SCIO press conference on WTO's eighth trade policy review of China

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The Straits Times:

Earlier you mentioned that nearly 20 years after China's accession to the WTO, there have been changes to the market in the form of a foreign investment law and better protection of IP rights, but the fact remains that there are still areas that are out of bounds to foreign investment and there is preferential treatment for state-owned enterprises. And this has come under criticism from other members during the review. So, what is China going to do to rectify this? Thank you. 

Wang Shouwen:

Thank you for your question. As I emphasized when answering the previous question, China has fully fulfilled its WTO accession commitments and obligations. There isn't any promised reform left unfulfilled.

You mentioned that China's SOEs receive special treatment. Regarding this question, article 16 of the PRC's Constitution stipulates state-owned enterprises have decision-making power in operation and management within the limits prescribed by law. China's SOEs are independent market entities that engage in independent operation, financing, self-discipline, and self-development. They compete with enterprises of other ownerships in the market on a level playing field, with no preferential treatment attached. In fact, in recent years, we have promoted mixed-ownership reforms at China's state-owned enterprises. So far, mixed-ownership enterprises account for over 70% of all legal entities of central SOEs, with listed companies being the primary carrier for the reforms. According to the statistics, SOE-controlled listed companies account for 67% of the assets of central SOEs and 87% of the profits respectively. Listed companies publish quarterly, semi-annual and annual reports, which serve as a transparent source of information to find out whether they enjoy special treatment or not. To conclude, China's SOEs do not enjoy special treatment. They are market entities with decision-making power in operation and management according to the Constitution.

As you mentioned, China has implemented the Foreign Investment Law, but there are still people criticizing China for keeping some areas off-limits to foreign investment. But I want to stress that China has opened up its market more and more of its own accord, instead of doing it as a WTO obligation. Under the WTO, China has fully complied with the Agreement on Trade-Related Investment Measures (TRIMs). The reason why China still prohibits or restricts foreign investment in some areas is that the WTO does not have relevant regulations, and many countries have similar prohibitions or restrictions. China also hopes that some bans and restrictions can be removed, but this requires WTO or bilateral investment negotiations. For example, China once held bilateral investment treaty negotiations with the United States; China and the EU have already concluded the negotiations for the Comprehensive Agreement on Investment (CAI). In other words, to open up wider and further relax restrictions on foreign investment through bilateral investment treaties or investment chapters in free trade agreements requires channels beyond the WTO. China is willing to address the investment access issue this way. For example, China has formally applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which sets high standards for investment. It is unfair and unreasonable to say that China's investment restrictions violate WTO regulations.

We understand the hope of some countries that China should further relax investment access. However, criticizing China in this way and saying that China has not fulfilled WTO regulations is unreasonable, unfair, and unacceptable.

On the whole, China has fulfilled all the commitments made on its accession to the WTO. China's SOEs are equally-treated market entities that have decision-making power in operation and management according to the PRC's Constitution. China has already fulfilled its investment obligations under the WTO, and has constantly opened wider to the outside world following an independent path. As we know, China's first negative list for foreign investment, initially introduced for the Shanghai FTZ, contained 190 items restricted for foreign investment. Now the list has been shortened to 30 items. So China has taken big strides to open up its investment access. We are willing to further expand market access for foreign investment both of our own accord, and through bilateral investment treaties, free trade agreements, or WTO negotiations. Thank you.

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