China's SOE Reform: Using WTO Rules to Build a Market Economy
International and Comparative Law Quarterly, 2019, Vol 68, Issue 2 (Forthcoming)
60 Pages Posted: 11 Jul 2018 Last revised: 20 Jan 2019
Date Written: July 1, 2018
This paper explores one of the most significant and pressing challenges for the multilateral trading system, that is, how the WTO rules may be utilized to deal with China’s state capitalism. The paper observes that the recent rounds (including the current round) of state-owned enterprise (SOE) reform in China have strengthened rather than weakened state capitalism and have created increasing sophistications in China’s market-oriented transformation. It argues that while the general GATT rules are limited in terms of the types of policy instruments and the scope of obligations, the WTO rules on subsidies and countervailing measures, coupled with China’s WTO-plus commitments, have provided sufficient defense against the encroachment of Chinese SOEs beyond its own shores. In this context, the paper submits that anti-dumping, which is designed to tackle activities of businesses or firms, has been over-used and even abused by WTO Members in dealing with state intervention and market distortions in China. Thus, WTO Members should now shift their focus to exploring the utility of the subsidy and China-specific rules to overcome the challenges arising from China’s state capitalism.
Keywords: State-owned enterprise; WTO; State capitalism; Anti-dumping; Subsidy; Countervailing measures; WTO-plus obligations.
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