Economics Paper on China, America, and the Fracturing Of the Global Trading System


From the introduction of capitalist market principles over four decades ago, China’s economic market has been on an upward growth rate. The Chinese government accession to the World Trade Organization (WTO) in 2001 was hailed as a breakthrough in the global market for various international trade stakeholders. It should be noted that former Chinese leader Deng Xiaoping had a long-term conclusion of a strong Chinese economy since the 1970s. Nevertheless, China’s participation in the global trade industry has not anything but smooth considering that for years the country’s self-proclaimed socialist market economy system has been open to criticisms just as much as it has been hailed. However, faced with the intricacies of joining WTO meant China’s laws, trade policies, as well as domestic regulation of business would have to change significantly, it stands to question as to why China’s leaders would consider joining the WTO as important.

Literature Review

Back in 1978, the Republic of China had no foreign investment in addition to limited trade in terms of international trade. Since 2016, China has been by far the world’s leading exporter, exporting goods worth an estimated USD 1,990,000,000,000 in the year on average since 2016. The growth rate has been a consequence of China joining the WTO. As explained by Bhattasali and Kawai (2017), the WTO membership opens up China’s economy to more international trade as well as investment, additionally, it opens up the world economy for China’s exports. As explained by Chow, Tuan, and Wang, (2017), China joining the WTO may be a positive force for the nation’s economic development; on the other hand, the competition of imports, as well as foreign enterprises in China, might have an adverse effect to the domestic enterprises in China’s agricultural, manufacturing as well as service sectors.

WTO Impact on China

Currently, the Republic of China is considered the world’s leader in terms of export. Followed by the United States with exports valued at an estimated 2.3 trillion US dollars. As explained by Brooks, Wang, and Jambeck (2018), the value of goods exported from China to the rest of the world grew significantly between 2002 and 2014. In 2002, China’s exports were estimated at approximately 327 billion US dollars this amount grew to about two trillion US dollars a decade later in 2012. Since 2012, Chinese exports to the global market have been more than 2 trillion US dollars’ worth of goods. As explained by Dai, Huang, and Zhang (2018), the year on year export growth remained above 17% between 2002 and 2012, except for 2009 and 2012 because of the financial meltdowns events in Europe and across the world. As presented by Manjiao (2017) by 2011, China made up an estimated 10% of global merchandise exports in addition to about 4% of global service exports. China’s greatest export product category at the time was machinery and transport equipment, of which it exported 902 billion US dollars’ worth for the product to developing economies globally. For the information, provided in the paper it can be argued that entry admission to WTO has played a positive role in improving the nation’s export and import trading. However, it should be noted that in some schools of thought it could be stated that China of joining WTO has been the subject of much speculation. With the economic changes that are, happening in China over the last three decades it may well be difficult to sort out the influence of WTO.


Over the last decade, China has seen an increase in multi-national corporations in the process of increasing and decreasing the number of jobs provided in the country. According to a study by Shaffer and Gao (2018), it was estimated that about 10 million jobs were lost in the farming, autos, metal, and petrochemicals; however, a similar amount of jobs a similar number went up in services, textiles, garments, and non-industry for over a decade and a half. Although international trade was expected to nearly double, the significant in foreign investment seems to have increased competition that has affected the local industry adversely.

International Trade Disputes.

One of the negative aspect of international trade is the existence of trade disputes. According to the World Trade Organisation (WTO), trade disputes are common and they can arise when a government believes that another government has violated an agreement or commitment made in the WTO.

The image above is a representation of the nations that have trade disputes with China in the global market. The WTO has endeavors to reduce conflicts between trading partners. As explained by Francois and Spinanger (2017), since 1995 the WTO disciplinary board has ruled over 350 cases. As of April 2018, the Republic of China was part of 55 cases, both as complainant and as respondent. A majority of the cases have been against the United States where 22 cases were brought against it while it was the complainant in 10 cases. It EU had the second-highest number of conflicts with China with the while it had four despites with Mexico, all of which were brought against it.

International trade resources distribution.

The multilateral trading platform endorsed the WTO at its the cornerstone of international trade, as well as the fact that it has been playing a critical role in promoting global trade plus building an open world economy. China has firmly supported the multilateral trading system since its accession to the WTO in 2001. The country has called upon the WTO to center its efforts more of the concerns of developing member states as opposed unilateralism as well as protectionism. China has encouraged the WTO to discuss as well as respond to new topics of general interest to particular members in regions such as Africa such as investment facilitation, micro, SMEs, and e-commerce. As explained by Joseph (2017), China initiated “Friends of Investment Facilitation for Development (FIFD)” in addition to sponsoring the Joint Ministerial Statement on Investment Facilitation for Development signed by over 30 members.


The world is undergoing a new round of major development, great change, and profound readjustment. China has grown to become the largest exporters over the last two decades with major reasons coming from the country’s membership to the WTO. The paper presented shows that China has been the greatest gainer of international trade over the period. The nations GDP as well as the FDI has more than tripled in over a decade and a half Nevertheless, the success has come with significant ramifications particularly through conflicts. Currently, China has been part of an estimated 55 cases of international trade disputes. The one aspect that stands out is the nation’s ambition to have a diverse policy of resource distribution. In summary, joining the WTO has been a historic for the global market.




Bhattasali, D., & Kawai, M. (2017). Implications of China’s accession to the World Trade Organization. In Japan and China (pp. 72-102). Palgrave Macmillan, London..

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Chow, P., Tuan, F., & Wang, Z. (2017). The Impacts of WTO Membership on Economic/Trade Relations Among the Three Chinese Economies: China, Hong Kong and Taiwan. Pacific Economic Review6(3), 419-444.

Dai, M., Huang, W., & Zhang, Y. (2018). How Do Households Adjust to Trade Liberalization? Evidence from China’s WTO Accession.

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Joseph, R. K. (2017). Investment Facilitation Agreement in WTO: What It Contains and Why India Should Be Cautious?. Available at SSRN 3083945.

Manjiao, C. (2017). China’s participation in WTO dispute settlement over the past decade: experiences and impacts. Journal of International Economic Law15(1), 29-49.

Shaffer, G., & Gao, H. (2018). China’s Rise: How It Took on the US at the WTO. U. Ill. L. Rev., 115.