China's Growing Role in World Trade

Robert C. Feenstra, Shang-Jin Wei, Robert C. Feenstra, Shang-Jin Wei

• Publisher: University of Chicago Press
• Year: 2010
• Print ISBN: 9780226239743, 9780226239712
• eBook ISBN: 9780226239729
• Topic: Business
• Subtopic: Business General
• Index: Business

In less than three decades, China has grown from playing a negligible role in international trade to being one of the world's largest exporters, a substantial importer of raw materials, intermediate outputs, and other goods, and both a recipient and source of foreign investment. Not surprisingly, China's economic dynamism has generated considerable attention and concern in the United States and beyond. While some analysts have warned of the potential pitfalls of China's rise—the loss of jobs, for example—others have highlighted the benefits of new market and investment opportunities for US firms.

Bringing together an expert group of contributors, China's Growing Role in World Trade undertakes an empirical investigation of the effects of China's new status. The essays collected here provide detailed analyses of the microstructure of trade, the macroeconomic implications, sector-level issues, and foreign direct investment. This volume's careful examination of micro data in light of established economic theories clarifies a number of misconceptions, disproves some conventional wisdom, and documents data patterns that enhance our understanding of China's trade and what it may mean to the rest of the world.

III

Sectoral Issues and Trade Policies

8

China’s WTO Entry

Antidumping, Safeguards, and Dispute Settlement

Chad P. Bown*

8.1 Introduction

Policymakers choose to enter into trade agreements like the World Trade Organization (WTO) for many political and economic reasons. However, economic theorists have posited two reasons central to this decision: first, that “large” countries seek reciprocal market access commitments to neutralize the terms-of-trade effects of trade liberalization; and second, that many countries seek an externally enforced contract in order to credibly commit domestic sectors to policy reform.¹ From the broad perspective of economic theory, China’s 2001 WTO accession might be motivated along the following lines: China agreed to undertake substantial import liberalization in exchange for greater certainty with respect to market access for its exports, and China’s program of reform would gain domestic credibility from trading partners’ threat and actual use of WTO dispute settlement procedures to ensure that China was living up to its liberalization commitments.

This chapter examines China’s political-economic experience in the face of “frictions” in the international trading system as it transitions to full WTO membership. We use a number of newly compiled data sources that track areas of international political-economic tensions associated with China’s increased trade. We focus on both its own exports and the potential changes in policy treatment they face across foreign markets as well as China’s imports and its own changes in trade policy associated with the market access commitments it undertook as part of its 2001 accession. While certainly only a part of the landscape, the data characterizing the changing nature of trade policies by China and its trading partners helps us characterize China’s actual WTO accession experience thus far.

With respect to policies facing China’s exports, we examine data on WTO members’ use of antidumping import restrictions against Chinese firms prior to and following its 2001 accession. While most economists view antidumping as economically baseless and little more than an easy-to-access tool of protectionism, there are many insights to be gained from examining its use, especially when it comes to China’s exporters’ experience. An additional benefit to studying antidumping is that it is a measurable and relatively transparent policy whose use has spread to many developed and developing countries. While it is certainly not the only tool of protectionism, antidumping is increasingly one of the few WTO-consistent instruments of protection that remains available to policymakers as more and more countries bind their import tariffs under the WTO and take on other liberalization commitments.²

Therefore, in section 8.2 of this chapter, we present data revealing the historic foreign use of antidumping against China’s exporters. These measures reveal one contributing explanation for China’s desire to seek WTO entry. By using a number of measures across virtually all of the major antidumping users in the WTO system, we find that China’s exporters faced substantial discriminatory treatment relative to other exporting country targets during the 1995 to 2001 period. We also introduce a regression approach that exploits variation across China’s exported products to examine a previously unexplored potential explanation for this feature of the data—that is, that foreign users were more likely to target China’s products that were benefiting from high Chinese import tariffs. The theory is that high-tariff products may have been tar...

Table of contents

• Cover
• Copyright
• Title Page
• Series Page
• National Bureau of Economic Research
• Relation of the Directors to the Work and Publications of the National Bureau of Economic Research
• Contents
• Introduction
• I. Microstructure of International Trade
• II. Macroeconomic Issues
• III. Sectoral Issues and Trade Policies
• IV. Foreign Investment and Trade
• Notes
• Contributors
• Author Index
• Subject Index