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Relying heavily on investment flows and rapid productivity has been successful in promoting strong economic growth in China.

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Factors underlying China's growth performance and prospects.

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Factors underlying China's growth performance and prospects.

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Chinese imports and exports surge despite the pandemic -Christopher Nyakpo

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Why are Chinese imports & exports surging? | DW News

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This video is for 6 months ago, and is talking about the incredible development of china

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CHINA IS DOING SOMETHING UNBELIEVABLE I‌N SHENZHEN

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Exporting from China: The Determinants of Trade Status

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Exporting from China: The Determinants of Trade Status

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Trying to understand a bit more the economic framework of China´s "trade success" I found this video that explains the factors that affect China´s dynamic and complex trade environment.

Different models and determinants are explained in deep which hopefully could be understood, modified, and apply in other countries to promote exports.

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Russell Cooper: Exporting from China: The Determinants of Trade Status

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China Posts Record Trade Surplus as Exports Surge

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China Posts Record Trade Surplus as Exports Surge

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In October 2021 exports of Chinese products in Europe and United States  are better than expected going back to the pre pandemic levels.

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China Posts Record Trade Surplus as Exports Surge

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Why China's Exports Are Rising Despite COVID-19 & Boycott Calls | Explained

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Since opening up to foreign trade and investment and implementing free-market reforms in 1979, China has been among the world’s fastest-growing economies, with real annual gross domestic product (GDP) growth averaging 9.5% through 2018, a pace described by the World Bank as “the fastest sustained expansion by a major economy in history.” Such growth has enabled China, on average, to double its GDP every eight years and helped raise an estimated 800 million people out of poverty. China has become the world’s largest economy (on a purchasing power parity basis), manufacturer, merchandise trader, and holder of foreign exchange reserves

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China’s exports continued to expand in August, as the country’s major trading partners gradually resumed business activities. Imports unexpectedly dropped. Grace Ng, senior China economist at JPMorgan, discusses what the figures say about the health of the world's second-largest economy

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China’s Exports Keep Expanding, While Imports Fall

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Export growth has been a major pivot in China's rapid economic expansion. The little info here gives insight into the factors or determinants of their export growth.

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Export growth has been a major component supporting China's rapid economic expansion. In the last few years, machinery and transport equipment accounted for almost half of total exports, in particular, electrical machinery, apparatus and appliances (14 percent), telecommunications and sound recording and reproducing apparatus and equipment (12 percent), office machines and automatic data processing machines (8 percent), and general industrial machinery and equipment, and machine parts (5 percent). Other major export categories were: miscellaneous manufactured articles (23 percent), manufactured goods classified chiefly by material (16 percent) such as textile yarn, fabrics, made-up articles (5 percent), manufactures of metals (4 percent) and iron and steel (2 percent); chemicals and related products (6 percent); and food and live animals (3 percent). The EU and US were the largest destinations of China's shipments, accounting for more than 15 percent followed by Hong Kong, Japan, South Korea, Vietnam, Germany, India and the Netherlands (3 percent).

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China Exports | 2022 Data | 2023 Forecast | 1981-2021 Historical | Calendar | Chart

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Exports in China increased to 3255.25 USD HML in November from 3003.41 USD HML in October of 2021. Exports in China averaged 740.31 USD HML from 1981 until 2021, reaching an all time high of 3255.25 USD HML in November of 2021 and a record low of 12.50 USD HML in February of 1983. This page provides…

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Dear SEPTies!

Here´s a very interesting infographic about China and EU trading relationship, it´s a general overview but it can give us major insights about the growth in China´s Export. I think it´s very interesting how China targets both developed and developing countries since it´s also one the major parteners for Mexico and Latin America in general.

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China’s August exports growth unexpectedly picks up speed in boost to economy

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China’s August exports growth unexpectedly picks up speed in boost to economy

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This material talks about how China which was the first country to be hit with the novel Corona virus has been able to recover its economy particularly its export growth in 2021.

It provides some figures and percentages to help readers decipher how the economy and export growth of China has boomed from August 2021.

Scott Edward Agyemang

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China's exports unexpectedly grew at a faster pace in August thanks to solid global demand, helping take some of the pressure off the world's second-biggest economy as it navigates its way through headwinds from several fronts.

China staged an impressive recovery from a coronavirus-battered slump, but economic momentum has weakened recently due to the delta variant-driven Covid-19 outbreaks, high raw material prices, slowing exports, tighter measures to tame hot property prices and a campaign to reduce carbon emissions.

Shipments from the world's biggest exporter in August rose at a faster-than-expected rate of 25.6% from a year earlier, from a 19.3.% gain in July, pointing to some resilience in China's industrial sector.

Analysts polled by Reuters had forecast growth of 17.1%.

"August exports showed that despite a higher base for comparison from last year, the ongoing global recovery will not be impeded, and the impact from the resurgence in the Covid-19 pandemic remains limited," said Ji Chunhua, Senior Vice President of Research at Zhongtai International.

Export growth of machineries and hi-tech products stayed high in August, Ji said.

Exports from neighboring countries also showed encouraging growth last month, with South Korean shipments accelerating on strong overseas demand.

Some of the port gridlock also appears to have cleared in a boost to China's shippers last month.

The eastern coastal ports have suffered congestion as a terminal at the country's second biggest container port shut down for two weeks due to a Covid-19 case. That put further pressure on global supply chains already struggling with a shortage of container vessels and high raw material prices.

Zhang Yi, Beijing-based economist at Zhonghai Shengrong Capital Management, said China's exports may sustain its strong growth into the fourth quarter, with overseas demand for Chinese goods over the Christmas season possibly exceeding expectations.

"We believe the main constraint facing China's exports right now is the very stretched international shipping capacity."

However, behind the robust headline figures, businesses are struggling on the ground. Companies faced increasing pressure in August as factory activity expanded at a slower pace while the services sector slumped into contraction. A global semiconductor shortage has added to the strains on exporters.

Imports increased 33.1% year-on-year in August, beating an expected 26.8% gain in the Reuters poll, buoyed by still high prices. That compared with 28.1% growth in the previous month.

China posted a trade surplus of $58.34 billion in August, versus the poll's forecast for a $51.05 billion surplus and $56.58 billion in July.

Many analysts expect the central bank to deliver a further cut to the amount of cash banks must hold as reserves later this year to lift growth, on top of

July's cut which released around 1 trillion yuan ($6.47 trillion) in long-term liquidity into the economy.

The country appears to have largely contained the latest coronavirus outbreaks of the more infectious delta variant, but it prompted measures including mass testing for millions of people as well as travel restrictions of varying degrees in August.

China's trade surplus with the United States rose to $37.68 billion from $35.4 billion in July, Reuters calculations based on the customs data showed.

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China's August exports growth unexpectedly picks up speed in boost to economy

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China's exports unexpectedly grew at a faster pace in August thanks to solid global demand, helping take some of the pressure off the world's second-biggest economy as it navigates its way through headwinds from several fronts.

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This resource talks about China being the leading exporter in the world and their fastest growing exports are vegetables and fresh fruits, cocoa, tea products and the likes.

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This source gives an opportunity to look at import and export activities of China (and other countries as well) in different infographical forms.

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The Atlas of Economic Complexity by @HarvardGrwthLab

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Visualize global trade data and economic growth opportunities for every country

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This blog gave a brief history of the development of the Chinese export and import and also shared insights into the challenges in the new era. It's interesting to read.

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By Alessandro Nicita and Carlos Razo, UNCTAD

China is perhaps one of the most unprecedented stories of economic development in recent history. In the last 25 years, the country's economy rapidly expanded, lifting more people out of poverty than anywhere else in the world.

But all this wouldn't have been possible without another outstanding story: the emergence of China from the periphery of world trade to becoming a global trade titan.

Genesis of a trade transformation

While the rise of China as an export powerhouse became evident at the beginning of this century, the story began earlier. Towards the end of the 1970s, China began a set of reforms to upgrade its economy and open up to the world. At that time, its share of global trade stood at less than 1%.

In 1986, to enhance and secure access to foreign markets for its growing exports, China applied to join the General Agreement on Tariffs and Trade (GATT).

However, the accession process was derailed, and 15 years passed before China could formally connect to the multilateral trading system. During these years, its share of global trade gradually increased but China's participation in the global economy remained well below its potential.

By the turn of the century, two intertwined events put China on the path towards becoming the manufacturing powerhouse of today: the emergence of global value chains (GVCs) and China's accession to the World Trade Organization (WTO).

In the mid-1990s, advancements in transport logistics and information and communication technologies enabled the fragmentation of production across the globe. Soon thereafter, GVCs scoured the globe seeking reliable low-cost partners to allow them to scale up operations, but with mixed consequences on labour conditions and carbon dioxide emissions.

At the same time, the newly formed WTO - founded in 1995 - provided a more structured regulatory environment for international trade, an international dispute settlement mechanism, as well as lower cross-border transaction costs resulting from lower tariffs and restraints on the use of some non-tariff barriers.

China's accession to the WTO in 2001 allowed GVCs to reliably tap into the country's potential as a manufacturing powerhouse, enabling it to dramatically expand its exports to the rest of the world. From then on, history was written fast. By 2010, China was already the world's undisputed export champion.

Meteoric rise both admired and questioned

The rise of this trade titan has been both admired and questioned. Concerns on the use of state subsidies, quotas, export measures, intellectual property rights and the management of its exchange rate have been a bone of contention.

In fact, many of these concerns form the bulk of complaints brought to the WTO and are behind the ongoing trade disagreements between the United States and China.

Nevertheless, China's exports proved to be resilient not only to this constant stream of complaints but also to the trade tensions with the United States and souring relationship with the European Union - in March 2021 the EU issued its first sanctions against China since 1989.

Indeed, China's importance to global production in most sectors, from precision instruments and industrial machinery to computers and smartphones, has constantly increased during the last two decades.

The COVID-19 pandemic has further demonstrated the keystone role that China plays in the global economy. In early 2020, when COVID-19 infections were gathering pace across the country, production processes across the globe stalled or slowed because of disruptions faced by Chinese suppliers.

Moreover, high levels of export resilience have afforded China not only a swift export recovery from the pandemic, but also allowed for further gains across a variety of export sectors, even when those sectors have experienced overall decline. As a result, China's share of global trade increased further during 2020, to nearly 15%.

In 2021, China's trade recovery from the crisis has been impressive. In the first quarter of this year, its exports surged by almost 50% year-over-year, to about $710 billion.

Although such a large increase is partly due to the low base of last year, the result of the first quarter is still 27% higher (about $150 billion) than the first quarter of 2019, before COVID-19 hit China and then the global economy.

What's next for China as the global export powerhouse?

Overall, China is likely to remain the world's leading exporter for the near future. However, its exports dominance in the global economy may be approaching its peak. There are a number of reasons for this.

First, China's economy is maturing to be more reliant on domestic rather than foreign demand, as the prominence of exports in the Chinese economy has been rapidly declining in recent years. For global trade, this implies that Chinese imports are likely to increase faster than exports, thus eroding China's exports' share in the global economy.

Second, increasing labour costs in China are eroding its global competitiveness, especially in labour-intensive production processes. This will eventually result in the relocation of global production to lower-cost countries. Highly competitive economies like Viet Nam will likely chip away trade from China.

Moreover, advancements in labour-saving technologies, such as automation and robotics, as well as fiscal incentives like incentives to firms and tax credits for local employment, are improving the financial attractiveness of reshoring some manufacturing processes closer to consumers in developed countries.

Finally, headwinds hitting the globalized economy are strengthening. Current geopolitical tensions and national policy shifts, which are increasingly considering social and environmental aspects of development, may reverse the hyperglobalization process of the past more than 20 years.

A further escalation of tensions and a lack of global action to address social and environmental concerns could lead to a deglobalization process that will likely have stronger-than-average implications for major exporters such as China.

Development in motion

In a series of dynamic graphs, we explain some of the salient issues facing the global economy today.
View all charts

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China is perhaps one of the most unprecedented stories of economic development in recent history. In the last 25 years, the country's economy rapidly expanded, lifting more people out of poverty than anywhere else in the world.

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"It is time for like-minded, market-oriented nations to acknowledge the full scale of China’s repudiation of the core tenets of the liberal international economic order, and to confront its continuing failure to meet its WTO commitments."

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Two Decades of False Promises

Discriminatory Standards and Practices

Unfair Trade Practices Harm Competitors

Policy Recommendations

China has taken full advantage of its WTO rights. It has also largely ignored the responsibilities and commitments through its embrace of state-directed capitalism predicated upon an aggressive innovation mercantilism. This mercantilism denies foreign enterprises access to Chinese markets on reciprocal terms; distorts global markets, including for advanced-technology goods; and deprives nations of the benefits they believed they would receive when granting China accession into the community of trading nations.

In this report, China's accession to the WTO is recounted along with the trade rules with which it fails to comply. The report also describes the economic benefits China has accrued in part by not complying with its WTO commitments. Lastly, it offers policy recommendations for policymakers from the United States and like-minded nations to address the continuing China trade challenge.

As such, the report's policy recommendations reflect China's failings and present a path forward to rectify the false promises. These recommendations include the following measures:

Develop a comprehensive "Bill of Particulars" against China

Revoke China's Permanent Normal Trade Relations (PNTR) and renegotiate WTO market access schedules for Chinese goods and services

Pursue a nonviolation nullification and impairment case against China at the WTO

Insist that China extend to other nations provisions from the U.S.-China Phase One agreement

Strengthen subsidies disciplines at the WTO

Create a Democracies' Alliance Treaty Organization (DATO) for trade

Form a Global Strategic Supply Chain Alliance (GSSCA)

The United States should join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and pursue free trade agreements (FTAs) with like-minded nations

The United States Trade Representative's Office (USTR) should self-initiate more cases against China before the WTO.

Elevate the focus on technology, innovation, and intellectual property (IP) in U.S. trade policymaking

Negotiations toward China's accession to the General Agreement on Tariffs and Trade (GATT) and its successor organization, the WTO, began in 1986 and took 15 years to complete. China ultimately entered the WTO on December 11, 2001, with the WTO's then-142 members voting in favor. Policymakers believed that giving China a stake in global institutions such as the WTO would bind it into the rules-based system set up after World War II. As the Economist wrote, they hoped "that economic integration would encourage China to evolve into a market economy and that, as they grew wealthier, its people would come to yearn for democratic freedoms, rights and the rule of law."

At the time, pundits hailed China's accession as a pivotal moment that heralded the country's shift toward a market-based economy that would adhere to the rules of international trade. WTO Director General Dr. Supachai Panitchpakdi, who led the organization from 2002 to 2005, and Mark Clifford, then a regional editor for BusinessWeek, heralded the move in their book China and the WTO: Changing China, Changing World Trade. "It is virtually impossible to overstate the importance of bringing the world's most populous nation into a system that establishes internationally accepted rules for economic behavior," they wrote. Furthermore, "The WTO will set out the rules for a market-based economy ... The agreement signals China's willingness to play by international trade rules and to bring its often opaque and cumbersome governmental apparatus into harmony with a world order that demands clarity and fairness."

Now, nearly 20 years on, a serious evaluation of China's time in the WTO shows that on balance the country has not moved significantly toward the WTO trading order, and by and large has not lived up to its commitments.

Panitchpakdi and Clifford were not alone. Then-WTO Director General Mike Moore gushed in 2001 about China's decision to join the WTO, describing it as "momentous," and asserting that "China's opaque and arbitrary trade and investment rules will become transparent, stable, and more predictable." Moore assuaged those concerned China might not live up to its commitments, intoning, "If it doesn't, the U.S. or any other WTO member government can use the organization's dispute-settlement procedures to ensure it does."

Global major powers rejoiced. "China's accession can only lock in and deepen market reforms, empowering those in leadership who support further and faster moves toward economic freedom," wrote the European Commission.

President Clinton called China's accession "a hundred-to-nothing deal for America when it comes to the economic consequences," and one that would "have a profound impact on human rights and liberty" in China. Then-president George W. Bush promised that granting permanent normal trade relations to the Middle Kingdom would "narrow our trade deficit with China."

If China had been a "normal" country, such expectations might very well have been warranted. But it was not. Its massive economic size and growth rates impeded foreign business from a "capital strike" to punish China for its mercantilist behavior. China could and does punish any company that has the temerity to encourage countries to bring a case to the WTO.

Consider the case of one high-level official of a U.S. Fortune 100 company. He met with the head of a major Chinese Ministry to complain about an egregious violation of WTO rules that was hurting his business to the benefit of a Chinese competitor, and threatened a WTO case. The response: If the company advocated for a WTO case to be brought forward, they would be foreclosed in the future from selling in China. Needless to say, the company did nothing, as it was better to have a shrinking share of the market than nothing at all.

In essence, many companies have no choice but to tolerate China's actions because they must have access either to the market or the low-priced labor, whose low price was subsidized even more by currency manipulation.

In addition, the WTO has lacked tools to discipline many of China's most-effective mercantilist practices, including currency manipulation, IP theft, and the forced technology transfer carried out by administrative guidance rather than formal rules. Neither the WTO itself nor its member countries have ever had the political courage to take on China's misdeeds in a serious and sustained way.

In 2018, two former Obama administration officials-Kurt M. Campbell, who now leads the Biden administration's Asia policy team at the National Security Council, and Ely Ratner (now at the Office of the Secretary of Defense)-admitted that both Democratic and Republican administrations "had been guilty of fundamental policy missteps on China." That same year, even the Economist magazine wrote that the West's gamble on China had failed and "the illusion has been shattered" that China will integrate into the liberal international order.

China may have evinced some degree of economic liberalization and market opening in the first decade after WTO accession, particularly in initially shrinking its large state-owned enterprise (SOE) sector. However, since President Xi Jinping's ascent to leadership in 2013, these reforms have reversed and reformers who were sympathetic to a more market-driven model shunted to the sidelines.

Nearly 20 years on, a serious evaluation of China's time in the WTO shows that the country has not moved significantly toward the WTO trading order. By and large, China has not lived up to its commitments. Nor has it led to a reduced trade deficit for the United States (or for many other nations). The WTO's dispute settlement system also fails to constrain China's actions.

Whereas the United States had the wherewithal to "sue" China for not living up to many of the commitments and standards it should have already been adhering to as a WTO member, most nations don't have that ability, and so continue to suffer from China's refusal to play by WTO rules.

China continues to fail to meet a wide range of its WTO commitments. According to USTR's 2020 USTR Report to Congress on China's WTO Compliance:

The United States had the wherewithal to "sue" China for not living up to many of the commitments and standards it should have been adhering to as a WTO member. Most nations do not have that ability. They continue to suffer from China's refusal to play by the rules it signed up for in joining the WTO.

To enumerate every Chinese failure to live up to its WTO commitments over the past two decades would represent an exhaustive undertaking. Hence, this report examines the 12 highest-level, most-important examples of China's continuing failure to meet its WTO commitments, though primarily oriented toward the U.S.-China trade relationship. (See .) They are

Fundamentally rejecting the WTO's market orientation;

State-led industrial planning that defies WTO norms;

Continuing prevalence of and preferences for SOEs;

Massive industrial subsidization often leading to overcapacity;

Failure to make timely and transparent notifications of subsidies;

Forced technology transfer and joint venture requirements;

Failure to respect foreign IP rights;

Abuse of antitrust rules;

Discriminatory technology standards;

Failure to reciprocally open government procurement;

Continuing use of service-market access restrictions; and

Retaliatory use of trade remedies.

This report represents an effort to place China's WTO-contravening economic and trade practices within these 12 discrete buckets. However, the essential point is that the policies collectively represent the Chinese Communist Party's (CCP) concerted effort to effectuate its brand of state-led capitalism with a heavy dollop of innovation mercantilism.

To be clear, China is not expected to be a free-market, libertarian haven. A nation such as China will want to have industrial policies to spur growth. That is not what is in dispute. What is in dispute is the overall extent of these policies and, importantly, whether they violate the spirit and letter of the WTO.

Rejection of the WTO's Market Orientation

There are myriad specific areas where China has failed to meet its WTO commitments. Fundamentally, China rejects the most foundational principle of the WTO: a market-based orientation.

Launched in 1995, the WTO grew out of the GATT set up after World War II. The GATT is fundamentally based on a market-economy view of world trade. In 1994, the Marrakesh Declaration, signed by 123 nations, brought eight years of Uruguay Round negotiations to a conclusion. The WTO launched the following year. The declaration affirmed that WTO members participate "based upon open, market-oriented policies."As USTR noted, "It clearly was not contemplated that any WTO member would reject market-based policies in favor of a state-led trade regime."

Similarly, WTO Deputy Director-General Alan Wolff recently stated:

While this report places China's WTO incompliant polices into 12 discrete buckets, it's essential to recognize their inherent "interwoven, overlapping, and reinforcing" nature, constituting the core of China's innovation-mercantilism-driven brand of state-led capitalism.

Yet, during WTO entry negotiations, Chinese representatives averred that China would hew to a market orientation and that its government would not influence trade and business operations.

As the WTO Report of the Working Party on the Accession of China notes, "The Government of China would not influence, directly or indirectly, commercial decisions on the part of state-owned or state-invested enterprises, including on the quantity, value, or country of origin of any goods purchased or sold, except in a manner consistent with the WTO Agreement."

China's representative reiterated these points in an introductory statement to the report:

China has backtracked from (or simply ignored) this essential requirement of WTO membership through its embrace of, in Chinese President Xi Jinping's framing, a "socialist market economy with Chinese characteristics." The Chinese government-that is, the CCP-exercises effective control over all domestic firms (SOE or private) operating in its economy.

In 2001, China promised WTO members that the government would not influence, directly or indirectly, the commercial decisions of SOEs. That has not been the case. Under Article 19 of the Company Law, all SOEs or private Chinese companies have a Chinese CCP cell that management must listen to, if not necessarily obey. Article 19 in essence codifies CCP influence over corporate governance and business decisions in China.

While Chinese leaders attempt to obfuscate and prevaricate about the true nature of their economic system with epithets such as "a socialist market economy with Chinese characteristics," the essential point is China's fundamental rejection of a market-based system.

China's "state capitalism," or "China Inc.," as described by Mark Wu, is not found anywhere else in the world and differs significantly from the economic models that influenced the Uruguay Round agreements. Wu outlines six elements that make China Inc. unique:

The state (i.e., the State-owned Assets Supervision and Administration Commission of the State Council (SASAC)) as a corporate holding entity

State control of financial institutions

State control over planning and inputs (i.e., the National Development and Reform Commission (NDRC))

Chinese-style corporate groups and affiliated networks

Communist Party involvement and control

The intertwined nature of private enterprises and the party-state

To be sure, this does not mean that only one version of capitalism fits within the WTO. In his classic 1967 book Modern Capitalism: The Changing Balance of Public and Private Power, Andrew Shonfield outlined the distinctly different flavors of capitalism that evolved in the post-war era. In the German model, large banks play a key role in allocating investment. The Italian model espouses public-private ownership of key industries, the French model touts indicative planning, and the Japanese model favors state-led industrial policy. Meanwhile, the American and British models offer largely free-market, laissez-faire capitalism, albeit leavened with a growing social-welfare state.

Notwithstanding their differences, Shonfield concluded that advanced capitalist economies share basic convictions. Private capital should be at the center of economic activity, market-based transactions are the key to prosperity, and private property should be protected. In short, any differences between capitalist nations are of degree, not of kind.

Against this understanding, China tries to portray itself as a market economy.

Indeed, many simply assume China has become capitalist. For instance, Wall Street financier Steven Rattner argued that China "understands the benefits of incorporating a robust free-enterprise element." Nobel laureate Ronald Coase and his coauthor Ning Wang have proclaimed that China has "embraced capitalism," citing, in part, the reference to Adam Smith's book The Theory of Moral Sentiments having more than a dozen Chinese translations.

China is a hybrid economy in which the state uses an array of tools for Communist-Party ends. To start with, China has more than 150,000 SOEs. However, Chinese state capitalism is not just, or even principally, about the number and size of such enterprises. It is about the CCP's central role in virtually all aspects of economic life. In fact, CCP officials are part of many Chinese companies in order to make sure the company follows the "direction" of the state.

Indeed, the party takes great effort to make its central planning sound like a jubilant, bottom-up exercise developed by cherubic-faced workers and wise intelligentsia. At its heart, however, Chinese state capitalism is a system in which the purpose of private and public firms is to fulfill the goals of the CCP-which itself uses an array of tools to obtain that alignment: hard and soft power; carrots and sticks. As Mavroidis and Sapir wrote in China and the WTO: Why Multilateralism Still Matters, "In China, the market economy is subservient to the needs of
the state."

Confusion about the Chinese economic system may stem from the view of capitalism as a system built on private ownership of property. Capitalism is more than that. It is a system in which those property owners have considerable, albeit not unlimited, freedom to pursue their goals without undue influence from the state. By this standard, China is far from a capitalist economy.

Indigenous Innovation: Industrial Planning Defying WTO Norms

The aim is to supplant foreign market share with domestic market share in these industries. This is tantamount to a strategy of indigenous innovation. To these ends, the Chinese government established semi-official targets to achieve the desired domestic share of Chinese products identified in the Made in China strategy by 2020 and 2025. This translates to 80 percent domestic sourcing of new energy vehicles, high-tech ship components, and new and renewable energy equipment by 2030; 70 percent for industrial robots and high-performance medical devices by 2030; and 35 percent domestic sourcing of mobile-phone chips by 2025 and 40 percent by 2030. (See .)

USTR describes the Made in China 2025 strategy thusly:

By December 2020, government-guided technology funds controlled more than RMB 4 trillion ($610 billion) in capital. This represents Chinese government-directed manipulation, not market-based competition, in one of the world's most-important industries. It is perfectly symbolic and representative of the centralized industrial planning system that is inconsistent with WTO principles.

The Prominence of State-Owned Enterprises

Rather, China's SOE sector has grown significantly over the last four decades, both in total numbers and market capitalization. In fact, the number of Chinese SOEs in the Fortune Global 500 has grown considerably since 2005. China's share of such firms has also increased substantially over that time, to where Chinese SOEs account for about three-quarters of such firms today. (See .) As of 2019, 109 Chinese corporations were listed on the Fortune Global 500. Only 15 percent of those were privately owned, and 93 were SOEs.

Moreover, SOEs' share in many key strategic industries is rising. Again, the semiconductor industry provides a good example. Out of China's top-10 semiconductor companies by revenue, China's National IC Plan Fund and Chinese SOEs together hold more than 25 percent of at least 5 of those firms. An OECD report on government-induced distortions in the global semiconductor industry finds that Chinese government investment has "profoundly reshaped China's semiconductor industry, combining to give the state a stronger influence over domestic companies." Distinguishing between SOEs and other companies in China, the report explains, is complicated by the "blurring of boundaries between the state and private interests" through critical avenues of state influence.

Again, this stands in direct contravention to China's promises to WTO members that it "would not influence, directly or indirectly, commercial decisions on the part of state-owned or state-invested enterprises."

Subsidies Leading to Overcapacity

Since China joined the WTO in 2001, subsidieshave financed approximately 20 percent of China's manufacturing capacity every year. The subsidies help economically inefficient firms to be more competitive. Markets are distorted and firms trying to compete on market-based terms are disadvantaged, in part by being deprived the revenues needed to reinvest in R&D and innovation.

China's industrial subsidies significantly distort markets and disadvantage firms trying to compete on market-based terms, in part by depriving them of revenues needed to reinvest in R&D and innovation.

Massive industrial subsidies have been critical to China's emergence in other industries as well. With its global market share growing from practically nothing in 2005 to over 60 percent by 2011, China became the dominant global player in solar photovoltaic (PV) manufacturing during the 2000s-with critical help from government subsidies. Chinese solar output was turbocharged by at least $42 billion of subsidies from 2010 to 2012 alone, according to the GW Solar Institute at George Washington University. The subsidies allowed China's major PV manufacturers to sustain enormous losses during their scale-up phase.

Extensive subsidization has also turbocharged the growth of Chinese telecommunication firms Huawei and ZTE. The Wall Street Journal reported that Huawei has received some $75 billion in state support over the past 25 years, including $1.6 billion in grants, $46.3 billion in credit facilities, $25 billion in tax breaks, and $2 billion in subsidized land purchases. By comparison, since 2000, Cisco Systems has received $44.5 million in total state and federal subsidies, loans, guarantees, grants, and other assistance from the U.S. government."

China's subsidies in semiconductors, solar panels, high-speed rail, and telecommunications are certainly problematic. But they are equaled by Chinese subsidies in other sectors, particularly steel and aluminum. China's share of world steel output grew from just 15 percent in 2000 to 50 percent by 2015. During the same period, America's share fell by half (from about 12 to 6 percent), Japan's by roughly equivalent amounts, and Europe's cratered from 22 to 10 percent. By 2015, China's steel output had doubled to 112 million tons annually-more than America's total consumption of steel in a single year.Today, two individual Chinese steel producers alone manufacture more steel than Japan's annual output.

Once firms accumulate the technology, competencies, and scale needed to go global, the Chinese government then often subsidizes their global market expansion, such as through the China Export-Import Bank and China's Export and Credit Insurance Corporation (Sinosure). As the Washington Post reported, Huawei's customers in the developing world can take advantage of loans at below-market interest rates, drawing on a staggering $100 billion line of credit at state-owned banks."

According to the U.S. ExIm Bank, China's official MLT [medium-long term] export credit activity from 2015 to 2019 alone was at least equal to 90 percent of that provided by all G7 countries combined. China's aggressive provision of export credits were "fundamentally changing the nature of export credit competition," the bank noted. These subsidies not only help the recipients directly but are often tied to buying Chinese components. For example, in the high-end equipment manufacturing sector, China maintains a program that conditions the receipt of a subsidy on an enterprise's use of at least 60 percent Chinese-made components when producing intelligent manufacturing equipment. This represents a direct violation of WTO subsidies rules.

Lack of Notification and Transparency

Furthermore, China fails to provide a period for public comment for new trade-related laws and regulations-as it agreed to as part of its WTO accession and (again) at the U.S.-China Strategic and Economic Dialogue (S&ED) in 2011. Multiple USTR reports show that this is part of a consistent pattern by China to avoid scrutiny for discriminatory and trade-distorting rules, regulations, and subsidies. China also regularly fails to publish measures in English, French, or Spanish before it implements them.

Forced Joint Ventures and Technology Transfer

In 2011, the Economist wrote erroneously, "Thanks to the WTO, foreign firms are no longer required to hand over technology in exchange for entry to China's market."

Their comment is understandable, as China clearly committed, in one of the legally binding paragraphs of its Working Party report, that it would not condition investments on the transfer of technology. The report stated:

In reality, Chinese technology transfer requirements are a continuing feature of Chinese policy. In 2012, 23 percent of the value of all foreign direct investment (FDI) projects were joint ventures. In 2015, 6,000 new international joint ventures, amounting to $27.8 billion of FDI inflows, were established in China. In their report China vs the World: Whose Technology Is It?, Harvard Business School professors Thomas Hout and Pankaj Ghemawat documented the technology transfer required in China as a condition of market access and impacted scores of companies in industries as diverse as aviation, automotive, chemicals, renewable energy, and high-speed rail.

Not only do China's forced joint venture and technology transfer practices continue to exist but they may actually be getting even worse.

China has employed different tactics to the same end in the biopharmaceutical industry, wherein various policies enable Chinese firms to get access to U.S. technology. For example, the relatively short six-year term for data exclusivity, coupled with the lack of a formal definition of a "new chemical entity," means the Chinese government can pressure U.S. firms to turn over important data to Chinese generic-drug firms.

China's forced joint venture and technology transfer practices not only continue but may be getting worse. In May 2019, the Wall Street Journal reported the increasing frequency of forced technology transfers between European firms in China to local firms. That same year, the European Chamber of Commerce found that more than twice as many firms felt compelled to undertake technology transfer in China as they did in 2017.

European companies in high-value, cutting-edge industries felt more pressure than usual, the Chamber reported. Some 30 percent of chemicals and petroleum companies, 28 percent of medical-device companies, 27 percent of pharmaceutical companies, and 21 percent of automotive companies reported such transfers.

Clearly, the practice has concerned foreign firms for a long time, and is not abating. According to a survey conducted by the U.S.-China Business Council in 2015, some 59 percent of firms were worried about transferring technology to China. Some 23 percent had been asked to transfer technology within the previous three years.

Intellectual Property Theft and Discriminatory Treatment

In China and the WTO, Panitchpakdi and Clifford were sanguine about the strength of China's commitments to protect foreign IP. China has promised "to make a number of long-term structural changes to limit IPR [intellectual property rights] violations," they wrote. Joining the WTO, they added, would require China to recognize the Trade-related Aspects of Intellectual Property Rights (TRIPS) agreement, which provides protections for patents, copyrights, trademarks, service marks, industrial designs, digital content, and other intangible property.

Scores of researchers have documented the economic espionage. Nicholas Eftimiades in the Brown Journal of World Affairs characterized the actions as "a massive, whole-of-society approach to economic espionage." Michael Pillsbury referred to the regular hacking into foreign commercial entities as "the world's largest perpetrator of IP theft." USTR's 2021National Trade Estimate Barriers (NTE) report laments that "actors affiliated with the Chinese Government and the Chinese military have infiltrated the computer systems of U.S. companies, stealing terabytes of data, including the companies' proprietary information and IP, for the purpose of providing commercial advantages to Chinese enterprises."

The acquisition of foreign semiconductor technology through IP theft has been a key pillar of Chinese industrial strategy.

In 2013, the IP Commission Report on the Theft of U.S. Intellectual Property found that China accounted for nearly 80 percent of all IP thefts from U.S.-headquartered organizations, amounting to an estimated $300 billion in lost business. Updating its assessment in 2017, the Commission on the Theft of American Intellectual Property estimated that China's IP theft may cost the U.S. economy as much as $600 billion annually. By 2019, a CNBC Global CFO Council report found that one in five North American corporations had their IP stolen in China within the past year.

Some claim that the United States and other like-minded nations have little ground to stand on in contesting Chinese IP theft or forced tech transfer. They argue that the United States did the very same to the United Kingdom and other nations as it developed. For instance, as Martin Wolf wrote in the Financial Times:

This argument collapses when we are reminded that the WTO did not exist in the 1700s. Nor was the United States committed to a certain set of trade obligations in return for a certain set of trade benefits. China is a sovereign actor, but it is bound to the international treaty commitments it has made and the trade agreements it has entered. This includes the covenants of the WTO TRIPS agreement.

If China wishes to pursue a strategy of unfettered economic espionage, IP theft, and forced tech and IP transfer, it has that option. However, it should then remove itself from the WTO. Such policies and behaviors are fundamentally inconsonant with the commitments China has made to other nations in order to receive the benefits of market access that come with WTO membership.

Abuse of Antitrust Laws

With Chinese courts largely rubber-stamping CCP dictates, foreign companies have little choice but to comply. All too often, complying means changing their terms of business so that they sell to the Chinese for less, transfer even more IP and technology to Chinese-owned companies,
or both.

USTR wrote that:

China is certainly within its right to develop a strategy to influence standards development in a way that is advantageous to its companies. It is also reasonable for China to try to gain as much influence as possible in SDOs-that's just smart and tough competition. However, China is not within its right to develop discriminatory technology standards, to prevent foreign companies from equitably participating in domestic standards-setting processes, or to otherwise contravene principles for the development of international standards identified in the WTO's Technical Barriers to Trade agreement.

China has become perhaps the world's most-aggressive nation in terms of trying to develop technology standards and to influence the direction of international SDOs.

The United States and most other nations have adopted a voluntary, transparent, market-led, and global approach to standards development. In comparison, China has adopted a government-directed system and made it difficult for foreign firms to equitably engage in Chinese standards-setting processes.

However, the Chinese firm Lenovo, which had voted for [Qualcomm's proposed] LDPC, returned home to an online outcry for its "unpatriotic vote." Several months later, when a second part of the standard was being adopted, Lenovo switched to support Huawei's polar codes, with Lenovo founder Liu Chuanzhi commenting, "We all agree that Chinese companies should be united and cannot be played off one another by outsiders."

Government Procurement

Nearly 20 years after it joined the WTO, China has yet to make a credible offer for GPA coverage, despite its commitment to do so swiftly in 2001.

A decade later, that promise remains unfulfilled. In 2020, China's Ministry of Finance made amendments to its Government Procurement Law and Tendering and Bidding Laws. However, USTR has assessed that "China continues to implement policies favoring products, services, and technologies made or developed by Chinese-owned and Chinese-controlled companies through explicit and implicit requirements that hamper foreign companies from fairly competing
in China."

Restricting Access to Services Markets

Across a range of services markets, from financial services to telecommunications and information technology services to theatrical films and audiovisual services, China fails to honor many of its decades-old commitments.

Banking and Electronic Payment Services

In the early years following China's accession to the WTO, optimism reigned. In their book China and the WTO, Panitchpakdi and Clifford contended that foreign banks would enjoy the same privileges as domestic banks. "Chinese banks," they wrote, "will for the first time face real competition."

Cloud and Telecommunications

In joining the WTO, China made a number of commitments in the telecommunications sector, including liberalizing foreign investment, agreeing to implement "pro-competitive regulatory principles, and agreeing to allow foreign suppliers to use any technology they choose to provide telecommunications services." USTR noted, however, that "China's restrictions on basic telecommunications services, such as informal bans on new entry, a requirement that foreign suppliers can only enter into joint ventures with state-owned enterprises, and exceedingly high capital requirements, have blocked foreign suppliers from accessing China's basic [telecommunications] services market."

China maintains extensive restrictions on foreign cloud service providers despite committing to provide nondiscriminatory treatment and broad market access to foreign firms in "computer and related services" as part of its WTO accession commitments. This category of Internet-based computer services includes email, voicemail, online information and database retrieval, electronic data interchange, enhanced facsimile services, code and protocol conversion, and online information and data processing. China categorizes cloud and related services as valued-added telecommunication services (VATS) and not as computer and related services, as it has much greater freedom in its WTO commitments to enact barriers to foreign firms and services in this sector.

China maintains extensive restrictions on foreign cloud service providers despite committing to provide nondiscriminatory treatment and broad market access to foreign firms in "computer and related services" as part of its WTO accession commitments.

China uses restrictive and discriminatory licensing and joint venture requirements to control foreign competition and to force foreign companies to help local competitors, including through forced technology transfers. Of the thousands of VATS licenses given out, only a small handful have gone to U.S. or other foreign firms.

Distribution and Production of Theatrical Films

A memorandum of understanding (MOU) initially negotiated in February 2012, and updated in 2017, between China and the United States facilitated change. The number of foreign films imported and distributed in China each year can increase, along with substantial additional revenue for U.S. film producers. However, as of March 2021, China has not yet fully implemented its MOU commitments, including with regard to critical commitments to open up film distribution opportunities for imported films. China further prohibits foreign companies from providing film production and distribution services in the country. Due to its restrictions in the area of theatre services, investors have been discouraged from investing in cinemas
in China."

Retaliatory Use of Trade Remedies

When a country's enterprises dump products into foreign markets-selling them below their cost of production or their cost in the home market-or when a country's enterprises benefit from excessive subsidization, injured parties in other nations can petition their governments to apply antidumping (AD) or countervailing duties (CVD) measures, respectively. In most cases, foreign enterprises are petitioning their governments for assistance in redressing mercantilist Chinese practices.

The 2021 USTR NTE report elaborates that:

This is not evidence of a country responsibly operating its AD/CVD regime in accordance with the WTO's Agreement on Subsidies and Countervailing Measures (ASCM). The United States alone has filed three WTO cases against China regarding its AD/CVD regime pertaining to grain-oriented, flat-rolled electrical steel (GOES); automobiles; and chicken broiler products. In adjudicating these cases, the WTO has confirmed that China failed to abide by WTO disciplines when imposing the duties at issue. Beyond the use of retaliatory trade practices, China has also threatened other trading partners such as Australia, Canada, and Sweden with limiting or restricting their ability to export products to China's markets when the CCP has been dissatisfied with those nations' actions in nontrade arenas such as diplomatic or national security interests.

A number of statistics complicate the tale. The United States has been running large trade deficits with China for some time. From 2001 to 2020, the United States accrued a $6.82 trillion deficit in trade in goods with China. Throughout the prior decade, U.S. goods trade deficits with China were consistently in the $400 billion to $500 billion range annually, topping out with a $539 billion trade deficit in 2018. (See .) America's goods trade deficit with China is only slightly offset by a services trade surplus that, in 2019 for instance, was just $36 billion, itself a 4.1 percent decrease from 2018.

Moreover, the United States has consistently run a trade deficit with China in Advanced Technology Products (ATP) that goes back to the early 2000s. From the full years 2001 through 2020, the United States accrued a $1.65 trillion deficit with China in ATP trade. (See .)

The United States is not the only country to have experienced unbalanced trade with China since the country's entry into the WTO. The 28 countries of the European Union also experienced an aggregate $2.1 trillion goods trade deficit with China over this period, with annual deficits consistently exceeding $100 billion annually in every year since 2006. (See .)

One of China's strongest economic and export sectors since the country's entry into the WTO has been ICT goods. In absolute terms, China generated a cumulative surplus of $2.6 trillion from 2002 to 2019, the latest year for which data is available. China's trade surplus in this sector rocketed from neutral-a $2 billion surplus in 2001-up to $150 billion in China's first decade in the WTO. This continued to increase, up to about a $200 billion annual surplus over the prior decade. (See .)

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False Promises II: The Continuing Gap Between China's WTO Commitments and Its Practices

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Two Decades of False Promises Discriminatory Standards and Practices Unfair Trade Practices Harm Competitors Policy Recommendations China has taken full advantage of its WTO rights. It has also largely ignored the responsibilities and commitments through its embrace of state-directed capitalism predicated upon an aggressive innovation mercantilism.