week 5: China and the WTO: Two Systems Meet

Question 1

What was China’s status in the General Agreement on Tariffs and Trade (GATT) in 1947?

Answer 1

China was one of the original contracting parties to the GATT in 1947.

Question 2

Why was China’s status in the GATT deactivated in 1950?

Answer 2

China’s status was deactivated after the formation of
the People’s Republic.

Question 3

When did China formally seek to resume its status as a contracting party to the GATT?

Answer 3

China formally sought the resumption of its status in 1986.

Question 4

How many rounds of negotiations did it take for China to agree on the ‘Protocol of Accession’ to the WTO?

Answer 4

It took 18 rounds of negotiations for China to agree on the ‘Protocol of Accession’ to the WTO.

Question 5

What was the challenge of China’s accession to the WTO?

Answer 5

The challenge was having a country with a socialist economic system and the largest population join an organization based on liberal economic principles.

Question 6

How was China’s accession to the WTO in 2001 initially perceived?

Answer 6

It was hailed as a magnificent achievement and a victory for the liberal paradigm.

Question 7

What has changed in the perception of China’s relationship with the WTO over 20 years?

Answer 7

There is a feeling that China and the WTO are mutually incompatible due to false expectations.

Question 8

What was the assumption of WTO incumbents when China knocked on its door?

Answer 8

They assumed China had entered a one-way street towards a market economy with Deng’s reforms.

Question 9

What is China’s economic system described as?

Answer 9

China describes its economic system as a ‘socialist market economy’.

Question 10

What is the role of state-owned enterprises (SOEs) in China’s economy?

Answer 10

SOEs dominate China’s economy, with substantial state involvement.

Question 11

What was the expectation of China’s trade partners regarding privatization?

Answer 11

China’s trade partners expected faster privatization, but it has been slower than expected.

Question 12

What is the main issue with China’s integration into the WTO?

Answer 12

The main issue is China’s retention of substantial state involvement, which contradicts the WTO’s liberal understanding.

Question 13

What was the primary goal of the GATT when it was established?
A) To promote state-controlled trade
B) To facilitate tariff negotiations among liberal market economies
C) To create a global currency
D) To limit international trade

Answer 13

B) To facilitate tariff negotiations among liberal market economies

Question 14

Why was China’s GATT status removed in 1950?
A) It chose not to participate.
B) The People’s Republic was formed.
C) It did not meet requirements.
D) It was too small.

Answer 14

B) The People’s Republic was formed.

Question 15

What percentage of total employment in China was in the public sector in 2019?
A) 45%
B) 50%
C) 63%
D) 75%

Answer 15

C) 63%

Question 16

What was the common concern about China’s state-owned enterprises(SOes) among trade partners
A)They were too competitive in the global market.
B)They receive excessive state support, undermining fair competition.
C)They have no influence in the economy.
D)They are fully privatized.

Answer 16

B) They receive excessive state support, undermining fair competition.

Question 17

How did WTO members view the significance of China joining the organization?
A) As a minor event with little impact
B) As a major victory for free trade
C) As a threat to their economies
D) As a sign of China’s military strength

Answer 17

B) As a major victory for free trade

Question 18

What effect did the Cold War have on the creation of GATT?
A) It made all countries join together.
B) It encouraged more state control in trade.
C) It had no effect on trade policies.
D) It led to trade being viewed as a part of national security.

Answer 18

D) It led to trade being viewed as a part of national security.

Question 19

When China describes its economic system as ‘socialist market economy’, what does that mean?

Answer 19

It is a mix of private initiative and state planning, where, unlike in Western economies, the Communist Party’s role is paramount

Question 20

Why are the headlines concerning China in Western articles so negative?

Answer 20

False expectations and a case of sub-optimal contracting