Since China formally joined the World Trade Organization (WTO) in November 2001, its economy has continued growing strongly and attracting much foreign investment, while the world’s major economies have struggled with sluggish growth or recession. Exactly how WTO entry has contributed to China’s ongoing strong economic performance is greatly debated, but WTO accession has definitely meant that China’s “reform and opening” have entered a new stage¾they are now institutionalized.
    The clearest signs of institutionalized reform and opening are the changes that have been made in Chinese foreign trade policy. The first-year WTO commitments that China’s government has fulfilled include cutting tariffs, opening most industries to foreign competition, amending or repealing old foreign trade laws and regulations, and issuing new ones that comply with WTO rules and principles. The changes that have been made to fulfill these WTO obligations are not just perfunctory policy adjustments; the changes are permanent, reform-deepening transformations of China’s trade regime. As interaction with the outside world increases in both scope and scale, trade policy has attracted attention from an increasing range of interest groups. New players and forces are now trying to participate in shaping China’s trade policy. Perceptions of trade policy have shifted too.
    This chapter focuses on the recent changes in China’s foreign trade policy in the context of WTO accession. First, it analyzes changes in trade policy thinking in the light of WTO accession by examining policy debates. It then discusses trade policy practices and adjustments, especially the Chinese government’s efforts to fulfill its WTO commitments. Finally, it explores the significance of the post-WTO changes in China’s trade policy. Perceptions of trade policy issues are emphasized throughout, as present thinking and policy practices will significantly influence the future path of China’s foreign economic policy.
    Trade Policy Debates after WTO Accession
    The Role of Foreign Trade in China’s Economy
    China’s imports and exports have expanded continuously since the 1990s. China’s trade has grown at a much faster rate than its gross domestic product, and its trade dependency ratio in 2001 was 44 percent, or 1.47 times higher than in 1990. China exports much more than it imports, and, with the exception of 1993, it enjoyed fast-growing trade surpluses in the 1990s. Foreign trade became China’s main engine of economic growth in the 1990s, contributing 7.5 percent on average to GDP growth (Zhang 2002). A 10 percent increase in Chinese exports was, for example, found to have resulted in a 1 percent increase in GDP in the 1990s, if both direct and indirect contributions were considered (Lin and Li 2002).