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China’s ‘Poor’ Trade Performance Attacked in New Report

China’s “poor” trade performance was called out in the United States Trade Representative’s (USTR) annual report to Congress.

The report, issued Friday, details the Biden administration’s assessment of China’s membership in the World Trade Organization (WTO).

“More than 20 years after it acceded to the World Trade Organization, China still embraces a state-led economic and trade approach that runs counter to the open, market-oriented principles endorsed by all members of the organization,” Ambassador Katherine Tai said. “China’s approach makes it an outlier and continues to cause serious harm to workers and businesses in the United States and around the world.”

Pointing to China’s “very serious” and pervasive non-market policies and practices, the report “is a reminder that the international trading system must continue to work together to defend our shared interests against these harmful actions,” Tai added.

A WTO member since 2001, China voluntarily agreed to integrate market-oriented practices into its trading system and its institutions—a commitment that it has ignored over the past two decades, the report said. “In fact, China’s embrace of a state-led, non-market approach to the economy and trade has increased rather than decreased over time, and the mercantilism that it generates has harmed and disadvantaged U.S workers and companies, as well as workers and companies of other WTO Members, often severely,” it added.

WTO members, including the U.S., have tried to address China’s shortcomings by working with its government leaders and filing cases against China through the WTO. The U.S. won all of the 27 cases it has filed against China.

China routinely uses its government to provide guidance, resources, and regulatory support for domestic industry, including its state-owned enterprises and companies. Meanwhile, its government attempts to limit market access for imported goods and services, limiting the opportunities for foreign manufacturers and service suppliers.

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“The benefits that China’s industries realize from these non-market policies and practices largely come at the expense of China’s trading partners and their workers and companies, as markets all over the world are distorted,” the report said. “The playing field is heavily skewed against foreign companies that seek to compete against Chinese companies, whether in
China’s market or markets outside of China.”

The Trump administration launched an investigation into the country’s actions under Section 301 of the Trade Act, resulting in punitive tariffs on China-made goods that continue today. It also enacted the Phase One trade agreement in 2019, which included commitments from China regarding intellectual property, technology transfer, agriculture, financial services, currency and foreign exchange, as well as the purchase of U.S. goods and services. The USTR said the agreement yielded “limited progress” on China’s part, and failed to address issues like industrial plans and subsidies, regulatory transparency, IP theft, and other issues related to technology transfers and market access.

Over the past two years, the Biden administration has taking a multi-pronged approach to managing the relationship with China and addressing the effects of the its actions on the U.S. and its trading partners, the USTR said. It has also passed the Bipartisan Infrastructure Law, the Inflation Reduction Act, and the CHIPS and Science Act to support U.S. industry and domestic production for certain goods.

“The United States has pursued direct engagement with China, where appropriate,” the USTR wrote. “At the same time, President Biden continues to build a coalition of allies and partners to address the unique problems posed by China and its non-market economic policies and practices.”