s decision to join the WTO and the 
manner in which it had negotiated its accession.  Si nce joining, China had engaged actively in all 
WTO activities and in the DDA.  China's commitment  to engage in DDA nego tiations, and the Dalian 
Mini-Ministerial Conference were encouraging. 
49. Harmony between China’s economy and the world economy was important for both China 
and the world.  According to the Secretariat, the Chinese Government was attempting to tackle 
inequalities through structural reforms to introduc e more economic efficiency.  This had been 
effective in developed countries with a social saf ety net, and he asked whether China was ready to 
adopt this measure.  Japan also asked when Chin a would be ready to introduce a more flexible 
exchange rate regime.  He believed that China needed a vast amount of resources to secure its WT/TPR/M/161 
Page 14  
 
  development and asked how China could reduce ener gy consumption by 20% in five years, and 
whether efficient energy use was sufficient to reach this goal. 
50. China’s economic development, supported by hi gh trade and investment growth, had had a 
positive impact on world trade and the global econom y, including the economic relationship between 
Japan and China.  To maintain this positive im pact, Japan urged China to comply with the WTO 
Agreements, including the Anti-Dumping Agr eement, and to implement its WTO accession 
commitments.  He had concerns regarding lack of transparency, frequent changes of rules and 
regulations without prior notice, different interpretations of these rules, etc. 
51. Japan noted China's efforts in facilitating IPR enforcement and promoting transparency but 
considered these issues to be very serious.  Eff ective IPR enforcement was needed to ensure an 
investment environment conducive to the developm ent of an innovative private sector and foreign 
investment, and he hoped China would strengthen enfo rcement.  He requested clarification on specific 
judicial decisions and administrative rulings on IPR enforcement in China.  
52. Japan was concerned about the ef fect of certain duties on imported automobile parts on trade, 
and had requested to join the consultations betw een China, the EC, and the United States.  He 
appreciated China's efforts since its WTO accession, and hoped China would continue to recognize its 
responsibilities and ensure the transparency and pred ictability of its trade and investment regimes. 
53. The representative of Chile
 stated that China's entry to th e WTO marked a milestone in the 
multilateral trading system, and China's trade policy changes over the last 20 years had been extraordinary.  Being a key player in the global economy, China's economic activities had a substantial impact on commodity prices, investme nt flows, and the production sectors of many 
countries.  Due to China's dynamism, the price of  Chile's main exports had risen to unprecedented 
levels.  China was Chile's second largest trade partne r.  Chile was the first Latin American country to 
establish diplomatic relations with China and the fi rst to conclude bilatera l negotiations in the WTO 
accession process;  it was also among the first to recognize China as a market economy and had signed a comprehensive and substantial free-trade ag reement, which included almost all tariff lines.  
Very few products had been excluded from the FTA,  and no sector had been completely excluded.  
The FTA showed China's strong commitment to free tr ade.  Strong bilateral relations extended to the 
Doha Round, where the two countries shared simila r positions in key areas of negotiations, such as 
the G20 and the FANS (Friends of Anti-Dumping) Group.  While China was not perfect, it was on the 
right path. 
54. The representative of Australia
 hoped that China's remarkab le economic reforms would 
continue at a pace and on a scale so as to enable its  economy to continue to discover and benefit from 
its competitive strengths in the global market.  China should look forward to this prospect with 
confidence, rather than ambivalence or doubt.  China’s experience with economic reform and 
liberalization, including its WTO accession, had been positive, and further liberalization should 
deliver similar benefits.  China's trade policy ev olution had enabled it to take its place in the 
multilateral trading system and to find its voice in the WTO.  Australia welcomed China's 
constructive contributions to the WTO, and urged it to  continue to play an ac tive and positive role in 
the Doha Round and in WTO bodies.   
55. As of 2004-05, China had become Australia’s second largest merchandise trading partner and 
sixth largest services export market.  There was al so growing two-way investment, complementing 
the growing trading ties.  Australia and China we re negotiating a bilateral FTA, which was a single 
undertaking covering goods, agriculture, services, a nd investment.  The FTA was expected to contain 
provisions that were comprehensive, ambitious , liberalizing, and in compliance with WTO 
disciplines.  WT/TPR/M/161 
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  56. China's evolving trade policy had led to treme ndous global interest in the requirements for 
traders, investors, and service supplies to do business with China.  Thus, greater efforts in 
transparency had become urgent fo r China to respond to this interest.  Australia had raised written 
questions including on import licensing and practi ces affecting iron ore.  Other questions included 
China's efforts to meet its formal WTO notifica tion obligations, and the uniform application of 
measures, particularly customs valuation and SPS.  Australia was encouraged by China’s efforts to 
implement its accession commitments and align its po licies and practices with WTO requirements and 
believed that China would take the steps necessar y to complete its integration into the global 
economy. 
57. The representative of New Zealand  noted that China was New Zealand's fourth largest trade 
partner, and New Zealand was the first to reach a bilateral agreement with China during its WTO 
accession process.  During the period under review, China had achieved significant progress in bringing laws and regulations into conformity with WTO norms, and furt her opened up its economy 
to trade and foreign investment.  He congratulated  China on these achievements, and encouraged it to 
continue this trend, particularly with respect to  trade in primary product sectors.  Efforts to reduce 
protection in these areas would further improve the efficiency and competitiveness of China's 
economy, and offer substantial bene fits to Chinese consumers.  He noted China's policy of pursing 
free-trade agreements to expand trade opportunities.  New Zealand wished to become the first OECD 
member to conclude such an agreement with China.   He was encouraged by negotiations to date, and 
remained optimistic that the two countries could conclude a broad-ranging and ambitious outcome 
that met the aspirations of both parties.   
58. China's quarantine arrangements and other SPS requirements were relatively strict.  
Improvements had been made, and New Zealand did not underestimate China's challenges in terms of 
the scale and complexity of its regulatory regime.  New Zealand had experienced an overly rigid and 
inefficient approach from some government agencies , which had accorded insufficient priority to the 
goal of, where possible, allowing less or least tr ade restrictive measures to meet SPS objectives.  
There remained room for improvement, including in  risk assessment, equivalence, streamlining of 
information requirements, transparency, and removing duplicative testing measures, particularly as these were implemented locally.  New Zealand  al so welcomed the ongoing dialogue, in particular 
with officials from the General Administration of  Quality Supervision, Inspection and Quarantine 
(AQSIQ) and  China National Certification a nd Accreditation Administration (CNCA), and the 
progress made across a range of issues.  Regular consultations on SPS and related issues, and the 
exchange of visits by relevant officials, had enha nced both sides' understanding and contributed to the 
resolution of some difficult issues.  New Zealand was also interested in Chin a's plans for unifying the 
dual enterprise income tax system and other economic improvements.  Noting that China had an important leadership role to play in the work of the WTO, he looked forward to continuing to work 
closely with China. 
59. The representative of the Republic of Korea
 commended China's economic growth since 1978 
when it had started reforms.  China's rapid emergenc e on the global stage made it an example of what 
could be achieved by integrating into the global ec onomy.  China's experience had shown the value of 
WTO membership to the economic reform process:  its WTO accession in 2001 had provided momentum to further reform and had reinforced pr evious market-oriented reforms.  Consequently, 
China had placed itself on the path of sustained economic growth, which was likely to continue for 
many years.  China had emerged as the world’s four th largest economy in terms of GDP and the third 
largest in terms of trade volume, indicating the enormous impact of its trade policy on the global 
trading system.  With additional economic weight came greater global responsibility, and the world 
would increasingly look to China to play an active an d constructive leadership role in promoting open 
global trade and maintaining ha rmonious economic relationships. WT/TPR/M/161 
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  60. Bilateral trade had surpassed US$100 billion in 2005, and China had become Korea's largest 
trading partner.  Since 2004, China had also been  the main investment destination for Korean 
companies.  He urged China to maintain its co mmitment to further liberalization.  China was 
continuing efforts to enhance transparency in its  trade policy, but there were areas for further 
improvement, in particular more transparent and consistent implementation of domestic laws and 
regulations by the central and local government s.  While acknowledging efforts to strengthen IPR 
enforcement, he remained concerned that these were  not sufficient to deter serious violations of 
patents, trade marks and industrial designs.  He en couraged China to take firm steps against IPR 
infringement through better enforcement of IPR laws  and effective coordination between government 
agencies.  China was the most frequent target of anti-dumping actions, and was also becoming a 
frequent user with an investigation process that was often non-transparent.  He urged China to refrain 
from using trade restrictive measures and to enhance tr ansparency in its investigation procedures.  He 
welcomed efforts to protect the environment, impr ove energy efficiency, and reform the tax code;  
although these were necessary, the interests of comp anies that had already invested in China should 
not be undermined.  He hoped for further improveme nt in customs procedures, especially for imports 
of medicines, cosmetics, and automobiles.  Korea was pleased with China’s efforts to implement its 
WTO commitments and commended the Government for  managing the economy so successfully. 
61. The representative of India
 applauded China's success in lifting 400 million people out of 
poverty;  this was a clear and unambiguous statem ent to the developing world, that economic 
openness, combined with the right social and regul atory policies, could successfully combat poverty.  
The pace of China's economic and trade growth had been the envy of most countries, both developed 
and developing.  Even though China's trade surp lus had dominated the news, it was its growing 
market that had stimulated economic growth in its tr ading partners.  The deluge of questions to China 
was a reflection of its key role in the global trad ing system.  India's trade with China had expanded 
very significantly during the last ten years although present levels were only a fraction of the existing 
potential, and they were actively engaged in furthe r developing their trade relationship.  India and 
China had a comprehensive institu tional mechanism for addressing tr ade issues, including industry, 
financial services, aviation, banking, and customs cooperation. 
62. India had raised a number of questions, including on SPS matters and in information 
technology.  India's exports of iron ore were main ly on a spot trading basis.  China had recently 
established import licensing, allowing only 118 compan ies to import iron ore, the objective being to 
check price manipulation.  Although these measures a pplied ostensibly to all iron ore imports, they 
effectively favoured long-term price and supply cont racts to the disadvantage of spot trading, which 
generally met the requirements of smaller enterp rises.  Another concern was non-tariff barriers, 
particularly import licensing requirements, commodity  inspection stipulations, the quarantine regime, 
and unclear testing and certification standards.  Prior requirements of SPS protocols were a deterrent 
to exports and, in India's experience, were not being applied on a MFN basis, as goods from some 
countries were permitted entry without any SPS protoc ols.  Although quality supervision, inspection, 
and quarantine were genuine concer ns, it had taken China three years to finalize the protocol on 
mangoes.  As China had been processing approval fo r only one fruit or vegetable at a time, this 
slowed down the process considerably.  
63. Import restrictions on motor vehicles required entry only through specified ports, while 
bonded warehousing facilities were denied.  There were  also FDI restrictions in the sector, notably 
minimum production capacity requirements for the pr oposed unit and restrictions on the number of 
joint ventures that a foreign investor was permitted to establish.  He urged China to look into these 
issues constructively. 
64. The representative of Canada  congratulated China on its brisk growth, which had lifted 
millions out of poverty and demonstr ated the benefits of developmen t through trade, investment, and 
market-oriented reforms.  There were a number of ch allenges associated with this rapid development.   WT/TPR/M/161 
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  Economic growth had accentuated inequalities amongs t regions, between urban and rural residents, 
and within the population more generally.  The e nvironment had been taxed as the narrow pursuit of 
economic growth had not been effectively reconc iled with the need for overall environmental 
sustainability.  If not addressed properly, these ch allenges would soon weigh heavily on China’s 
economic growth and social development.  Sh e was pleased that China’s policy makers had 
recognized these challenges and were seeking to a ddress them, including through enhanced efforts in 
respect of sustainable development and to address regional imbalances.  Improving rural incomes, 
advancing economic development in less well-off regions, and cleaning up the environment were 
considered to be vital objectives.  Their attainment , and the formation of a harmonious society, could 
be assisted by taking full advantage of intern ational trade, investment, and technology. 
65. One example of trade and investment being a catalyst for development was China's 
electronics sector, which had become internati onally competitive due to a favourable commercial 
climate and openness.  This had been furthered by  the ongoing review of existing voluntary and 
mandatory standards, and harmonization with inte rnational ones.  Through these efforts, China had 
stimulated technological research, created intern ationally competitive companies, and driven 
employment and economic growth.  Without market s secured by WTO membership and partnerships 
encouraged by integration into the global economy, China’s electronics sector would not have been as 
competitive, and its success not as apparent.  She urge d China to consider carefully how this success 
could be replicated to surmount challenges in other areas of the economy. 
66. Open markets leading to positive commercia l environments depended upon all members 
adhering to the WTO rules.  Canada expressed co ncern about China’s policies in the automotive 
sector, and believed that it was not adhering to its WTO commitment to provide non-discriminatory 
access to its market for auto parts at the tariff ra te in its schedule of commitments.  However, she 
remained confident that this situation could be rectified through dialogue. 
67. Greater use of international markets could pr omote China’s rural productivity.  She urged 
China to consider carefully its policy of enc ouraging wheat cultivation to meet food security 
objectives.  Lifting restrictions on wheat impor ts and promoting cultivation of higher-value 
agricultural products would raise living standards and stimulate agricultural service industries in 
support of China’s natural comparative advantages .  China would reap the benefits of a more 
productive agricultural sector and higher rural inco mes, while international markets would fill any 
demand created by a reduction in China’s wheat pr oduction.  China’s regional development objectives 
could be furthered by greater inte rnational participation in the natu ral resources sector:  by applying 
lessons learned in the electronics sector, China coul d generate growth and employment across diverse 
regions, increase the domestic production of resources, and stimulate research and development.  A 
more supportive and rules-based environment for inv estment, in addition to greater transparency in 
the legislation framework, would enable the resources sector to contribute strongly to regional development objectives and raise incomes in areas beyond the main urban centres. 
68. Environmentally friendly growth and the advent  of a consumer-based economy were strongly 
linked to the emerging services sector.  Thus, continued development of services would help 
modernize the economy, generate employment, and be nefit all sectors.  She congratulated China for 
its progress in services, especially in following its schedule of liberalization commitments in financial services;  however, accelerating the introduction of critical legislation would bring even greater benefits.  One area of particular concern was China’s Approved Destination Status (ADS) 
programme, which affected tourism services that c ould be provided to tourists from China.  She 
requested more information on the programme's rule s and regulations, and the criteria for signing the 
ADS Memorandum of Understanding with a WTO Member.  She also welcomed China's IPR 
enforcement efforts and looked forward to enhanced measures in this regard.   WT/TPR/M/161 
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  69. The representative of Hong Kong, China
 noted the special relations between China and Hong 
Kong, China:  politically they were one country  but with separate administrations and distinct 
identities and seats in the WTO;  while in economi c and trade activities, they were separate customs 
territories but had very close relations.  Since Chin a's  open door policy in 1978, these close economic 
and trade relations had been strengthened.  Since 1985, China had become Hong Kong, China’s 
largest trading partner.  In 2005, bilateral trade amounted to US$265 billion, accounting for 45% of 
Hong Kong, China’s total trade.  Hong Kong, Chin a was China’s third largest trading partner, 
accounting for 9.6% of China’s total external trade.   China was one of the most important external 
investors for Hong Kong, China, accounting for 26% of total inward FDI at the end of 2003;  Hong Kong, China was China’s largest source of realized FDI, with 42% of the total at end 
September 2005.  Hong Kong, China’s manufacturi ng sector was supported by over 50,000 factories 
and over 10 million workers in China, mainly concen trated in the neighbourin g Guangdong Province.  
The close ties had culminated in a Closer Economic Partnership Arrangement between China and Hong Kong, China in 2003. 
70. Between 1979 and 2001, China had gradually re formed its economic system and opened its 
borders to establish and improve th e "socialist market economy".  In 2001, when China acceded to the 
WTO, it took on a wide range of liberalization co mmitments, many of which exceeded those made by 
other developing country members.  Nearly 60% of China's GDP was accounted for by the private 
sector.  China’s rapid economic growth, especially after its accession to the WTO, presented a strong 
case for the economic benefits from liberalization and integration into the multilateral trading system.  
This was a timely reminder to the WTO membersh ip at a critical moment in the DDA negotiations. 
71. China had bound all its tariff lines with an average bound rate of 10% in 2005, and had 
reduced its average applied rate from 15.6% in 20 01 before accession to 9.7% in 2005.  He looked 
forward to further tariff liberalization from the DD A negotiations.  Apart from national standards, 
there were a large number of sectoral, local, and en terprise standards.  As around 32% of national 
standards were equivalent to international sta ndards, he was pleased that the Standardisation 
Administration of China had begun to examine ex isting national standards and align them with 
international ones.  While China had enacted tr ade remedy laws, so far it had not taken any 
countervailing action, and its only safeguards measu re had been terminated just a year after 
imposition.  As with other Members, he urged Chin a to use extra caution in exercising its rights under 
the Anti-dumping Agreement.  Anti-dumping was a tw o-edged sword, affecting both trade and the 
domestic economy.  Before a measure was imposed, th e interests of various groups should be taken 
into account;  however, the interests of the producers,  and those of the importers, retailers, industrial 
users, and consumers were not necessarily coherent .  He noted that China had incorporated a public 
interest test in its anti-dumping laws and hoped th e overall effects would be taken into consideration 
before applying anti-dumping measures.  
72. China had enacted legislation to implement its international IPR obligations.  He appreciated 
China’s concrete commitment and encouraged it to continue efforts to improve enforcement, and 
coordination between enforcement agencies.  Chin a had been liberalizing its services sectors closely 
in line with its GATS commitments, which were ge nerally more extensive than those of other 
developing countries;  he was encouraged by the reforms, notably in financial services and telecommunications.  Given the growing importance of services trade in China’s GDP and employment, continued liberalization of trade in  services would be crucial for China’s further 
economic development and he encouraged China to participate more actively in the ongoing services 
negotiations, to advance the interests of its services industries. 
73. For a big country with a huge rural population like China, economic and trade liberalization 
reforms could be particularly challenging.  The authorities had taken concrete and positive steps to 
abide by China's WTO commitments, and to bring its laws and regulations into  conformity with WTO 
rules.  He encouraged China in its efforts to lower tariffs, eliminate non-tariff barriers, open its  WT/TPR/M/161 
 Page 19 
 
 
  domestic market, and to enhance transparency an d improve effective enforcement in its domestic 
regime. 
74. The representative of Mexico  considered the trade policy review of China particularly 
important, and timely.  China was a key player in the international economy, and in the WTO.  China was Mexico's second largest trading partner:  based on Mexican statistics, the value of imports from 
China was US$14,500 million in 2 005, although Table AI.3 of the Secretariat Report showed 
US$5,334 million.  Mexico's exports to China were valued at US$2,140 million;  they had grown by 
35% annually during the last ten years, but accounted  for only 1.5% of China's total imports.  China 
was not only an implacable competitor, but also  a great export opportunity for Mexico's goods and 
services.  Recognizing China's efforts to bring its trad e policy in line with WTO rules, he noted that 
there was a long way to go and encouraged China to move forward as quickly as possible.  Mexico 
had raised questions on subsidies, development requirements, customs procedures, import licences, 
technical rules, SPS rules, safeguards, anti-dumping, and intellectual property.    
75. He welcomed China's subsidies notification, wh ich Mexico was studying carefully but had a 
number of concerns, notably in leather and footw ear, textiles and clothing, electronics and electronic 
products, steel products, chemical products and au tomobiles.  He was concerned about China's 
industrial policies, which could be export barrier s to Mexican products and could displace Mexican 
industries in their traditional markets.  If compe tition from China was based on the rules of the WTO, 
Mexican industries could become more efficient;  how ever, in this regard, he had doubts.  Examples 
of China's policies focusing on strategic adjust ment of the industrial structure included, inter alia , 
providing credit, controlling prices, investment by pu blic entities, subsidizing energy, water, and land, 
as well as financing state-owned enterprises on favour able terms.  He noted from the Secretariat's 
report that possible subsidies for automobiles included direct or indirect transfers, as well as loans 
based on a company's exports, and tariff preferen ces for locally produced automobiles.  Fiscal 
incentives for foreign-invested en terprises established in certain areas indicated that China was 
artificially stimulating the developm ent of its automobile industry. 
76. Despite reductions in controls on international trade in steel, certain administrative measures 
remained, such as import licences for iron ore, whic h are granted only to enterprises complying with 
certain requirements.  In the electronics sector, Me xico was concerned about the 100% VAT rebate on 
certain exports of information technology prod ucts, including integrated circuits, mobile 
telecommunication equipment, computer terminal stations, and digitally controlled machinery.  
Assistance was also provided through export credit  insurance to selected exporters, including of 
electronics and communications equipment.  China was in its fifth year as a WTO Member;  although 
there remained some concerns a bout China's trade policy, he recognized its tremendous efforts to 
reform its trade policy and also appreciated its cooperative attitude regard ing bilateral concerns. 
77. The representative of Norway
 noted that China entered the WTO at the same time as the 
current round of negotiations was launched.  Chin a had become one of the major economies of the 
world, and a major contributor to the WTO.  The pace of China's integration into the world economy 
had been faster since Doha, and he hoped that the Round would also pick up speed soon.  
78. The transformation of the Chinese economy had been a formidable task, requiring patience 
and stamina in introducing and enforcing reform .  Premier Wen Jiabao’s speech on 5 March 2006 to 
the National People’s Congress noted the need for d eeper reforms and liberalization and that the  
achievements of the past 20 years would not have b een possible if China had not resolutely carried out 
its economic reforms.  Although reform had been implemented gradually, ec onomic growth had been 
much faster than in most other countries.  Given th e speed of development, it was important to ensure 
the efficient allocation of capital, and he requested  information on policies to continue liberalization 
in the banking and securities sectors within a regulat ed, but non-discriminatory framework.  He also 
urged China to continue liberalizati on, and to expand into new areas.  In particular, he encouraged the WT/TPR/M/161 
Page 20  
 
  use of the current negotiations to reduce restrictions on cross-border  insurance for high risk 
commercial projects, such as maritime insurance.  Su ch a move would be beneficial to exporters of 
such services and the Chinese economy, as it would re duce the cost of transporting China's exports 
and increase the competitiveness of its merchant fleet. 
79. Regarding the implementation of the WTO Ag reements, it was important to introduce 
appropriate legislation and to implement these ch anges.  China's customs authorities had been 
increasingly involved in seizures and investiga tions of goods infringing IPRs, and coordination 
between the administrative and judicial authorities seemed to have been stepped up.  However, he 
noted from the Secretariat's report that, despite thes e efforts, enforcement appeared to remain weak 
and infringement of IPRs widespread.  He requested information on additional action to address the 
enforcement concerns.  He commended China's efforts to improve transparency;  further 
improvements would increase economic efficiency, assist  foreign traders and investors in China, and 
aid in the fight against corruption.  It was impor tant for sub-central entities to apply the central 
government rules and regulations properly to ensure  consistent application throughout China.   
80. SPS measures were important and sensitive tr ade issues and China's SPS regime and 
inspection procedures for imports remained comple x and not very clear.  Norway and China had a 
dialogue on SPS issues, particularly for fish and marine products.  Basing Chinese SPS standards on 
international ones would simplify the situation for th e Chinese authorities and for international trade.  
Most Norwegian companies, including those interested  in investing in China, were SMEs.  Some of 
them faced uncertainties about minimum registered capital requirements to set up a wholly 
foreign-owned enterprise (WFOE) in China.  Give n that these challenges were greater for smaller 
companies, he requested details on requirement s for WFOEs and information on steps to ease 
investment by foreign SMEs.  
81. The representative of Brazil
 noted the reduction of China’s average applied MFN rate, from 
15.6% in 2001 to 9.7% in 2005.  Br azil appreciated China's efforts to  encourage private enterprises in 
activities previously restricted to the public sect or.  He was pleased that the proposals for the 
11th Five Year Plan, approved in October 2005, which aimed to double GDP per capita by 2010 
relative to 2000, included topics like environment and income distribution disparities.  He encouraged 
China to translate rapid economic growth into conc rete benefits for its population.  A strong and 
prosperous China would make a key contribution to world economic growth  and to the multilateral 
trading system. 
82. In 2005, Brazil's imports from China were US$ 5.3 billion, an increase of 44.3% compared to 
2004.  There had been a significant increase in im ports of certain products, causing concerns in 
Brazilian industry.  China was also an important market for Brazil with exports of US$ 6.8 billion 
in 2005.  Non-tariff measures had been falli ng progressively, as China implemented its WTO 
commitments, and China had taken steps to simplify its administration of other border measures, such 
as standards, and SPS and contingency measures.  The SPS regime and inspection procedures for 
imports remained unclear, as a large number of la ws and regulations governed implementation.  
Furthermore, in 2005, only 32% of  standards were based on interna tional ones.  Although the average 
MFN tariff on agriculture had fallen from 23.1% in 2 001 to 15.3% in 2005, the complexity of the SPS 
regime and inspection procedures reduced predictabilit y and negatively affected trade.  He was also 
concerned about the use of import licences to regulate specific imports, and interference in prices;  the 
latter not only reduced predictability, but also seemed to contradict government efforts to complete its 
reforms. 
83. Almost five years after China’s accession, mu ch had been done, but there was still work 
ahead.  China’s growing importance in the worl d economy and in the WTO would necessarily bring 
more responsibilities.  He expected that the relati onship between China and Brazil could be elevated 
further and considered that China's participation in the G-20 was a clear indication of the degree of  WT/TPR/M/161 
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  convergence between the two in the multilateral ar ena.  This was also important element for 
negotiations on agriculture.  The bilateral strategic pa rtnership had also been important for the growth 
of mutual trade and investment relations, and had sh own the way for the resolution of natural frictions 
resulting from closer contacts.  
84. The representative of the Separate Customs Te rritory of Taiwan, Penghu, Kinmen and Matsu  
(Chinese Taipei ) pointed out that Chinese Taipei was one of China's major sources of FDI, mainly in 
information technology and manufacturing.  In ad dition, two-way trade, totalled some US$92 billion 
in 2005.  He complimented China's "open-door " policy and economic reforms, which had steadily 
strengthened its economic position.  Since China’s WTO accession, its efforts to comply with WTO 
rules and to implement its commitme nts had also served to underpin this strong growth.  However, 
China continued to face major problems and huge cha llenges.  There was a need to create millions of 
jobs over the next decade as the economy was restru ctured.  There were also wide disparities between 
regions and between urban and rural areas, as well as environmental problems emerging from such 
rapid economic growth, and the need to restructur e the financial sector and the capital markets to 
make them more market-oriented.  Substantial effo rts were still needed to establish a fully developed 
market economy and he wished China well in r esolving these issues smoothly.  He noted that 
although China had joined the WTO four years ago, it had just submitted its full subsidy notification 
and he hoped that China meet its future notifica tion obligations.  China had committed to allowing 
wholly foreign-owned companies in distributio n services, such as wholesale trade, commission 
agents, retailing, franchising, and maintenance and repair services before 11 December 2004.  
However, the application procedures for operating ri ghts for distribution services remained unclear.  
He requested information on the relevant procedur es for foreign distribution service suppliers, and on 
how China ensured compliance with its WTO commitments on transparency.  He also urged China to 
take action to ensure IPR enforcement, as this woul d be beneficial to China's manufacturers and to its 
trading partners. 
85. China had granted duty-free treatment to pr oducts from the 39 LDCs with which it had 
diplomatic relations.  He appreciated China’s efforts to increase assistance to LDCs, but believed that 
this should be on a non-discriminatory basis for a ll LDCs.  He hoped for normalized trading relations 
with China within the WTO frame work as continued efforts to im prove bilateral dialogue would 
create mutual benefits, and enhance the operation of the multilateral trading system. 
86. The representative of Thailand, on behalf of ASEAN  congratulated China on its market-
oriented reforms, which had yielded remarkable be nefits for the economy and the people.  As a newly 
acceded Member, China’s trade liberalization and implementation achievements were impressive.  It 
had become the third largest global trader and a majo r engine of world growth, and also demonstrated 
deep commitment to the multilateral system.  Ex amples of its success included the growing private 
sector, financial system reforms, including exchan ge rate and agriculture tax reform, investment 
liberalization, and elimination of non-trade barri ers.  She applauded China’s accomplishments, and 
urged it to continue its reforms so as to rema in a pillar of the Asian and world economies. 
87. China’s expansionary fiscal policy, and the reor ganization of state-ownership, prudent capital 
market measures, widespread lega l and transparency reforms, and investment incentives, had made it 
one of the largest FDI destinations.  The recent gui delines on deregulation should attract more FDI, as 
they aimed to equalize access by foreign and domest ic investors.  China had reduced its 100% bound 
tariffs in line with its WTO Accession Pr otocol, and 99.4% of MFN tariffs were ad valorem , 
providing a predictable and transparent trading envi ronment.  Continued synchronization of MFN and 
interim duty rates would enhance trade further.  China had also eliminated various non-tariff 
measures, including import quotas, licences, and tende ring by 1 January 2005, and had liberalized 
trading rights six months ahead of schedule on 1 Ju ly 2004.  Major liberalizing reforms in agriculture 
had reduced state intervention, bo rder measures and tariffs, and had converted import quotas to TRQs.  WT/TPR/M/161 
Page 22  
 
  Nevertheless, some challenges remained, such as streamlining central and sub-national regulations, 
standards, and procedures affecting imports.  She en couraged China to facilitate trade in all aspects. 
88. She commended China on its GATS commitments , which were wider-ranging than those of 
other developing countries, covering nine of 12 sectors.  China had already implemented its market 
access commitments, significantly increasing access for foreign service providers especially in 
banking, insurance, and distribution services.  Exis ting SOEs and private-sector restrictions were 
being liberalized gradually.  She welcomed Ch ina’s enhanced regula tions and strengthened 
administrative enforcement of IPR in fringement in all areas and at all levels of governance. Its efforts 
in this regard were forward-looking and aimed to educate and raise social awareness of the 
importance of IPR protection. 
89. She noted China's active participation in the multila teral trading system, particularly its role in 
the DDA negotiations as a developing Member.  Desp ite having joined the WTO only in 2001, China 
had submitted over 30 proposals and position papers .  China’s positive contribution would help 
advance the negotiations.  China  was also a frequent participant in the dispute settlement system, 
having contributed as a third party in over 20 disput es.  ASEAN was pleased to have been party to 
China’s first free-trade agreement, the ASEAN- China Framework Agreement on Comprehensive 
Economic Cooperation (ACFTA) whic h would expand global trade thr ough regional liberalization.  
Since signing the ACFTA in November 2002, ASE AN had become China’s fourth largest trading 
partner, with bilateral trade growing by over 30% annually. ASEAN members were also among the 
first to recognize China as a market economy.   
90. China's 11
th Five Year Plan aimed at doubling GDP per capita in 2010 relative to 2000 while 
building a harmonious society via a people-oriented approach to economic development.  China also 
had a "mutually beneficial win-for-all" globa l strategy through fair and balanced economic 
globalization.  Having witnessed China’s economic ri se in the past three d ecades, she was convinced 
that these goals were within reach. 
91. The representative of Turkey  said that China's wide-ranging reforms had been strengthened 
through its WTO accession, and had enabled cont inued economic growth and a more open and 
integrated trade and investment environment.  Sh e encouraged China, as the largest developing 
country recipient of FDI, to maintain liberal i nvestment policies.  Further compliance with WTO 
commitments would also be the best way to increase  FDI inflow into China.  Turkey  appreciated 
China's efforts to gradually open up its market to the world in a manner that promoted sound economic development.  Trade barriers including tariffs, import and export prohibitions, licensing 
requirements, and other restrictions, had been re duced considerably.  However, China's SPS and TBT 
regimes with low reference to international standa rds were restricting access.  The various kinds of 
duty rates that were applied on imports cast a shadow  over efforts to eliminate trade barriers.  In 
addition, although considerable im provement had been made in encouraging the private sector, 
China's large number of SOEs posed a challenge for the free market economy.   
92. She commended China's active ro le in the DDA negotiations.  With its growing share in 
world trade, China was in a position to take resp onsible steps to benefit the multilateral trading 
system, which was based on fair and free-market prin ciples.  For the successful conclusion of the 
negotiations, she encouraged China to play a construc tive role especially in some key areas.  Relations 
between Turkey and China dated back centuries and had been strengthened th rough increased bilateral 
economic and trade ties.  As a result also of Chin a's increasingly favourable investment environment, 
Turkey's investment in China was increasing. 
93. The representative of the European Communities
 noted the seismic change to the world 
economy from the re-emergence of China as a ma jor trader, which was an opportunity and a 
challenge.  WTO rules would ensure that China w ould make a positive contribution to free and fair  WT/TPR/M/161 
 Page 23 
 
 
  trade, commensurate with its size and history, and to  the benefit of China and the world.  The review 
was an important benchmark, as it a llowed an open debate on China’s trade policy.  It had been nearly 
five years since accession to the WTO and he exp ected all of China’s commitments to have been 
implemented.  Thus, the review had come at an im portant time and Members had high expectations of 
China.  He admired China's efforts at reform but  there had been signs of decreasing enthusiasm for 
reform and he hoped that China would not follow th is path.  The figures on growth and trade in the 
reports testified to the benefits from WTO accession  and the forward-looking approach of Chinese 
leaders in paving the way for future market-oriented reforms.  As transparency was a key feature of 
the WTO, this review was an important demonstra tion of China's commitment to the WTO.  An active 
role by China in the DDA would be key to its su ccess, and negotiations were currently at a crucial 
stage. 
94. The EC-China partnership had gathered strength,  and trade flows continued to grow rapidly, 
reaching €209.4 billion in 2005.  The EC had become  China’s largest trading partner, while China 
was the EC's second largest.  China’s WTO entry had b een beneficial for bilateral trade relations, with 
considerable potential for growth.  Trade frictions , which were normal in any fast-growing trading 
relationship, had been solved in a cooperative way.   Nonetheless, it was essential to ensure a balance 
of opportunities through transparent and fair rules.  If the EC's population was to welcome China onto 
its very open market, the EC needed to demons trate to its population, companies, and economic 
operators that the Chinese market was open.  Complementing the WTO framework, there were 
multiple channels of trade-related dialogues, includi ng on IPR standards and certification, industrial 
policies, and environment, reflecting the need for constant dialogue to jointly address non-tariff 
issues. 
95. One challenge facing China was to balance social and economic development by, for 
example, addressing income disparities between regions  and creating a social safety net.  Developing 
domestic consumption would benefit Chinese citizens,  and along with a gradual move towards a more 
flexible exchange rate, contribute to, and redress, global trade imbalances.  The EC and China also 
shared common values and interests in meeting new social and environmenta l challenges and believed 
that trade policy should contribute to more sustai nable production patterns rather than to lower 
standards. 
96. He welcomed China’s commitment to the ongoing DDA negotiations, which corresponded 
fully with that of the EC:  like China, the EC re garded the WTO as the main instrument to develop 
trading relations and the clear message from China was important.  Like many others, China pursued 
bilateral liberalization in parallel to the multilatera l sphere.  As complementarity between the two was 
crucial, he was interested in China's experience a nd opinions on this relationship.  He also welcomed 
the inclusion of a substantial discussion on sustai nable development, including environmental and 
social issues.  With a large wo rk force, China faced challenges such as uniform application of 
employment standards, job creation, skills impr ovement, and reduction of urban and rural income 
disparities, which required innovative and sensitive responses.  He appreciated China's enormous 
challenges and the considerable efforts it had ma de to implement its WTO accession commitments.  
However, almost five years after entry, the transition period for rules implementation was over, and China was expected to fully comply with WTO ru les.  After a period of adapting to WTO rules, 
however, there were worrying signs that policies of  fostering national champions and discriminatory 
treatment of foreign firms were now emerging again, impeding business opportunities.  Examples 
included industrial policies that discriminated agains t foreign invested enterprises, forced technology 
transfer, and export subsidies.  He requested clar ification on these points.  He was also concerned 
about transparency, a fundamental WTO principle.  China’s record had impr oved since WTO entry, 
but much remained to be done to make doing business in China simpler and more predictable. 
97. Regulatory issues and non-tariff barriers often b ecame key obstacles to trade as tariffs came 
down, and China needed to follow WTO disciplines.  Important obstacles to trade remained, and the WT/TPR/M/161 
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  EC had submitted written questions including on th e CCC system which was in need of important 
revision, and non-tariff barriers created by SPS requi rements.  China had made its first subsidies 
notification to the WTO, and he encouraged it to c ontinue to do so.  The EC was carefully watching 
developments on IPRs, where some important progress had been made in recent years;  he urged China to continue and to reinforce its efforts in this area.  China had made important commitments 
regarding services, and would gain from in creased openness, in areas such as banking, 
telecommunications, and construction.  The legitimat e expectations of market access at the time of 
China’s entry to WTO had not been fully fulfille d.  He welcomed and supported China’s rise and 
encouraged it to become a responsible and reliabl e partner in the international economic and trading 
system.  As the third biggest trading entity, it was time for China to exercise a responsibility 
commensurate with its weight in the system.  The EC was ready to support China, by working 
together with all WTO Members to eliminate th e outstanding trade irritants and to ensure full 
compliance with all WTO rules, and by bri nging the DDA to a successful conclusion.  
98. Regarding the DDA negations, the EC had an ambitious agenda based on the Single 
Undertaking.  He expected substantial results not onl y on the three pillars of market access, but also in 
rules, including trade facilitation, anti-dumping, s ubsidies, RTAs, and GIs, along with a substantial 
development package.  He hoped China shared th is ambition as it would be one of the major 
beneficiaries of further multilateral liberalization, in particular in NAMA. 
99. The representative of Argentina
 appreciated the responsibility required to govern a population 
of 1.3 billion, which was growing da ily by 44,000.  He encouraged China to continue its structural 
reform aimed at reducing social and economic discr epancies, reorganizing state property, establishing 
a capital market, and increasing the presence of priv ate companies.  He was encouraged by the 
guidelines adopted in 2005, which allowed private inv estment in activities that were restricted to the 
public sector, although it was important to build a co mpetition framework, to ensure equal conditions 
for the public and private sectors.  He welcomed  reforms to simplify the administration of border 
measures, although sanitary inspection procedur es were complex and lacked clarity.  SPS 
requirements were excessive, such as zero tolerance w ithout risk analysis, or restrictions related to 
foot and mouth disease when there was no risk unde r OIE standards.  There were also unnecessary 
delays in registering meat exporting enterprises  and no notification of changes in exporters' 
registration.  
100. China was a strategic and valuable trading part ner.  In 2005 it was Argentina's fourth largest 
export market, and the third largest source of impor ts.  Bilateral trade had increased by 504% since 
1995.   China was also a trustworthy and responsib le Member of the WTO, which had facilitated the 
negotiation process with many proposals.  The WTO was much better off with China than without it. 
101. The representative of Bolivia  noted that the last two decades of opening up had resulted in 
strong economic growth in China.  There remained  challenges in meeting the needs of China's huge 
population and she asked about the social cost of re forms, and the corrective structural measures that 
had been undertaken or were to be taken, with a particular emphasis on the role of the State.  
102. Bolivia's exports to China consisted of tin, zi nc, silver and its concentrates, and smaller 
amounts of hides and wood.  China's market provi ded the potential for more diversified and higher 
value added exports, which would grant better mark et access in the interests of strengthening 
cooperation and South-South trade.  In the mul tilateral trading framework, particularly in the 
agricultural negotiations, as both countries were members of the G20, she applauded China's 
constructive attitude in addressing the needs of each developing country member.   
103. The representative of Colombia  stated that the first TPR of China was a challenge for all 
Members, the Secretariat, and China.  China’s r ecent economic growth, which could be explained by 
its trade policy direction, had been extraordinar y.  Macroeconomic and legislative changes had  WT/TPR/M/161 
 Page 25 
 
 
  reduced state intervention, but Ch ina faced new challenges. Foreign investment had increased private 
sector participation although domestic private co mpanies were discriminated against.  Economic 
freedom had made China a major supplier to the world based on its comparative advantages, particularly cheap labour. 
104. China remained a dual economy:  on the one hand it was a major international trader but on 
the other hand faced high levels of poverty and regional inequality.  Trad e policy was a vehicle to 
combat social inequality, and thus she urged fair trade.  Labour flexibility was a concern, given the 
need to create 100 million new jobs.  It was also a fact  of the multilateral system that increased market 
penetration led to increased anti-dumping investiga tions.  Between 2002 and 2004, Members initiated 
756 anti-dumping investigations, of which 152, or 20 %, were on exports from China.  The increased 
measures, she believed, were the price China pa id for exploiting its comparative advantages. 
105. China also played a key role in establishing commodity prices, including for oil and iron.  
China’s demand was such that even when prices re ached unprecedented levels, it was able to not only 
acquire products, but also to stabilize prices through energy conservation.  A trade and capital account surplus had led to the accumulation of US$819 billi on in monetary reserves in 2005, the majority of 
which had been used to purchase securities issued by the world’s richest governments.  The paradox 
was that an economy with a per capita income of  US$1,700 was financing economies with per capita 
incomes of over US$25,000.  She also noted the di fferent tax treatment to foreign-invested and 
domestic enterprises. 
106. Colombia encouraged China to play a key role in the Doha negotiations;  its entry into the 
WTO demonstrated the benefits of belonging to the multilateral system, and the need to do more than 
preserve the status quo.  China understood the aims of developing countries, and its role in the 
negotiations included defending the interests of all de veloping countries.  An analysis of preference 
erosion in NAMA and agriculture would demonstr ate their inefficiency, which she believed China 
would not wish to defend.  China controlled basic ag ricultural commodities, particularly maize, sugar, 
cotton, and meat and she believed that it had a re sponsibility to open up its markets for these products 
without waiting for other members to make adjustme nts in the negotiations.  She also asked about 
China’s assessment of a future agreement that includ ed strategic sectors in most countries, as well as 
self regulation of exports.  Noting China’s use of  indirect measures to achieve industrial policy 
objectives and border and internal measures, she believ ed China needed to improve its export regime 
and adopt international norms to which it had committed. 
107. Colombia's trade deficit with China ha d increased from US$326.4 million in 2000 to 
US$1,380 million in 2005.  Exports to China ha d increased from US$29.4 million to US$237 million 
in 2005, and accounted for 1.1% of world exports.  Imports from China had increased from US$87.4 million to US$573.6 million.  She asked fo r China's cooperation in controlling smuggling, 
production of illicit drugs, and money laundering.  In textile and clothing, Colombia was concerned 
about China’s exports, which led to disparities in many  parts of the world and, without going back to 
systems such as the MFA, she calle d for an agreement and respect fo r markets.  She urged China to 
open its market for sugar, in which Colombia was competitive, which might reduce the trade deficit. 
In addition, Colombia wished for a bilateral i nvestment promotion and protection agreement.  
Colombia would help to build confidence among Ch inese investors in Colombia who would benefit 
from improved market access to the United States as a result of the recently signed FTA between Colombia and the United States. 
108. The representative of Singapore
 stated that China and Singapore enjoyed warm relations, with 
bilateral trade in 2005 accounting for US$41.3 billi on, an increase of 26% over 2004.  China was 
Singapore's fourth largest trading partner, and Singa pore was China’s eight largest trading partner.  
China was also Singapore's second la rgest investment destination, w ith cumulative actual investment 
of almost US$27.74 billion by the end of 2005.  More than 1,760 Chinese companies operated in WT/TPR/M/161 
Page 26  
 
  Singapore, and by the end of 2005, over 80 Chinese enterprises had listed on the Singapore Exchange.  
However, there was room for further cooperation a nd deeper bilateral relations.  Since its accession in 
2001, China had been an active and constructive play er in the WTO.  Recognizing that progressive 
trade liberalization was vital to guarantee fair a nd sustainable market access to goods and services, 
China had worked hard to meet its extensive commitments, and had been progressively liberalizing its 
trade regime.   
109. Singapore welcomed China’s continuing reform effo rts.  Price controls and restrictions on 
private-sector participation, particularly in manuf acturing, had been reduced.  As a result, Singapore 
had recognized China as a market economy in 2004.  China’s GATS commitments tended to be more 
extensive than those of other developing countries.   The supervisory framework for services was also 
being strengthened.  Restrictions on private domes tic and foreign investment were being gradually 
relaxed.  All these measures had brought about tang ible benefits for consumers.  He commended 
China’s support for the integration of developing countries, transition economies, and LDCs into the 
multilateral trading system, and we lcomed its contributions toward s enhancing developing countries’ 
capacities through technical assistance. 
110. China’s commitment to fulfilling its WTO obliga tions and reforming its economy despite the 
challenges were laudable although there were a few areas for improvement.  These included the 
enforcement of IPR legislation, market access  barriers for services (especially in finance, 
telecommunications, and transport), implementati on of standards and technical requirements and 
conformity assessment procedures, and compliance with WTO requirements on transparency and the 
uniform application of laws.  Liberalization in ser vices had been slower than in manufacturing, which 
tended to have greater state ownership and foreign equity restrictions although these restrictions had 
been relaxed to some extent.  While acknowledging China’s right to develop strategic sectors, he 
encouraged it to adopt measures that  were least trade restrictive.  This could contribute to absorbing 
excess labour in other sectors and set an example fo r the integration of developing countries into the 
global marketplace. 
111. He welcomed China’s constructive engageme nt in institutions such as ASEAN+3, the 
ASEAN-China FTA (ACFTA), Asia-Europe M eeting (ASEM), and Asia Pacific Economic 
Cooperation (APEC).  Such regional initiatives a nd trade agreements could complement WTO 
negotiations and ensure market access on a reciprocal  basis.  Nonetheless, he also urged China to 
continue exploring deeper ‘win-win’ resolutio ns through the WTO and ACFTA-plus agreements. 
112. The representative of Benin
 stated that China and Benin had had fruitful cooperation for 
many years, reflected by China's strong presence in Benin in the economic, social, and cultural 
domains.  Benin was one of China’s most important trading partners in Africa.  He also commended 
China’s remarkable efforts in favour of African count ries;  China had paid special attention to several 
LDCs in its assistance programmes.  China's economic and institutional reforms had made its 
economy one of the most dynamic in the world.  The progressive nature of its reforms had been one 
of the main factors behind China's success and woul d serve as a model for small countries like Benin.  
These efforts had enabled China to become a Memb er of the WTO in 2001, included monetary policy 
reform, an improved investment environment for the private sector, the tariff, and the institutional and 
regulatory framework as well as sectoral reforms, particularly in energy, services, and manufacturing.  
113. Despite these efforts, several challenges remained, including obstacles for exports, 
environmental problems, and unequal income distri bution between the urban and rural populations.  
The 11th Five Year Plan, approved in 2005, which aimed to double GDP per capita by 2010 
(compared with 2000), had take n into account these concerns. 
114. Benin supported China’s appeal to the internati onal community to make a collective effort in 
the multilateral negotiations, in order for globalization to result in balanced  development and to  WT/TPR/M/161 
 Page 27 
 
 
  improve the life of every human being.  He asked  Members to increase external assistance and to 
lighten the debt of developing countries, particular ly small highly indebted countries and LDCs.  He 
also urged China to continue its effo rts to achieve the objectives of the 11th Five Year Plan.   
115. The representative of Uruguay  agreed that the multilateral trading system would be very 
different without China.  Since joining the WTO, China had become one of the main players in the 
trading system and was a significant source of opport unities, including for Uruguay.  After five years 
of mutual learning, she believed that China had ta ken an active and positive part in all the areas, 
reaffirming its commitment to the principles, rules,  and disciplines of the WTO.  Data on per capita 
income and poverty demonstrated that reforms we re improving living conditions in China.  The 
decline in poverty showed that structural and m acroeconomic reforms accompanied by trade policies 
and an appropriate investment regime were able to  maintain sustainable growth levels with specific 
social goals.  She encouraged China to follow this  path, and involve itself more intensively in the 
international economy according to WTO principles and rules. 
116. China had become one of Uruguay's main trading partners, and the main market for several 
traditional exports, such as combed wool.  Uruguay welcomed positive results in the phytosanitary 
area, as it exported citrus fruit, rice, and soya a nd dairy products to China, and had started re-
exporting bovine meat, sheep, a nd cattle.  Uruguay was also interested in exporting computer 
services, software development and architectural services, as well as scientific and technical cooperation on cattle and food production. 
117. As China integrated with the international economy, it needed to adapt to the rules and 
disciplines governing global trade.  The process was progressive and, during China's integration, she 
hoped to see more clearly the tremendous potential, in  terms of trading opportunities, that China was 
to provide to the world. 
118. The representative of Cuba
 expressed concern over questi ons from certain Members which 
involved value judgements about China’s political, legal or social structure, and were not subject to 
WTO obligations.  Some of these questions and comments referred to domestic issues, which was a 
matter of national sovereignty under international law.   
119. Since its accession to the WTO in 2001, China ha d continued with its reform and policy of 
opening up adopted in 1979, and had achieved outstanding economic, trade and social results, in spite of huge and complex domestic and external challe nges.  China's development was unprecedented, and 
had transformed a vast, overpopulated, multi-ethnic, agricultural, backward and poor country into a 
prosperous, steady, and rapidly gr owing nation.  China was a super power, and knew how to preserve 
its independence, sovereignty and integrity as a na tion, setting an example for developing countries 
and becoming a driving force for global economic grow th.  In addition to having one of the fastest 
growth rates over the last five years, China’s budget deficit was low, at 1.3% of GDP, and it 
continued to improve the competitiveness and mana gement of SOEs.  When China acceded to the 
WTO in 2001, it made commitments that in some ca ses were similar to those of developed countries.  
It had examined and revised a large number of la ws and regulations to meet its commitments, which 
had simplified trade procedures and enhanced tran sparency and predictability.  Despite being a 
developing country, China had made , and continued to make, huge effo rts to promote participation by 
other developing countries in its market, and to pr ovide them with development assistance.  In this 
regard, there was a nearly five-fold increase in  Chinese imports from 39 LDCs between 2002 and 
2005.  China had also provided assistance for over 110 developing countries, and had cancelled nearly 
200 debt contracts of 44 developing countries. 
120. Cuba had been the first Latin American country to officially recognize China over 45 years 
ago, and was proud to count on China's stable friendship and solidarity in its struggle against the blockade imposed by the United States.  In 2005 , China had become Cuba's second largest trade WT/TPR/M/161 
Page 28  
 
  partner after Venezuela.  The mutual relations hip was an example of transparency and solid 
cooperation.  Exchanges with China were present in almost every sector in the Cuban economy.  Cuba 
saw China as a reliable and consistent partner, which, unlike developed countries, did not impose 
political conditions on trade relations.  As China had reiterated, it followed the path of peaceful 
development and sought equality a nd mutual benefits in economic and trade cooperation with other 
countries.  China was not a trading threat, but a source of stability and opportunity for all.   
121. At the end of November 2004, China and C uba had signed 16 impor tant agreements on 
economic, trade, and scientific and technical cooperation in areas of common interest.  The 
agreements relating to trade promotion, investme nt, and financial security had stimulated economic 
and trading cooperation on the basis of mutual benef its, in particular in the areas of oil, nickel, 
telecommunications, tourism, railroads, ports , roads and ship construction equipment. 
122. The representative of Kenya
 noted that since the establishment of diplomatic relations in 
1963, bilateral relations had been warm and cordial.  Bilateral trade had been increasing steadily, 
partly because of the commencement of Kenya Ai rways flights to Hong Kong, China and Guangzhou 
in 2004.  However, Kenya's trade deficit with China had also increased:  in the last five years Kenyan 
exports to China amounted to slightly over K Sh 2,000 billion, compared with imports of about 
K Sh 41,000 billion.  He hoped enha nced cooperation, particularly in trade and investment, would 
address the huge trade imbalance.  He commended China for embarking on structural reforms since 
1978, which had been critical in opening up the economy to international trade and FDI inflows, both leading to rapid economic growth.  China’s WTO ac cession had further increased its integration into 
the world economy, thereby attracting more FDI and ra ising its share of world trade to 6.7% in 2004.  
He encouraged China to continue reform in or der to address challenges and to reap the maximum 
benefits from globalization. 
123. Standards, particularly SPS, were complex, w ith a large number of laws, and unclear border 
examination and approval procedur es;  he urged China to address its SPS regime, and implement 
measures consistent with the Agreement.  He w as also concerned about tariff escalation and urged 
China to address this in the current negotiations.  China's active WTO participation and its leading 
voice among developing countries to de fend and articulate their interests in the multilateral trading 
system were appreciated.  Kenya looked forwar d to working closely with China in the ongoing 
negotiations, to ensure effective implementation of  the development content of the DDA.  He also 
asked for China’s support in a waiver for AGOA, a preferential U.S. scheme benefiting sub-Saharan 
African countries.  He also looked forward to the successful implementation of the China-African 
Forum initiative, which provided a platform for collective dialogue and mutually beneficial 
cooperation in diverse fields. 
124. The representative of Jamaica
 said that over the past decade or so, China had been 
consistently ranked among the world's foremost em erging markets and was now one of the world's 
largest economies.  China's share in world trade was around 6.7% in 2004 and its trade to GDP ratio 
increased seven-fold between 1979 and 2004, from less than 10% to 76.3%, making it the world's 
third largest trader behind the U.S. and the EC.  Such impressive growth had been due mainly to 
market opening initiatives, and accession to the WTO in 2001.  The liberalization of its trade and 
investment regime had made China the world's main destination for fo reign direct investment.  FDI, 
which had been targeted primarily towards privat e entities involved in export-oriented production, had 
contributed to China's rapid export growth, technological innovation, and human resource 
development.  China was also the third largest des tination for imports from the rest of the world.  
China had also been able to achieve improved soci al indicators including, reducing the proportion of 
its population living below the poverty line from 73% in 1990 to 32% in 2003 and an increase in employment, albeit primarily in the private sector.  WT/TPR/M/161 
 Page 29 
 
 
  125. Despite the commendable economic achievement s, however, a number of challenges had 
emerged.  These  involved addressing the dual struct ure of the economy, dealing with income and 
urban-rural disparities, facilitating and sustaini ng the establishment of a competitive business 
environment conducive to the further expansion of the private sector, and implementing a flexible 
labour market to absorb new entrants.  Many de veloping countries in the midst of socio-economic 
reforms also faced similar daunting challenges, although on a much smaller scale.  China was an 
active participant in the WTO work programme, and was playing an engaging role in the DDA.  Like 
many other developing countries, regional trade a rrangements were becoming an integral element of 
China's trade policy regime, with the signing of a number of these agreements with various countries. 
126. Jamaica had excellent relations with China, wh ich had been intensified with the opening of 
the Jamaican Embassy in Beijing in July 2005.  Bilateral cooperation had increased significantly 
through initiatives aimed at strengthening econo mic and technical cooperation and trade and 
investment links.  China was also providing assist ance to Jamaica to enhance infrastructural and 
human resource development, such as through th e expansion of Jamaica's port facilities, the 
rehabilitation of the railway transportation syst em, and the provision of technical training. 
127. The representative of Nigeria  noted that China's overall polic y framework had been targeted 
at convergence through appropriate sequencing and timing of reforms, thus avoiding the adverse 
effects of rapid liberalization experienced by ma ny developing countries.  Since accession to the 
WTO, China had deepened trade and investment po licy reform.  In particular, China was making 
progress towards greater private sector participation, and a gradual shift away from direct intervention 
in the economy to the increasing use of rules-based free-market instruments.  It was due to this 
commitment to reform that Nigeria was one of the first countries to recognize China as a market 
economy.  The two countries had excellent politic al and economic relations and had been fully 
cooperative and supportive of each ot her in various international fora.  The leadership of the two 
countries also enjoyed a high level of personal fri endship and mutually be neficial cooperation in 
bilateral trade and investment relations.  Nigeri a thus wished to bene fit from Chinese economic 
growth through increased trade and FDI in manufacturing in Nigeria. 
128. China had negotiated, or was negotiating, bila teral and regional trade agreements, based on 
the belief that globalization and regional economic in tegration were inevitable trends.  He hoped that 
the trend in bilateral and regional trade agreements  would not diminish China’s commitment to the 
multilateral trading system.  There was also a lack  of progress on granting a waiver for AGOA, which 
would bring key economic benefits and incentiv es to poor and vulnerabl e sub-Saharan African 
economies, including the strengthening of trade and investment relations between the LDC 
beneficiaries and the United States.  He urged China to contribute proactively to an early and amicable solution in the WTO on the AGOA waiver requested by the United States, which would be 
consistent with China's policy under the China-Africa Partnership Initiative. 
129. China had demonstrated its commitment to cr ack down on criminal IPR infringements.  He 
also noted the extensive use of th e China Compulsory Certification (CCC) mark on imports.  Nigeria 
had continued to experience a trem endous influx of Chinese products, which were often sub-standard 
and infringed IPRs.  He urged China to strengthen its IPR and standards regulations, not just on 
imports but also on exports, and was interested in how  China intended to address this concern.  China 
was an important developing country Member of the WTO, and Nigeria looked forward to 
collaborating with China in the ongoing DDA negotiations. 
130. The representative of Ecuador
 said that China had promoted trade policies intelligently and 
enabled private sector participation in a greater num ber of areas, particularly in sectors that used 
technology intensively and were environmentally fri endly.  Regarding trade reforms, she emphasized 
the drop in MFN applied tariffs from 15.6% in 2001  to 9.7% in 2005, and the total tariff binding in 
ad valorem  terms, which permitted predictability for trad ing partners and made trade transparent.  WT/TPR/M/161 
Page 30  
 
  There had been a decline in non-tariff barriers, and in import licences, and a simplification of the 
administrative system.  However, she was concer ned about some protectionist measures, and the 
increasing trade deficit.  In 1997, Ecuador's e xports to China had a value of US$157 million and 
imports US$52 million, with a trade surplus of US$104 million.  In 2005, Ecuador's trade deficit with 
China had risen to US$592 million with only US$4 million of exports to China, and US$596 million 
of imports.  Ecuador's main exports were oil, crude  oil, fuel, banana, and aluminium by-products, and 
its major imports included dissolvent oil, mobile phones, accessories for electronic devices, television 
and broadcasting devices, footwear, vehicles and spare parts, data processing machines, sports articles, chemicals products, tyr es and other industrial products. 
131. WTO Members needed to ensure that trade liberalization was not an end in itself but a 
mechanism to ensure integration in the multilateral trade system, and a better distribution of benefits, 
through more balanced trade.  Developing countries,  such as Ecuador, needed market access to secure 
economic growth.  This was the real challenge to the system. She was convinced that China's efforts 
were very important for the world economy, and that China would continue reforms to improve 
income distribution.  She reminded Members to work to ensure that the benefits of the global trading 
system reached the majority of their populations. 
132. The representative of Guatemala
 said that China was a major trading partner, particularly in 
the multilateral context.  Since China began its programme of economic liberalization, and its 
accession to the WTO, it had undertaken major and fa r reaching economic reforms, which had led to 
deep changes in China, with positiv e results for global trade.  Chin a's presence in the WTO had given 
new impetus and balance to the multilateral negotia tions.  She urged China to play an active and 
decisive role in the Doha Round negotiations, gi ving particular priority to market access and 
eliminating subsidies and supports, which distor ted agriculture.  Guatemala and China, as G20 
Members, shared similar ideas and she believed that a developing trade partner like China, with its 
size and capacity, had a major responsibility in achie ving successful conclusions to the negotiations.  
She encouraged China to play a key role in obtaining the objectives set by developing countries. 
133. The representative of the United States  asked when China would submit more responses to 
the questions that Members had submitted in advance. 
134. The representative of China  said that more responses would be provided before the start of the 
second session.  WT/TPR/M/161 
 Page 31 
 
 
  V. REPLIES BY THE REPRESENTATIVE OF THE PEOPLE’S REPUBLIC OF 
CHINA AND ADDITIONAL COMMENTS 
135. The representative of China  thanked Members for their interventions on the first day and for 
their positive comments on China's implementation of its WTO commitments.  He thanked the discussant who had outlined China's economic and trade achievements following its WTO accession 
and had pointed out challenges facing China.  The five challenges he had mentioned were real and 
China was working to overcome them.  He thanke d Members for their written questions to which 
China was circulating a second instalment of answ ers during the meeting.  The remaining answers 
would be provided to the Secretariat in the coming month. 
(i) Macroeconomic and inst itutional environment 
136. Discussant and several Members had mentione d imbalance in the economy as one of the 
primary challenges facing China.  This issue had alre ady been placed at the top of the Government's 
working agenda.  By launching the "New Socia list Countryside" programme, the Government was 
committed to addressing the roots of this imbalance.   China would engage in massive construction 
and upgrading of rural infrastructure such as  roadworks, safe and clean drinking water, 
communication facilities, environmental protection and ecological preservation, rural water works, 
including flood-defence reservoirs, and rural ener gy development including power grids.  China 
would charge no tuition and miscellaneous fees on rural students receiving compulsory education, 
which would be covered by central and local govern ments.  China would gradually establish a rural 
health care system at county, town, and village levels and speed up efforts to build a modern 
collective health care system in rural areas.  Chin a would also explore the possibility of putting in 
place a minimum livelihood assurance system in rural areas and further raise the level of support to 
poor regions.  On the basis of pushing forward inst itutional reform at township and village levels, 
payment transfer would be increased to local budgets under-funded due to the elimination of the 
agricultural tax.  China would also direct resources  to create jobs for the migrant rural workforce, 
develop labour-intensive industries and services with greater potential of job creation, foster an 
integrated labour market between urban and rural ar eas, strictly enforce mi nimum wage requirements, 
and improve the labour contracting system. 
137. Government policy was to spur economic grow th by expanding domestic demand.  The focus 
would be further shifted to boosting consumer  demand, reducing fixed assets investment, and 
progressively lowering the investment to GDP ratio.  China would make efforts to increase urban and 
rural incomes, especially for medium and low inco me earners, raising standards for basic pensions 
and minimum livelihood allowances for urban reside nts and adjusting and strictly enforcing the 
minimum wage.  China would also further improve its social security system to encourage consumption.  It would develop further the rural market by extending urban distribution chains to 
rural areas.  China would also try to maintain such consumer magnets as  housing and automobiles, 
while creating new consumer attractions in servi ces such as culture, fitness, and tourism and would 
also improve the consumer credit system to encourage consumption. 
138. On 21 July 2005, China moved to a managed fl oating exchange rate regime based on supply 
and demand with reference to a basket of currenc ies.  The RMB was thus no longer pegged to the 
U.S. dollar.  By the end of March 2006, the RMB exchange rate against the U.S. dollar had appreciated cumulatively by over 3%.  Over the la st nine months, the RMB to dollar exchange rate 
had been more flexible, reflecting exchange rate movements between major cu rrencies and displaying 
the characteristics of the new regi me based on market supply and demand with reference to a basket 
of currencies.  In particular, since the introduction of "market makers" the fl exibility of the exchange 
rate had increased remarkably.  The Government woul d continue to relax fore ign exchange controls, 
including significantly relaxing restrictions on en terprises' foreign exchange cash retaining ratios 
under the current account, raising the ceiling on fore ign exchange purchases by individual residents, WT/TPR/M/161 
Page 32  
 
  and simplifying the procedures, and relaxing restrictions  on the use of foreign exchange by enterprises 
under the capital account.  The next step would be to continue to adjust some of the foreign exchange 
administration policies and create a better environmen t to allow markets to play a bigger role in 
determining the exchange rate. 
139. China had made extensive commitments to open its market upon its WTO accession, which 
was a significant contribution to the multilateral trad ing system.  Its fast economic growth had also 
benefited from the open, healthy, and functional syst em.  China had become one of the larger trading 
nations, and the multilateral trading system remained at  the top of its trade agenda;  the most urgent 
and important task at present was the success of the Doha round.  Like other Members, China was 
engaged in a bilateral and regi onal FTA negotiations.  These, howe ver, could not and should not 
replace the multilateral trading system.  China had either agreed or was negotiating nine FTAs 
involving 27 countries and regions.  The results of the negotiations would be notified to the WTO.  
Issues such as tax and labour market reform, invest ment procedures, and regulations had already been 
mentioned in China's policy statement, and additio nal information would be provided in its written 
responses. 
140. The discussant
 suggested that, in the y ears ahead, China would become a major investor in 
other parts of the world.  Outward investment w as US$6.92 billion in 2002;  in the context of the 
"going global" strategy, he believe d that this figure would rise dramatically and be part of China's 
positive contribution to the world economy.  Inward FDI was large but the differential tax treatment 
remained a challenge:  domestic enterprises were su bject to a statutory rate of 33%, and foreign 
invested enterprises, especially those operating in  SEZs and other zones, enjoyed reduced rates of 
15% and 24%.  The differential also created challenges in terms of tax avoidance as a result of round 
tripping or fake foreign investment, with Chin ese companies investing in China through overseas 
registered companies to avail of the lower tax rates. 
141. The representative of Pakistan  noted that China's growth had not only lifted millions of 
Chinese out of poverty but was good for the world and the region.  Pakistan’s strong friendship with 
China since its independence had led to trade and economic growth.  In 2001, bilateral trade was 
valued at less than US$1 billion dollars;  it had more than quadrupled in the subsequent four years and 
was expected to reach US$8 billion by 2008.  The two countries were also moving from a preferential 
tariff regime to a free-trade agreement and already had an "early harvest programme".  He believed that China had been one of the most constructive and positive players in the DDA and in subtle ways 
had ensured that the process moved forward for the benefit of all.   
142. The representative of the United States
 expressed disappointment that China was not able to 
provide as many answers in advance as he had hoped.   He noted that the easiest questions had been 
answered first, and hoped that full responses would be  available within the month.  He also hoped for 
clarification on some points.  China had acknowle dged the need to further develop its foreign 
exchange market to strengthen th e role of the market in determining the exchange rate, and had 
explained its plans to introduce greater flexibility in  the exchange rate regime:  he urged China to 
continue in this direction which w ould be beneficial to it and its trad ing partners.  On transparency he 
welcomed the State Council's notice issued on 30 March 2006, directing all central, provincial and 
local government entities to send copies of their trad e-related measures to the Ministry of Commerce 
for immediate publication in the Official Gazette .  This would go a long way in helping China fulfil 
the commitment made in its Protocol of Accession to establish a single official journal for all 
trade-related measures, and would make it easier for foreign businesses to navigate their way in 
China's market.  The United States hoped for further progress in the publication in the official journal 
of proposed measures for public comment before the final version was published.  While it might take 
time to establish a system that regularly sought public comment, it would better achieve government objectives and was more workable for the enterprises affected by the measures:  he encouraged China 
to consider ways to solicit public comment on draf t measures on a regular basis.  He understood that  WT/TPR/M/161 
 Page 33 
 
 
  China had been working towards a combined income tax system for foreign invested and domestic 
enterprises and asked when such a sy stem may come into effect.  He also asked for more details on 
plans to switch from a production based to a consumption based VAT. 
143. The representative of Japan  indicated that China had answered around half of Japan's 
questions.  He appreciated the responses and looke d forward to receiving the remaining answers.  
Japan looked forward to continuing bilateral and multilateral consultations to make China's trade 
regime more transparent.  Japan  hoped China fully recognized its impact on the world economy and 
would take responsible actions in accordance with  its role, including supplying clear answers to 
Members' questions.  Japan was disappointed by some  answers:  for example,  the response to Japan's 
question on transparency indicated that the current legislative framework could ensure transparency.  
However, Japan believed that China should explai n the manner in which transparency was ensured. 
144. The representative of the European Communities  appreciated China's efforts in its first Trade 
Policy Review and looked forward to receiving furthe r answers.  He appreciated China's efforts to 
meet its WTO obligations, but the EC had some co ncerns over remaining in consistencies in IPRs, 
TBT, SPS, and echoed the concerns of Members on transparency.  The EC was examining China's 
answers on services.  He believed that export-led gr owth was not a sustainable policy and appreciated 
China's remarks on domestic consumption, which had addressed some of the EC's concerns.  He also 
noted the strong statement on China's commitment to the DDA   Most studies concluded that China 
would be the single largest beneficiary from a succ essful outcome in NAMA and he hoped that China 
would make a significant contribution correspondi ng to its weight in the world economy. 
145. The representative of Canada  said he was pleased to have received answers to many of 
Canada's questions and looked forward to writte n responses on the remaining questions as soon as 
possible including in IPR, agricultu re, services and auto parts trade. 
146. The representative of China  said he understood Members’ concerns about transparency as it 
was a basic principle to ensure th e WTO rules were honoured in Memb ers’ trade regimes.  During the 
15 years of negotiations leading to China’s WTO me mbership, transparency in its trade regime had 
continued to improve.  In 1992, the Government had made an important commitment to enforce only 
those regulations and policies that were published. Si nce its accession, China had made further efforts 
to increase transparency and to in crease awareness and expectations of the principle of transparency 
in China.  China had amended over 2,500 laws a nd regulations and put in place a WTO-consistent 
legal framework for trade policies.  All existing and effective laws had already been made public 
through the gazettes of government bodies, gove rnment websites and public media.  Also upon 
accession, China had established its WTO Notifi cation and Enquiry Centre to take on the 
responsibility of fulfilling China’s obligations regard ing trade policy notification and enquiry.  Thus 
far, 629 notifications on trade policies and measures had been submitted to the WTO. 
147. Some Members had suggested that China create an official publication or website to publish 
drafts of all regulations  relating to foreign trade and economy as well as official decisions.  The China 
Foreign Trade and Economic Cooperation Gazette  was the official journal designated by the 
Government to publish laws, regul ations, rules, and measures related to trade in goods, trade in 
services and trade-related intellectual property rights .  To enhance transparency, the State Council had 
recently urged all government agencies to copy  to the Ministry of Commerce (MOFCOM) all 
economic or trade-related regulati ons when they were issued so that the information could be 
published in the Gazette immediately. Similarly, co pies of all draft regulations and rules that were 
made public for comments must also be simultaneously made available to MOFCOM for immediate 
publication in the Gazette.  China believed that a tr ansparent trade regime not only benefited traders 
and investors but also enhanced efficiency and competitiveness.  He confirmed that all outstanding 
responses would be provided to the Secretariat in the coming month. WT/TPR/M/161 
Page 34  
 
  148. The representative of the United States
 thanked China for its responses, particularly on 
transparency.  He asked whether, under the new State Council notice, draft measures were to be 
published in the official gazette only when a public entity wished to seek public comment on the draft, 
but that this was not a requirement.  He urged Ch ina to consider a system seeking public comment on 
all draft measures. 
149. The representative of China  clarified that draft regulations a nd rules that were made public for 
comment were published in the gaze tte.  He understood that the transp arency obligation did not cover 
the whole drafting process and therefore China was no t obliged to provide the draft process to WTO 
Members.  For example, the forms and proce dures for seeking public comments on legislative 
process, laws and regulations or rules were clear ly provided for in China’s Legislation Law, the 
Regulations on Procedures for the Formulation of Administrative Regulations and the Regulations, on 
Procedures for the Formulation of Departmental Rules.  Since accession to the WTO, China had 
followed these laws and provisions in its legislative efforts.  Another example was a full draft of the 
Measures on Registration of Foreign Trade Oper ators, which had been posted on the MOFCOM 
website for public comment in May 2004.  In a sep arate instance, a public comment period had been 
provided in early 2005 for the draft Regulations on Direct Selling.  Due to the approaching Spring 
Festival, the deadline had been ex tended to leave enough time for comments.  Also, for the same 
draft, both domestic and foreign companies had be en invited to comment in various forms on many 
occasions.  In July 2005, the Standing Committe e of the National People’s Congress had published 
the draft Property Rights Law in full text for exte nsive public comments.  China believed that it had 
honoured its WTO commitments and obligations.  
150. The Representative of the United States  said that MOFCOM was an excellent example of an 
agency that regularly provided measures for public  comment and wished that this practice would 
become more uniformly applied by other agencies.   The United States believed that China's accession 
committed it to providing a meaningful period for public comment and looked forward to further 
dialogue with China on this issue. 
(ii) Trade and related measures 
151. The representative of China  noted that written replies to comments and questions on issues 
such as customs valuation and formalities as we ll as import procedures had been provided while 
replies to questions on export duties were being pr epared. He had already discussed increasing IPR 
protection on the first day. 
152. Although China used anti-dumping measures, it was the biggest victim of such measures.  In 
2005, many Chinese products were subject to anti-dumping, special safeguards measures, and 
restrictions on textiles, affecting exports valued  at US$12 billion.  He sh ared the discussant’s hope 
that the number of anti-dumping measures by and ag ainst China would decline in the future.  China 
believed that disciplines on contingency measures shoul d be tightened and the measures be used in a 
restrained manner.  China was therefore participa ting proactively in the on-going rules negotiations. 
153. Compulsory certification of products for reas ons of consumer safety was a common practice 
in many countries and was in conformity with the principles of the TBT Agreement.  Before China’s 
accession two different sets of compulsory certification systems, the CCIB, and Great Wall, were administered by two different government bodies.  In order to address Members concerns, China had formulated the triple C system with unified product lists, standards, and procedures. This system had 
been widely acknowledged and appl auded by domestic consumers. 
154. China would carefully study Members' ques tions and comments on CCC procedures and their 
administration, and would take justified advice into consideration in its future work.  Members shared 
a common goal to establish a compulsory certification system, consistent with the TBT Agreement, to  WT/TPR/M/161 
 Page 35 
 
 
  secure customer safety, and at the same time provi de convenient and transparent administration for 
producers.  SPS issues were complex and as a big agricultural country with a huge farming population, China faced challenges of food safety, hu man health, and animal and plant health.  Since 
reform began in 1978, the authorities had been  cooperating closely with their international 
counterparts, and had established an SPS regime simi lar to that of many other WTO Members. China 
had always sought a balance between protecting it s own interests and trade facilitation with its 
partners. 
155. In China's Working Party Report, it had been made clear that in Chinese, "standard" was 
somewhat different from "technical regulation" in the WTO TBT Agreement.  This might have caused 
some confusion and concerns among Members.  China had attached great importance to harmonizing 
its national standards with international norms.  Currently, around 45% of natural standards were 
equivalent to international standards.  Chinese st andards were harmonized not  only with ISO and IEC 
standards, but also ITU, CAC and others, whic h were not included in the 32% adoption rate 
mentioned in the Secretariat Report.  According to  China’s standardization authorities, the adoption 
rate in 2005 for newly developed standards wa s as high as 53.86%.  China’s standardization 
authorities had just completed an examination of  all national standards and had found that 44.2% 
needed to be revised;  the revision of these standa rds was expected to furt her increase the adoption 
rate of international standards. 
156. Many Members in their written questions had ask ed when China would be ready to join the 
GPA.  He was delighted to announce that Chin a would submit its Appendix I offer no later than 
31 December 2007.  China’s government procurement system had been introduced recently and was 
still being improved.  It was therefore natural th at China still faced many practical difficulties in 
joining the GPA. Assessing the impact of GPA me mbership on industries was complicated, especially 
for a developing country like China.  China hoped  to have a complete picture of government 
procurement practices in other Members through bila teral exchanges and technical consultations to 
create the appropriate conditions fo r launching GPA accession negotiations. 
157. Some Members had commended China’s first s ubsidy notification under Article 25.8 of the 
Agreement on Subsidy and Counterva iling Measures.  The information,  gathered in accordance with 
the WTO Agreement, mainly included: preferential ta x treatment for foreign investment;  preferential 
tax treatment for specific regions, such as the re latively poor western regions;  preferential tax 
treatment and financial appropriation for disaster preparation, poverty alleviation, environmental 
protection, employment promotion or social welfar e;  financial support for small and medium-sized 
enterprises;  preferential tax treatment and financ ial appropriation for enterprises for research and 
development;  and de-minimus  green box agricultural subsidi es.  Detailed information on these 
programmes had been included in the full, up-to- date notification, whic h covered 78 subsidy 
programmes and had addressed most of the Members’ questions. 
158. With regard to competition policy, China’ s draft Antimonopoly Law was moving forward in 
the legislative process. The centrepiece of the dr aft law was about monopolistic practices of business 
operators rather than market structure and operato r scale.  The draft contained, among others, banning 
monopoly agreements, banning the abuse of dom inant market position, and regulating the 
concentration of operators, which w as consistent with antitrust regulati ons in most countries.  China’s 
Antimonopoly Law would apply equally to various t ypes of market players including state-owned, 
collective-owned, private, and foreign-invested en terprises.  It contained neither exemptions for 
SOEs, nor different treatment for SOEs and private enterprises.  The law would strictly follow the 
principle of national treatment and would not be discriminatory against foreign enterprises. 
159. The representative of the European Communities  thanked China for the clarification on TBT 
and standards, including about merging the two prev ious systems and its commitment to international 
standards.  The EC, through discussions with its indus tries, believed that the adoption of international WT/TPR/M/161 
Page 36  
 
  standards was not quite at the leve l suggested by China's figures.  He  welcomed the abolition of 11% 
of national standards.  However, there was no re ason for not basing the increasing number of national 
standards on international standards.  This issue was of concern to the EC and would be analysed 
further.  On SPS the EC hoped that China would re spond to all the questions raised by Members, and 
eliminate unnecessary barriers to trade.  Based on Ch ina's preliminary replies, the EC welcomed its 
willingness to cooperate to bring its legislation in line with the OIE guidelines, for example on BSE.  
On the GPA, he welcomed China's intention to subm it an Annex I offer no later than December 2007.  
On IPR issues, he welcomed the special website on court decisions, the action plan adopted by the 
State Council, and the commitment to close open- markets selling counterfeited goods.  However, IPR 
was still a major cause for concern and the EC l ooked forward to concrete results on all these 
measures.  On subsidies, the EC was examining Ch ina's notification, and asking whether the notified 
subsidies were compatible with WTO rules.  On i ndustrial policy, the EC was concerned that after a 
period of adapting to WTO rules there were worry ing signs that the NDRC was issuing new policies 
trying to foster national champions, insisting, for example, on local content, discriminating against 
FIEs and imports.  These policies seemed to sub sequently become regulations, for example in 
automobiles.  He asked how WTO compliance for th ese policies was reviewed internally in Beijing. 
160. The representative of the United States
 thanked China for written responses on standards, SPS 
measures procurement, and IPR enforcement.  The Un ited States had recently had bilateral talks with 
China and China had agreed to take steps to impr ove IPR enforcement.  The United States' questions 
had been separated into two parts, the first part ta king priority.  One of the priority areas was China's 
industrial policy tools on which fe w questions had been answered in writing making it difficult to 
comment on them.  Of these, 17 questions were on subsidies of which China had answered only one.  
Eleven of these dealt with subsidies that could be considered as prohibited under the Agreement.  
Most of the questions raised by the United States we re not dealt with in China's subsidies notification, 
and detailed answers in writing would be appreciated. 
161. For the first category of questions concerni ng FIEs (questions 11, 12 and 26) he asked 
whether China agreed that they were export subs idies and about plans for withdrawing them.  The 
second category (question 55) could be considered import substitution subsidies also prohibited under 
the Agreement, and he asked whethe r China agreed with this characterization and about its plans to 
withdraw the subsidies.  Question 6 of the first pa rt of the submission dealt with subsidies provided 
through state-owned banks such as the state-ow ned commercial and policy banks.  The subsidies 
practices of these banks were non-transparent a nd were believed to constitute the bulk of 
subsidization provided by the Government.  There was no information on the subsidies practices of 
these banks and China's subsidies notification di d not address them, although in Annex 5 of the 
Accession Protocol, China listed loans from state- owned banks as subsidies and provided information 
on them at the time.  China also acknowledged in paragraphs 172 and 173 of its Working Party Report 
that it needed to provide information on support provided through the banking system, including 
policy loans, the automatic rollover of unpaid pr inciple and interest, forgiven and non-performing 
loans, and the selective use of below-market interest rates.  He realized that China would not be able 
to provide all the information today but urged it to  provide comprehensive information in its written 
responses.  Questions 23 and 25, which dealt, resp ectively, with export duties and VAT rebates on 
export were also important, and he would appreci ate a response on these.  He thanked China for 
information on the draft Anti-Monopoly Law and w ould welcome circulation of a draft soon for 
public comment. 
162. The representative of Japan  thanked China for its explanations.  He appreciated the 
Government's recognition that there were problems with anti-dumping measures and readiness to facilitate improvements.  However, answers on th e consistency of some practices with WTO rules 
stated only that these measures were reasonable b ecause they were taken according to Chinese laws 
and regulations.  He requested more detail on why the Government thought these measures were 
rational and in accordance with WTO rules.  He we lcomed China's announcem ent of an Annex I GPA  WT/TPR/M/161 
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  offer by the end of 2007.  Japan appreciated th e establishment of a special IPR protection group and 
further efforts to protect IPRs.  However, enfo rcement problems were highlighted by responses to 
Japan's questions on page 113-119.  Japan hoped for c ontinued cooperation with China on this matter.  
China's answer to Japan's question 12 on page  129 on the stage of economic development and 
protection for IPR indicated some misunderstanding.  Japan had indicated that the level of protection 
should not change with the level of economic development but that did not mean that Japan was 
overlooking the stages of economic development. 
163. The representative of China  noted that these had been exchanges views with entrepreneurs in 
the United States on strengthening IPR protection.  China was taking steps to further improve IPR 
protection:  the National Working Group on IPR Prot ection had recently unveiled an action plan.  For 
example, over the next three years, China would set  up 50 reporting centres in 50 major cities to 
handle IP-related complaints.  It would launch seven specialized campaigns to combat IPR violations.  
The Supreme People’s Court announced that it would set up IPR tribunals across China and had recently set up a website for publishing court verd icts and rulings in IPR cases.  China would also 
intensify enforcement efforts by:  (i) intensif ying import and export supervision pursuant to the 
Regulations on Customs Protection of IPR, against imports and exports of suspected infringing goods, 
which might result in the seizure and confiscation of such infringing shipments;  (ii) promoting 
software legalization by requiring pre-installati on of authorized operating systems in computers 
purchased by government at various levels, and in co mputers produced and imported;  (iii) combating 
cyber piracy by collecting information on webs ites reportedly engaged in illegal and criminal 
activities, and collaboration between administ rative enforcement agencies, streamlining 
administration over Internet websites, and shu tting down websites illegally downloading music and 
video files;  (iv) fighting infringement at trad e shows through the Measures on IPR Protection at 
Trade Shows issued jointly and put into effect by the MOFCOM, the State Administration of Industry and Commerce, the State IP Office and the Nationa l Copyright Administration.  To enforce the 
measures, an operation named Blue Sky would be stag ed jointly by the relevant authorities;  and (v) 
cracking down on infringing distribution activitie s, and closing down markets selling infringing 
products. 
164. China had taken note of concerns regarding in dustrial policy.  The Chinese government had 
formulated industry policies in the past few years to provide guidance for the development of some 
industries.  The first was to encourage innovatio n.  Chinese enterprises la cked their own famous 
brands and patents, and to adapt to the fierce comp etition of the international market, they needed to 
develop through constant innovation.  Therefore, the government encouraged business innovation;  
these innovations were the result of progressive ope ning and increased competition.  The second was 
to strengthen environmental protec tion and encourage energy conserva tion.  Aimed at establishing a 
harmonious society, China had restricted the development of highly polluting and energy consuming industries:  it was phasing out technologies and equipment unfriendly to the environment and energy 
conservation.  The third was to further reduce ad ministrative approval by the government and narrow 
the scope of government-approved investment projec ts.   The fourth, to push forward SOE reform, 
especially monopolies, transform SOEs into compan ies with multiple shareholders, and break down 
monopoly by increasing competition in sectors like oil, telecom, power, railway, and civil aviation.  The fifth was to encourage development of the private sector. China encouraged private sector 
involvement in SOE reform and in areas such as financial services, public utilities, and infrastructure 
building. 
165. Given the limited amount of time left, he sugg ested that China would provide additional 
responses to questions raised by Members in th e coming month and hoped th at the written responses 
would address Members' concerns. WT/TPR/M/161 
Page 38  
 
  (iii) Sectoral aspects 
166. The representative of China
 confirmed that China had no specific export assistance or VAT 
rebate system for electronic and communications equipment manufacturers, except for the preferential tax policies contained in its subs idy notification such as for forei gn-invested enterprises, and the 
general VAT rebate scheme for all exports.  Agricu ltural policy had already been addressed under the 
first theme.  As a large consumer and producer of  energy, China had maintained an average energy 
self-sufficiency rate of over 90% since the 1990s.  China had based its economic development on 
indigenous energy and resources for which it was well positioned.  In recent years, although China's 
demand for energy had been growing, coal had rema ined its primary source of energy.  The factors 
affecting world oil prices were many and complex and China was also a victim of the latest oil price 
increases.  China was willing to engage in energy and resource cooperation with other countries in the 
spirit of mutual benefits and win-win results a nd was hopeful that such cooperation would lead to 
stability in the world energy market and the su stainable development of the energy-supplying 
countries. 
167. In the textiles and clothing sector, China had ne ither subsidies nor import restrictions.  The 
sector was fully and freely competitive, and over 90% of enterprises in the sector were private.  China 
was also the world’s third largest textile im porter, after the EC and the United States. 
168. Over two decades of reform and opening had le d China to believe that services trade would 
play a more important role in its economic deve lopment. To develop this sector, China needed 
liberalization and competition, and was ready to work  with Members to facilitate greater international 
services trade liberalization by driving the Doha round negotiations. 
169. The discussant
 welcomed China's comments that it need ed liberalization in the services sector 
and that it was ready to work with other Member s to facilitate greater opening of services trade.  
Services contributed around 41% of China's GDP an d around 25% of jobs.  Greater liberalization of 
services was important for creating jobs, re ducing unemployment, and increasing economic 
competitiveness in general and in certain sectors.  There had been great interest in some services, 
particularly banking, insurance, and telecommuni cations.  He welcomed the written answers and 
noted that capital requirements for investment by FIEs in telecommunications seemed high, and there 
had been no new entrants in basic telecommunicati ons services, suggesting that this requirement was 
preventing entry by foreign investors.  Foreign presence was also low in banking and insurance.  
Although these were sensitive sectors and reform was ongoing, in particular  to develop a smooth 
functioning capital market and as part of reformi ng SOEs, they were also crucial for making China 
more competitive and for creating jobs.  He hoped for greater reform in these sectors and in services 
in general.  He acknowledged that China's GATS co mmitments were more extensive than those of 
other developing countries but asked it to consid er autonomous liberalization in the future.  
170. The representative of the United States  highlighted the degree of government direction and 
involvement in the steel sector through provisions encouraging the use of domestically produced 
equipment and technologies, imposing de facto tec hnology transfer requirements, and prescribing the 
number and size of steel producers in China, their location, the types of products to be produced and the technology to be used.  Written responses suggest ed that the steel policy was not compulsory in 
itself, although traditionally many policies were im plemented through measures.  The United States 
hoped for a move towards the use of market mech anisms rather than government intervention and 
direction.  In response to the U.S. question 53,  China had stated that there was no government 
interference in decisions by commercial enterprises including in the steel sector, but in response to 
Canada's question 54a, China stated that a major el ement of China's ongoing reform was to gradually 
eliminate government interference in commercial deci sions of enterprises including in steel.  The first 
response suggested that there was no interference,  the second one suggested that interference was 
being gradually eliminated.  He urged Chin a to move along this path more quickly.  WT/TPR/M/161 
 Page 39 
 
 
  171. With regard to iron ore, the Secretariat's re port stated that the Ministry of Commerce was 
issuing import licences only to importers satisfying ce rtain criteria.  In its written responses China had 
not acknowledged the use of such criteria, and he asked China to explain how it justified the use of such criteria.  A recent notice issued by the Mi nistry of Commerce entitled "Notice on Tightening up 
the Administration of Iron Ore Imports" sought to re duce the pace of iron ore imports and prohibited 
the issuance of import licences for iron ore sought from Australia and Brazil if the unit prices were 
higher than those set in the notice.  He asked how China justified these provisions given its WTO 
notifications.  On the export quota system for coke he asked China to justify the production and domestic sale of nearly 200 MT but exports of only 14 million tonnes. 
172. The auto policy was an example of a policy th at, while not in itself compulsory, could be 
made so through specific measures.  The United Stat es, along with the EC and Canada, had requested 
consultations on China's policy on imported auto part s.  More information had been provided in the 
answers on the telecommunications law and he urge d China to circulate the draft law for public 
comment as soon as possible. 
173. The representative of th e European Communities
 noted that on page 16 of the responses 
received that day, China stated that further servi ces liberalization would be pursued for example in 
translation, road transport, and cleansing services, et c.  The EC had had constructive engagement with 
China in the recent plurilateral discussions and woul d have liked to have seen reference to banking, 
insurance, telecommunications, construction, com puter reservation, express delivery, legal services, 
tourism, etc., in which the EC could work with  China to obtain a higher degree of liberalization 
thereby contributing to economic development a nd further liberalization and competitiveness in 
services.  The answer to the EC's question on coke  did not address the removal of export licences, and 
he requested further clarification.  He hope d for a constructive dialogue with China on the 
consultations on imports of auto parts. 
174. The representative of China  noted that in the last few years the production capacity of the iron 
and steel industry in China had grown excessively , leading to over exploitation and waste of 
resources, as well as environmental problems.  Thus, measures had been  introduced to reduce 
investment in the sector, including tighter energy -efficiency requirement and higher environmental 
thresholds, applied to both foreign and domestic enterprises.  Regarding Members' concerns about 
China's new automotive industry policy, he asked th em to compare the current  Automotive Industry 
Development Policy with the 1994 policy, which ha d contained requirements for local content and 
export performance and had been of concern to Me mbers.  After acceding to the WTO, China had 
modified the 1994 policy and abolished local-conten t and export-performance requirements.  The 
current policy was not contradictory to WTO rules.  The EC, United States, and Canada had formally requested consultations with China on 30 Marc h 2006 under the WTO dispute settlement mechanism, 
on importation of auto parts.  China believed th at the DSB provided a proper forum for Members to 
settle trade disputes and had therefore accepted the request for consultations on 7 April 2006.  The 
first round of consultations woul d be held on 11 May 2006 in Ge neva, and China hoped that the 
dispute could be resolved thr ough this consultation process.  
175. Regarding questions on financ ial and telecommunications services, since its WTO accession, 
China had lowered its requirements on establishmen t of financial institutions and operational capital 
several times.  China had lowered the operationa l capital requirement for foreign bank branches from 
Y 600 million to Y 500 million in December 2003, and further to Y 400 million in December 2005.  
Members had also raised the issue of China’s excessively high capitalization requirement in 
telecommunications:  China took note of these c oncerns and would consider the feasibility of 
lowering the capitalization requirement.  However, he explained the rationale for the current policy:  
with a vast territory and huge population, China faced an arduous task of providing universal service 
and needed enormous investment to install telecom networks.  In 2000, the minimum cost of installing 
a network at the provincial level and of providing basic telecom services was Y 200 million.  The cost WT/TPR/M/161 
Page 40  
 
  of installing a cross-region netw ork and providing basic telecom services was Y 2 billion.  The capital 
requirement was the same for foreign an d domestic telecom service providers.   
176. China's experience of reform had led it to believe that greater openness led to fiercer 
competition and in turn to faster sectoral development.  Companies counting on government support would not survive in the global environment.  China was not a mercantilist country and import 
substitution was never an option.  China's choice wa s liberalization and competition.  Other questions 
would receive written responses. 
177. The representative of the United States
 had hoped for more discussion on some of the 
questions raised and asked China to provide detailed responses in writing. 
178. The discussant  thanked China for the way in which it had handled the large number of written 
and oral questions received.  It was clear that Members recognized China's progress on its WTO 
commitments and its economic and trade policies.  He was sure all Members would join him in 
commending and congratulating China on its difficu lt reforms.  All WTO Members faced challenges 
and problems, even while remaining committed to th e WTO, and it was important to have a sense of 
perspective in discussions.  Many challenges remain ed for China.  The large number of questions 
demonstrated interest and concern about developm ents in China.  The Chinese Government also 
recognized the problems and challenges it faced a nd had been open and proactive in responding to 
them.  China was already dealing with many of these challenges and the Trade Policy Review had had 
benefits for its ministries and agencies.  The deba te in the TPRM also demonstrated that China was 
open to discussing the challenges it faced, and the discussion had been possible because it was a WTO 
Member.  China's Membership w as therefore positive for China and also for all Members and the 
world trading system. 
179. The representative of China  noted that the in-depth discussions had added to the 
comprehensiveness of the documents prepared for the review, and together presented a China at four 
and a half years after accession to Members, that  was consistently developing along its reform and 
opening-up path, and integrating further into the world economy and global trade.  Information on 
China’s trade regime ha s been updated throughout the Review;  China's development objectives and 
policy priorities had been clarified, and its contribu tions recognized.  China had also been reminded of 
its responsibilities, which it had always been, and w ould continue to be, con scious of.  His delegation 
consisted of over 20 people from more than a dozen  ministries who had listened very carefully to 
Members' concerns and comments.  It was also a very useful exercise for China. All the questions, 
comments and concerns expressed by China's trading partners during the review process were well-
taken, and would be responded to in writing in the coming month.  WT/TPR/M/161 
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  VI. CONCLUDING REMARKS BY THE CHAIRPERSON 
180. The first Trade Policy Review of the People's Re public of China has given us a much better 
understanding of China's trade polic ies and practices and of challeng es that remain.  I thank Vice 
Minister Yi Xiaozhun and his delegation as well as th e Discussant, Ambassador Gafoor of Singapore, 
and Members of the TPRB for contributing to our fr ank exchange of views.  China's response to a 
large number of questions is also appreciated. 
181. Recognizing the considerable steps taken by Ch ina in reforming its economy, and the role 
played by openness in fostering its rapid econom ic growth, Members commended China's continued 
trade liberalization.  China has taken major steps,  especially in the run up to its WTO accession, to 
streamline its trade policy regime, revising and upd ating a large number of laws in the process.  
Reform has resulted in a remarkable transformati on of the Chinese economy.  Real economic growth 
has been at some 9% over almost two decades, resulting in an eleven-fo ld increase in per capita 
income between 1978 and 2005.  The percentage of  China's population living below the poverty line 
has declined from 73% in 1990 to 32% in 2003.  Tr ade and investment reforms have resulted in China 
becoming the world's third largest trader a nd one of the largest recipients of FDI. 
182. Nevertheless, there remain a number of challenges.  These include growing income 
inequalities and the need for job creation, while c ontinuing and deepening economic reforms.  China 
noted that in meeting its goal of annual average GDP growth of 7.5% over the next five years, 
particular attention would be paid to agriculture, rural development and farm ers' incomes, balanced 
regional development, technological innovation, ener gy conservation and environmental protection.  
Regarding the exchange-rate regime, which some Members raised, China said that it was taking steps 
to further develop its foreign exchange market.  There were also remarks by some Members about 
China's RTA activity.  China noted that RTAs could not, and should not, replace the multilateral trading system;  rather they could usefully complement the system. 
183. On trade policy, Members complemented Ch ina on measures to implement its accession 
commitments.  As a result, border measures, including  the tariff and export restrictions, had declined.  
Applied and bound rates are close, making the tariff more predictable and transparent.  
Notwithstanding these achievements, many Members rai sed the issue of transparency in policymaking 
and implementation, and were con cerned about the use of certain measures on imports and exports, 
especially anti-dumping and countervailing, standard s, SPS, export taxes an d VAT rebates.  Some 
Members also thought that policies, such as that on automobile parts, were being used to restrict 
imports.  China said that it had implemented its acces sion commitments in good faith.  As a result, the 
economy was much more open and transparent.  Ch ina's trade and related laws had also been 
extensively reviewed, and amended where necessary, to meet its WTO commitments.   
184. Members noted although direct intervention by the Government in the economy had declined, 
but expressed concern that indirect measures were s till used to "guide" investment in certain sectors, 
particularly in manufacturing, including the steel and automotive sectors.  They thanked China for its 
recent notification on subsidies and raised further qu estions.  Several questions were raised about the 
investment climate, as well as about the draft Competition Law and its treatment of the public sector.   
185. Many Members expressed concern that, desp ite China's efforts, the enforcement of 
intellectual property rights (IPRs) remained problema tic.  They urged China to address this.  China 
acknowledged that there remained gaps between the level of protection of IPRs in China and 
developed Members.  Nevertheless, China had set up a complete legislative and enforcement 
mechanism for IPRs and had raised public awareness of IPRs. 
 WT/TPR/M/161 
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  186. Reform in agriculture was commended by Member s;  further liberalization would help raise 
rural productivity.  China's demand for natural resources and energy, in the view of some Members, could also be better met through a more open and transparent policy on investment in this sector.  On energy conservation and environmen tal protection, Members requested details on steps to be taken to 
improve energy efficiency. 
187. On services, many Members noted that co mmitments undertaken by China were more 
extensive than those of other de veloping countries.  However, liberalization in services had been 
slower than in other areas and Members encouraged  China to continue to relax ownership and entry 
requirements and to strengthen regulation.  Continued reform, particularly in the financial sector, was 
crucial to ensure a better allocation of resources.   
188. Members urged China to continue its active par ticipation in the current negotiations and to 
work for a successful conclusion to the DDA.  They  noted, and welcomed, steps taken by China to 
provide assistance to LDCs, including through im proved market access and debt forgiveness. 
189. This review has been very useful in giving us  all an overview of China's trade policies and 
practices.  I would once again like to thank the Chin ese delegation for their efforts, the Discussant for 
his insightful comments, and Members for contributing to what has been a very enlightening two days 
of discussions.  We look forward to receiving the remaining outstanding responses within the next month. 
__________