China emerges as force in global trade wrangling after collapse of WTO talks

The Canadian Press

July 31, 2008

BEIJING — Richer and more confident, China is playing a higher-profile role in wrangling over global commerce, drawing criticism from American officials who once prodded Beijing to be more active in international trade talks.

This week in Geneva, China took an unexpectedly prominent part in pressing, along with India, for import safeguards to shield poor farmers. U.S. officials blamed them for the collapse of global trade talks. China's envoy countered by accusing the Americans of demanding too much.

Beijing's unusually public stance reflects its status as an emerging power that is increasingly asserting itself on issues ranging from climate change to Africa, buoyed by the rapid expansion of the world's fourth-largest economy.

"China is practising a kind of major power diplomacy. It expects its interests to be respected," said Joseph Cheng, chairman of the Contemporary China Research Center at City University of Hong Kong. On trade, he said, "China intends to play a more active role as a Third World leader."

The trade clash highlighted China's unusual economic mix of efficient, competitive exporters and a vast, poor countryside that is home to millions of farming families crowded onto tiny, inefficient plots.

China has been a major beneficiary of trade liberalization, which helped to guarantee market access abroad for its goods. But the United States, the European Union and other trading partners say Beijing is violating its free-trade commitments by hampering foreign competition in its banking, finance and other industries.

China's imports of corn, soybeans and other commodities to feed its 1.3 billion people and growing numbers of farm animals are rising rapidly.

But Beijing is reluctant to do anything that might hurt its countryside, which has missed out on China's three-decade-old boom. Thousands of rural protests are reported every year over poverty and other complaints. Communist leaders have made an official priority of improving rural life.

"We need to import a lot of food. But if the amount of imports is too big, it will cause unemployment among farmers and social instability," said Shen Guobin, an associate professor at Fudan University's Institute of the World Economy in Shanghai.

"We have more bargaining power on the international stage than before," Shen said. "It's the good performance of our economy that supports our negotiators."

China remained in the background in global affairs for two decades after its 1979 opening and the launch of economic reform. But over the last decade, Beijing has stepped up its presence abroad with activities ranging from taking on a bigger role in U.N. peacekeeping to expanding political and commercial ties with Africa and Latin America.

China has pursued oil investments in Iran and Sudan, resisting foreign pressure to limit contact with their isolated governments.

The Geneva talks snagged on whether China, India and other countries should be allowed to impose higher tariffs to protect farmers against a sudden surge in imports or a drop in prices. American and European negotiators rejected the proposed threshold to trigger such measures as too low. The U.S. trade representative, Susan Schwab, criticized the measure as "blatant protectionism."

In response to the collapse of talks, the Canadian government said it will move aggressively to negotiate individual country-to-country trade deals to protect its economic interests.

Canada would be at the table whenever talks resume, but is not waiting for a multinational agreement, said Trade Minister Michael Fortier.

The conflict was a bitter irony after Schwab and other U.S. officials lobbied Beijing to help restart the global talks, urging China to act as a developing world champion of free trade. In 2006, Schwab told then-Commerce Minister Bo Xilai that "it's time for China to speak up more" in the WTO.

China's trade minister, Chen Deming, blamed Washington for the impasse, saying "once their interests were guaranteed, the Americans demanded a sky-high price," Chinese business newspapers said Wednesday.

It would be unfair to blame Beijing for the collapse of the talks, said Cheng.

"There was no game plan, no strategy, no serious effort on the part of the United States and European Union to get things done," he said. "There were no serious efforts to convince the Third World to accept the developed world's package."

Source: The Canadian Press

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