{"id":7920,"date":"2023-07-18T15:20:46","date_gmt":"2023-07-18T19:20:05","guid":{"rendered":"https:\/\/www.law.georgetown.edu\/iiel\/initiatives\/citd\/news-analysis-events\/chinas-state-economy-and-the-wto-book-discussion-with-professor-henry-gao\/"},"modified":"2025-05-12T11:08:25","modified_gmt":"2025-05-12T15:08:25","slug":"chinas-state-economy-and-the-wto-book-discussion-with-professor-henry-gao","status":"publish","type":"page","link":"https:\/\/www.law.georgetown.edu\/iiel\/initiatives\/citd\/engaging-the-world\/chinas-state-economy-and-the-wto-book-discussion-with-professor-henry-gao\/","title":{"rendered":"China\u2019s State Economy and the WTO: Book Discussion with Professor Henry Gao"},"content":{"rendered":"

Published March 29, 2023 by Emmanuel Amoah<\/a>, LLM, Economic and International Trade Law <\/em>at Georgetown Law, IIEL Fellow.<\/em><\/p>\n

On March 29, 2023, renowned China expert and trade law scholar Professor Henry Gao of Singapore Management University visited Georgetown Law for a discussion of his most recent book co-authored with Professor Weihuan Zhou and entitled\u00a0\u201cBetween Market Economy and State Capitalism: China\u2019s State-Owned Enterprises and the World Trading System.\u201d<\/a>\u00a0This event was organized by the Center on Inclusive Trade and Development (CITD) in collaboration with the Georgetown Society for Trade Investment and Development and the Center for Asian Law. CITD\u2019s co-director, Professor Jennifer Hillman, facilitated the discussion.<\/p>\n

In his talk, Professor Gao highlighted two \u201cproblems\u201d and one \u201cpromise\u201d on the topic on which the book turns: China\u2019s state-dominated economy and the challenges the Chinese model poses to the multilateral trading system. The first problem Professor Gao pointed out was China\u2019s shift towards state capitalism and its drifting away from a market economy model. The second problem he highlighted was that this shift would not be confined within China\u2019s borders but have a rippling effect across the globe. Professor Gao gave a couple of reasons in support of the claim that a trend towards state capitalism would be global and undesirable. First, he asserted that the regulatory measures taken by China might impact not only its domestic firms but also international ones. The recent fine imposed on the British accounting firm Deloitte is one example of this broader reach of Chinese policy. Second, Professor Gao pointed out that the seeming prosperity of China\u2019s economic model might entice developing nations to follow the so-called \u201cBeijing consensus.\u201d China\u2019s success, in other words, might encourage developing countries to replicate the Chinese model and become heavily dependent on subsidies and state-owned enterprises. It might be misguided to try to \u201cout-China China by becoming more like China,\u201d he noted.<\/p>\n

Despite these perceived problems, Professor Gao emphasized the \u201cpromise\u201d of multilateralism. He explained that existing World Trade Organization (WTO) rules, particularly those on subsidies and China\u2019s accession, could be utilized to address the challenges posed by China\u2019s state capitalism. He also discussed the potential of using the WTO to create new rules to grapple with these challenges. While the WTO\u2019s rule-making function has been struggling since the collapse of the Doha round, recent deals struck at the 12th Ministerial Conference might boost confidence in the organization\u2019s ability to develop new rules.<\/p>\n

Professors Gao and Zhou comprehensively analyze China\u2019s state-owned enterprises (SOEs), the commitments China made upon joining the WTO, and the relevance of WTO rules in resolving the issues in their book. In it, they trace China\u2019s economic transformation, starting with the 1970s at a time during which SOEs proliferated, through its pivot to a more market-oriented economy before China joined the WTO in 2001, and the subsequent turn away from a market orientation. The authors describe China\u2019s key WTO commitments regarding SOEs, price distortions, subsidies, and trading rights. These commitments, however, did not prevent China from becoming a state-capitalist economy. Professors Gao and Zhou argue that the responsibility lies with China and the WTO members who failed to utilize the mechanisms agreed upon during China\u2019s accession. They maintain that WTO negotiators are not primarily at fault, as they extracted essential commitments during the accession process.<\/p>\n

The authors identify two main reasons for the failure of commitments to forestall the shift towards state-capitalism and the influx of subsidized Chinese goods in global markets. First, commitments were too broad in nature and mechanisms for enforcing transparency very limited. Second, the WTO\u2019s approach hinged on specific commitments rather than on a comprehensive regulation of SOEs and anti-competitive behavior.<\/p>\n

Professors Gao and Zhou argue that the WTO should be the forum for addressing the challenges arising from China\u2019s state capitalism and the growth of its SOEs. They propose three ways to go about using the WTO to confront these challenges: 1) strategic WTO litigation; 2) increased use of WTO-consistent countervailing duties; and 3) multilateral negotiations to amend WTO subsidy rules. The authors underscore the importance of a multilateral approach, as unilateral efforts have been ineffective.<\/p>\n

China\u2019s veer towards state capitalism poses a significant challenge to trade governance as we know it. This development lies at the heart of the current U.S.-China trade war, the loss of faith in the multilateral trading system, and the breakdown of the WTO\u2019s Appellate Body. The book written by Professors Henry Gao and Weihuan Zhou offers a thorough take on a timely development affecting not only the U.S.-China trade relations, but international economic relations as a whole. Is the WTO and its rules-based system capable of addressing this development? Based on Professor Gao and Zhou\u2019s book, it should, at the very least, be an organization and system that is resorted to with a view to disentangling some of the very complex issues and dilemmas that this development has already given rise to.<\/p>\n

Watch the recording of the event here:\u00a0https:\/\/vimeo.com\/823359539\/6a6796ad26?share=copy<\/a><\/em><\/p>\n

You can also find a review of the book by our Co-director, Jennifer Hillman, here:\u00a0https:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=4428229<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Published March 29, 2023 by Emmanuel Amoah, LLM, Economic and International Trade Law at Georgetown Law, IIEL Fellow. On March 29, 2023, renowned China expert and trade law scholar Professor […]<\/p>\n","protected":false},"author":11247,"featured_media":0,"parent":6006,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_acf_changed":false,"_price":"","_stock":"","_tribe_ticket_header":"","_tribe_default_ticket_provider":"","_tribe_ticket_capacity":"0","_ticket_start_date":"","_ticket_end_date":"","_tribe_ticket_show_description":"","_tribe_ticket_show_not_going":false,"_tribe_ticket_use_global_stock":"","_tribe_ticket_global_stock_level":"","_global_stock_mode":"","_global_stock_cap":"","_tribe_rsvp_for_event":"","_tribe_ticket_going_count":"","_tribe_ticket_not_going_count":"","_tribe_tickets_list":"[]","_tribe_ticket_has_attendee_info_fields":false,"footnotes":"","_tec_slr_enabled":"","_tec_slr_layout":""},"class_list":["post-7920","page","type-page","status-publish","hentry"],"acf":[],"ticketed":false,"_links":{"self":[{"href":"https:\/\/www.law.georgetown.edu\/iiel\/wp-json\/wp\/v2\/pages\/7920","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.law.georgetown.edu\/iiel\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.law.georgetown.edu\/iiel\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.law.georgetown.edu\/iiel\/wp-json\/wp\/v2\/users\/11247"}],"replies":[{"embeddable":true,"href":"https:\/\/www.law.georgetown.edu\/iiel\/wp-json\/wp\/v2\/comments?post=7920"}],"version-history":[{"count":2,"href":"https:\/\/www.law.georgetown.edu\/iiel\/wp-json\/wp\/v2\/pages\/7920\/revisions"}],"predecessor-version":[{"id":7923,"href":"https:\/\/www.law.georgetown.edu\/iiel\/wp-json\/wp\/v2\/pages\/7920\/revisions\/7923"}],"up":[{"embeddable":true,"href":"https:\/\/www.law.georgetown.edu\/iiel\/wp-json\/wp\/v2\/pages\/6006"}],"wp:attachment":[{"href":"https:\/\/www.law.georgetown.edu\/iiel\/wp-json\/wp\/v2\/media?parent=7920"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}