When Gao Hucheng, China’s commerce minister, stepped up to the podium at the World Trade Organisation meeting in Bali this week for his opening address it was full of diplomatic language hailing multilateralism and the central role of the WTO.
But buried in his speech was one seemingly-benign line that startled some of the assembled ministers and senior trade officials. “We’re also open-minded towards other multilateral – and plurilateral – negotiations,” Mr Gao said.
In those jargony words lay official confirmation of an important shift in China’s trade policy. After years of defending the multilateral WTO against the perceived threat of plurilateral deals negotiated by some members, China was considering shifting sides.
In so doing, it would be following the path of the US, EU and others who, frustrated at the slow pace of progress in the WTO, have cut out Geneva and begun launching talks outside its umbrella.
Beijing’s change of heart manifested itself quietly this week as the world focused on the hard-nosed negotiations by India that have threatened to block the first global trade deal in the WTO’s 18-year history – one that it is desperate to seal to rebut its critics.
Ever since China joined the WTO in 2001 it has seen the Geneva-based body as a path for trade negotiations beyond the bilateral deals it has signed with other countries. But now China is not only starting to hedge its bets but even offering pointed criticism of the WTO.
“We are seeing a big shift,” says Tu Xinquan, a trade policy expert at the China Institute for WTO Studies at Beijing’s University of International Business and Economics.
One reason is that China’s leadership is frustrated with the WTO’s record at delivering results, Mr Tu says. In his speech, Mr Gao cited the “low efficiency of its decision-making system”.
In spite of the magnitude of its shift, Beijing has been content to leave the stage to India. While Anand Sharma, India’s commerce minister, was threatening to sink the negotiations the lone Chinese public event was an announcement on the first day of the meeting by Mr Gao that China was increasing its support for the “Cotton Four” African countries – Benin, Burkina Faso, Chad, and Mali.
The sole drama involving China may have been when a journalist asked Mr Gao, who speaks fluent French and has a doctorate from a Paris university, whether there were any strings attached to the aid. “Is this just philanthropy?” he asked. Mr Gao greeted the question with silence.
The result of China’s emerging ennuis with the WTO is that it is exploring other avenues more aggressively. It has applied to join negotiations led by the EU and US to update the rules governing the $4tn annual trade in services.
When those talks were launched two years ago the then-Chinese ambassador to the WTO is said to have stormed into then-director general Pascal Lamy’s office to demand to know how they could proceed outside the WTO.
Diplomats say Beijing is also inquiring about the 12-country Trans-Pacific Partnership talks now underway. And some analysts believe it could eventually join the TPP, often described as the US’s economic pivot to Asia and even an attempt to contain China economically.
“We are trying everything we can,” Mr Tu says. “Plurilateral, bilateral, the WTO. As long as it works!”
The reason, he said, was Beijing’s desire to speed up reforms and its view that opening the economy further could help it achieve that aim. But there are still barriers in China’s way.
European and US officials are sceptical of China’s bid to join the Trade in Services Agreement discussions now taking place between more than 50 countries representing some 70 per cent of the global trade in services. They point to the collapse of talks over IT products, blamed on China, as a cautionary example.
Any move to join the TPP would also be years away. The tensions with Japan, a TPP member, over the no-fly zone China has imposed over disputed islands in the East China Sea do not help, officials say.