Varieties of contestation: China’s rise and the liberal trade order

Abstract

This article reassesses whether, and if so how and why, China contests the WTO’s liberal trade order. Our framework on ‘varieties of contestation’ goes beyond the mainstream view of a monolithic Chinese trade policy that either challenges or supports the liberal trade order. We propose a two-step approach that allows for a more differentiated assessment. First, a constructivist analysis captures the extent to which China embraces liberal trade norms. China may contest the validity of the liberal compromise that underpins WTO rules (frame contestation) or merely express disapproval regarding their application (claim contestation). Second, a political-economic analysis of sector-specific preferences allows us to explain why China engages in contestation in some cases, but not in others. Empirically, we examine three sectors that have played a crucial role in recent WTO discussions: steel, agriculture, and information technology. We find that contestation is more prevalent in steel and agriculture compared to IT. It is only with respect to the steel sector, which is state-permeated and where behind-the-border regulation is at stake, that China contests the validity of the prevailing liberal compromise. This pattern of selective contestation suggests that China will neither entirely abandon the WTO nor proactively revive it.

Keywords:

• China
• Doha Development Round
• World Trade Organization
• steel
• agriculture
• information technology
• state capitalism
• norm contestation

1. Introduction

The so-called liberal international order is increasingly contested in the realm of trade. The World Trade Organization’s (WTO) key liberal principles, particularly progressive trade liberalization and non-discrimination, have seemingly lost support. Whereas old powers are pushing for liberalization on ‘behind-the-border’ issues, such as competition policy, government procurement, services, and e-commerce, many developing countries are insisting that ‘traditional’ liberalization topics, such as agricultural subsidies, be negotiated first. The resulting deadlock – excepting a few minor agreements – casts a shadow over the WTO’s ability to further advance the free movement of goods and services.

At the same time, WTO members are increasingly ignoring commitments that were negotiated in the past. The ongoing resurgence of economic nationalism, for instance, conflicts with the WTO’s principle of non-discrimination between foreign and national goods, firms, and services. While much has been said about the ways in which US President Trump openly circumvents the multilateral trading system and deepens the WTO’s crisis (Elsig, Pollack, & Shaffer, 2017), commentators in the West have also been concerned that China’s ‘unfair’ trade practices risk undermining the liberal order (Cato Institute, 2018). They claim that China’s state-led economy puts foreign competitors at a disadvantage through, for instance, forced technology transfer or a comprehensive system of state subsidies for national firms. The US, in particular, has long accused China of using state-owned enterprises (SOEs) to ‘subsidize and distort its economy’ (USTR, 2019), which recently culminated in the so-called US-China trade war.

This alarmism in the public debates, nevertheless, stands in contrast with scholarly research on China’s role in the WTO. In fact, most scholars argue that, more than a decade after its accession to the WTO in 2001, China does not appear to be intent on challenging it. This assessment follows from a liberal institutionalist perspective in which China is seen as being interested in an open trading system and acting rather pragmatically within the existing set of rules (Vickers, 2014, p. 271). China’s track record of complying with the WTO’s Dispute Settlement Body rulings, for example, is seen to indicate an embracing of ‘the values and norms … that the WTO embodies’ (Zeng & Liang, 2013, p. 12). Others expect China to maintain a ‘low profile’ (Gao, 2012), at best, or to exert merely ‘unintended, anti-systemic effects’ on the liberal trade agenda (Hopewell, 2016). Some scholars, such as Davies (2018), even claim that at a time where the US seems to retreat from its former role ‘Beijing is the last best hope for reviving the WTO’. While a smaller group of scholars is more cautious in its assessment of the possibility to fully integrate China into the WTO’s liberal order (see for instance Nölke, ten Brink, Claar, & May, 2015; Kobayashi, 2013; Narlikar, 2019), the dominant view is that China is a rule taker, not a rule breaker.

It is against the background of this discrepancy between public portrayals and scholarly assessments that this article aims to reassess whether, and if so how and why, China contests the WTO’s liberal order. We depart from existing accounts on two grounds. First, we argue that to capture variation in China’s behavior we need to go beyond the existing scholarship’s tendency to reify the WTO’s liberal order. Instead, we assume that what this order stands for is itself subject to contestation. We treat the liberal idea that underpins the WTO’s trade order as given i.e. the ‘normative presumption … that ‘free’ trade … [is] the yardstick for good policy against which regulations … should be measured and justified only exceptionally’ (Drake & Nicolaïdis, 1992, p. 40). Where the exact line between the desirability of open markets and justifiable state intervention, however, is drawn has always been subject to contestation (Ruggie, 1982). The principles that prevail in practice are more or less liberal, depending on the different manifestations of the ‘liberal compromise’ between open markets and societal goals that are struck. While we assume that all states contest liberal principles from time to time, we are interested in uncovering and assessing the path that China follows.

Second, we defy the existing scholarship’s tendency to strictly categorize China as either a rule breaker or rule taker. We begin with the assumption that if and how China engages in contestation varies across industry sectors. With respect to sectors in which state intervention and the maintenance of discretionary national autonomy are essential for development rather than a ‘barrier to trade,’ Chinese policy preferences are more likely to conflict with liberal ideas. WTO rules that concern behind-the-border issues and touch on domestic regulation are thus more likely to be contested than rules on traditional issues such as tariffs. Behind-the-border regulation aims to level the playing field between national and foreign firms through, for instance, adjustments in domestic laws (Kim, 2015). This allows us to account for variation in China’s behavior, depending on domestic industry-specific preferences and their fit with the liberalization commitments at stake.

Conceptually, we make use of a two-step approach that allows for the possibility of a more hybrid outcome in which China engages in both support and contestation (see the Introduction to this Special Forum). We are the first to apply recent constructivist research that differentiates between the contestation of the justification (frame) and the application (claim) of a norm to Chinese trade policy-making in the WTO (Stimmer, 2019; Stimmer & Wisken, 2019; Wiener, 2017; see also Deitelhoff & Zimmermann, 2019). This approach allows us to disentangle how China contests the liberal trade order as we capture variation in the extent of China’s embrace of liberal trade norms. We then utilize political-economic expertise from China Studies on economic preferences in the three key sectors to reveal why China engages in contestation (or does not) (see Section 2).

Empirically, we focus on the three sectors of steel, agriculture, and information technology (IT), which have all featured prominently in WTO discussions. On the one hand, this case selection allows us to explain variation in China’s behavior: established powers have accused China of breaking rules on steel and agriculture, but not on IT. In fact, China’s engagement was crucial to the successful expansion of the Information Technology Agreement (ITA) in 2015, the WTO’s first tariff-cutting agreement since the beginning of the Doha Round. On the other hand, the small number of cases allows us to explore in greater detail if and how China contests the prevailing liberal compromises as endorsed in the WTO’s rules and principles. Given China’s increasingly active role and the existing literature’s extensive coverage of earlier periods, we focus on the years spanning from the Bali Ministerial Conference in 2013 until today (August 2019). In terms of method, we make use of case study analysis and systematic mapping and evaluation of practices and justificatory discourses that shape contestation. We draw on expert interviews,¹ primary sources (including in Chinese language), and secondary literature.

A key finding is that China follows a pattern of selective contestation of the WTO’s liberal trade order, which also reflects its sectoral economic preferences. We find only a few select instances of contestation in the IT sector, and strong contestation in steel and agriculture – but with different patterns. It is only in steel, however, that China contests the WTO’s conception of ‘liberal’ trade policy, especially because behind-the-border regulation is at stake in this case. In agriculture, China does not disagree with established trading powers on the liberal compromise as such, but merely seeks to increase existing wiggle room to pursue its domestic policy goals. The IT case even shows that China does not contest behind-the-border regulations across the board, but only those that conflict with state demands for national autonomy.

Does this pattern of selective contestation make China any different from other major trading powers in the WTO? The answer falls somewhere in between the premonitions of alarmist commentators and the mainstream scholarly expectation that China plays by the rules. China resembles other major trading powers in the sense that not all instances of alleged rule breaking constitute a challenge to the liberal trade order. Other trading powers also try to carve out exemptions for themselves and bend the application of existing rules in their own favor. Yet, China is different compared to established trading powers in that its current domestic economic setup is incompatible in some, but not all, sectors with the WTO’s liberal principle of non-discrimination between foreign and domestic firms. In these ‘sectors of conflict,’ it becomes unlikely that the WTO can serve as a forum for the negotiation of new behind-the-border issues, which the US, despite all its skepticism towards the WTO system, and the EU continue to push for.²

Accordingly, we are likely to see a continuance on the trajectory towards what we refer to as a minimalist WTO, one that focuses on the few sectors and issues where consensus between Western trading powers, China, and other emerging powers regarding the liberal compromise between open markets and state intervention is feasible. Such consensus is most likely in negotiations on traditional areas, such as market access for trade in goods, and on a select number of behind-the-border regulatory issues that do not interfere with political demands for state control and national autonomy.

Our argument proceeds in three major steps: first, we present a literature review from which we derive our framework. Second, we discuss empirical evidence from our three case studies. Third, we summarize our findings and discuss avenues for future research.

2. Literature review and conceptual framework

As China gained power, more scholars became interested in understanding how its accession to the WTO shaped the evolution of the world trading system (Narlikar, 2010; Pearson, 2006; Vickers, 2014).³ Many authors, most of whom prescribing to a liberal institutionalist perspective, conclude that China has assumed the constructive role of a rule taker that is willing to play by the rules of the game (Tu, 2013; Vickers, 2014; Zeng & Liang, 2013). Only a few scholars argue that China’s track record should instead be understood as ‘creative compliance’, which is ‘very far from WTO ideals’ (Kobayashi, 2013, p. 108; see also Wu, 2016). Existing perspectives, however, tend to portray China’s trade policymaking in the WTO as either ‘rule breaking’ or ‘rule taking’. To counter this strict dichotomy, we review the constructivist literature on contestation and political-economic expertise from China Studies, which allows us to capture a more hybrid scenario that entails both support and contestation.

2.1. Processes of contestation and the liberal trade order

A constructivist perspective reminds us, first, that we should neither presume that the prevailing liberal norms of this order (and their interpretations) are fixed nor necessarily perfectly liberal. To assess whether China supports or contests the WTO’s liberal trade order, it is therefore necessary to first disentangle what the ‘liberal’ order, which can change both over time and across sectors, entails.

The world trading system was initially constructed as a compromise that balanced liberal principles against the need for state intervention to pursue societal goals such as domestic welfare (Ruggie, 1982). The terms of this compromise differed across sectors, with societal goals featuring more prominently in agriculture, for instance, than in relation to industrial goods. Since the 1980s, however, this initial ‘embedded liberalism’ compromise is increasingly contested (Colgan & Keohane, 2017). With respect to the current era, constructivists point out that the rise of emerging powers such as China could potentially further contest the WTO’s trade order. It could lead to new ‘edits’ or ‘hybridizations’ of the (neo)liberal economic ideas at stake (Ban & Blyth, 2013) as well as to criticisms of the presumably Western-centric bias of existing rules (compare Nel, 2010; Vieira, 2016).

From a constructivist perspective, it is thus important to analyze how China contributes to these ongoing processes of contestation of liberal trade norms that shape the WTO’s trade order. Wiener (2014) prominently defines norm contestation⁴ as ‘directed toward norms’ and as ‘express[ions of] “disapproval” of these norms’ (Deitelhoff & Zimmermann, 2019, p. 3). If China allegedly breaks WTO rules, does this indicate that China contests, i.e. disapproves of, the liberal underpinnings of the WTO’s trade order? Therefore, what matters is not only China’s behavior as it breaks or takes rules, but also to the justificatory discourses through which Chinese policymakers might express disapproval of the prevailing understandings of the liberal principles at stake in the WTO’s trade order.

2.2. Economic preferences and the liberal trade order

Whether or not Chinese policymakers seek to contest the liberal trade order, moreover, depends on the match between specific economic preferences and WTO liberalization commitments in a given sector. In order to grasp China’s economic preferences in different sectors, we build on political-economic expertise from China Studies and insights from International Political Economy that go beyond analyzing China as a monolithic economic model sui generis. This allows us to account for variation in Chinese preferences, including across industry sectors, and examine how this variation shapes Chinese trade-policy making at the WTO.

While China’s political economy shares key characteristics with other capitalisms and/or state developmentalisms, what distinguishes it from contemporary Western capitalisms is the extent to which party-state actors continuously intervene in the economy. With terms such as ‘Sino-Capitalism’ or ‘state-permeated capitalism’, authors reveal, inter alia, pervasive state control of and intervention into the economy (McNally, 2012; ten Brink, 2019). This state activity can be evidenced by the central role of SOEs, direct or indirect subsidies to firms, public procurement, financial assistance, the prioritization of national companies in competition policy, and administrative burdens on foreign enterprises (see Breslin, 2011; Hsueh, 2011; Naughton & Tsai, 2015). In contrast to the post-1970s liberalization projects of Western nations, economic policies in China are deliberately centered on macro- and micropolitical regulation through the party-state (Gruin, 2019). In addition, a delineation between public and private activities analogous to the one prevalent in liberal democracies is not drawn in China. Combined, these features potentially create tensions with liberal WTO norms, and hold the potential for conflicts over liberal trade principles, as ‘second image’ IPE scholars with a focus on domestic determinants of foreign economic policy preferences argue (Nölke et al., 2015; Stephen & Parízek, 2019).

However, the Chinese economy is also heterogeneous. Different industries exhibit different economic dynamics, forms of (strong or weak) state-permeation, ownership structures, and degrees of competitiveness (Hsueh, 2011; Taube & in der Heiden, 2010; ten Brink, 2019; see Section 3 for further sector-specific literature). Since there is reason to assume a connection between domestic economic setups and foreign economic policy preferences (Katzenstein, 1978), we can thus advance recent ‘second image’ political economy scholarship, which derives preferences from China’s political economy writ large (Nölke et al., 2015; Stephen & Parízek, 2019). This leads to the expectation that China is more likely to contest prevailing WTO rules in sectors which are strongly characterized by state-permeation and in which these rules would conflict with the interest of preserving discretionary autonomy especially over behind-the-border issues (Sally, 2004; see also Jiang, 2008, pp. 183–186; Jiang, 2010, p. 253 on similar expectations for the China-Australia trade agreement).⁵

2.3. Capturing ‘varieties of contestation’

Our framework proposes a two-step approach: the constructivist analysis of processes of contestation focuses on how China contests the WTO’s liberal trade order, and the political-economic analysis of sector-specific preferences helps us to explain why China engages in contestation in some cases but not in others. By including the international level through our analysis of processes of contestation of the liberal trade order, we go beyond a one-sided ‘second image’ IPE focus on domestic determinants of foreign policy preferences (for a similar critique see Katzenstein, 2003, p. 11). Such an approach suggests that a more fine-grained analysis, focusing on the match between prevailing liberal trade norms and sector-specific preferences dependent on varying economic setups, better reveals variegation in China’s behavior at the WTO.

In a first step, our case studies make use of a constructivist perspective in reconstructing the prevailing liberal compromise at stake within the relevant sector. Based on primary and secondary sources we then also identify the justificatory discourses that China uses to defend its position vis-à-vis its counterparts in order to analyze the extent to which China’s behavior indicates a disapproval of the liberal compromise at stake. In doing so, we make use of recent constructivist research on norm contestation that differentiates between a rather mild form of contesting the application of a norm – its claim – and a more fundamental contestation of the validity of a norm – its frame (Stimmer, 2019; for a similar distinction see Deitelhoff & Zimmermann, 2019).

Applied to China's contestation of WTO rules, we define so-called claim contestation as contestation over how China should act in the light of existing rules. Claim contestation thus involves challenging the application of specific WTO rules. China, however, can also openly disagree with other states over the normative content of WTO rules – with a focus on liberal trade norms in this article. We thus see so-called frame contestation where China disagrees with other states over the validity of the liberal compromise that underpins WTO rules. In sum, claim contestation indicates neglect or a bending of existing rules that all states commonly engage in from time to time, whereas frame contestation indicates a fundamental challenge to the prevailing liberal compromise. After exploring the pattern of contestation that emerges within the case, we in a second step rely on political-economic analysis to reveal different industry-specific preferences that help us to explain where these patterns of contestation come from. In particular, we analyze characteristics of the domestic economy in the given industry sector. This allows us to assess the extent to which China’s contestation of liberal principles is linked to the prevalence of state permeation and domestic demands to preserve discretionary autonomy, especially over behind-the-border issues.

Notably, while our focus lies on China, this framework is also applicable to other states that engage in the contestation of the WTO’s trade order. Moreover, our framework allows us to tease out some implications regarding the bigger picture of how China’s behavior at the WTO affects its trade order. Exploring the distinct forms and selective patterns of contestation enables us to map conflict-lines and agreement over how to interpret prevailing liberal norms, which are in turn likely to shape the future trajectory of the WTO. For instance, capturing variation regarding the depth and quality of contestation matters because it leads to different trajectories regarding the normative understandings under consideration, in this case the WTO’s liberal trade order. Agreement over the claim and frame of a norm for instance increases normative guidance and would thus support and strengthen this order. If only the claim is contested, normative agreement remains strong enough to provide a reference frame. However, if both the frame and claim of a liberal WTO norm are contested, we expect a disruption of the normative foundation of the WTO’s trade order, which in turn complicates or hinders cooperation (see Risse, 2000; Weinhardt, 2017, pp. 286–288; 2020).

Assessing China’s behavior is, however, merely a necessary, but not a sufficient condition for making claims about the future of the WTO. The latter also depends on the different directions in which other major trading nations move.

3. Case study analysis

3.1. The conflict over Chinese steel exports

Since several years, the global steel market is heavily oversupplied as the expansion of production potential has progressed rapidly, both globally and particularly in China. This oversupply has weighed on prices and globally undermined profitability in the steel sector. As Chinese exports skyrocketed to become the world’s largest, the US and other countries have – either unilaterally or through the WTO’s dispute settlement system – sought to limit inflows. The Dispute Settlement Body (DSB) confirmed violations of the WTO’s anti-dumping and anti-subsidy rules on the part of Chinese producers and the Chinese government. In all instances where a WTO panel had ordered the country to revise policies that constituted violations of the organization’s rules, China has complied in the required fashion and within the specified timeframe.⁶ It has, however, only remedied contentious issues after being ordered to do so by the WTO. Moreover, a number of cases are still pending.⁷

Most liberal institutionalist scholars do not regard China’s breaches of WTO rules in the realm of steel as a fundamental challenge to its liberal order. Instead, they tend to see China’s compliance with the DSB’s ruling as evidence of its general willingness to act as a pragmatic rule taker (Harpaz, 2010, p. 1155; Webster, 2013, pp. 534–535). However, as we argue, the conflict reveals fundamental disagreement over the normative foundation of the WTO’s liberal order. Chinese industrial policy suggests a rejection of not only the ways in which existing WTO rules are applied, but also the validity of the underlying idea that fair competition is primarily based on market principles.

3.1.1. The prevailing liberal compromise

The conflict over steel touches upon a central liberal compromise, which concerns behind-the-border regulation: the presumption that domestic and foreign firms should trade on some kind of level playing field that creates fair competition and mutual non-discrimination. WTO rules stipulate for instance that most support measures provided by the government and government entities would distort this level playing field, while private firms are allowed to make use of cross-subsidies (Wu, 2016, p. 301). Yet, the distinction between public and private entities in WTO law remains ambiguous with respect to China (Wu, 2016), and does not easily fit the manifold ways in which SOEs are active in the steel sector. It remains, for instance, unclear if private enterprises receive illegitimate subsidies ‘in-kind’ when purchasing steel from state-owned China Baowu Steel under the condition that the subsidization of the steel mill depresses transaction prices (Wu, 2016).

Initially, WTO members were to some extent able to side step the issue because China joined with the status of a so-called Non-Market Economy (NME). This status lowered the threshold for determining illegitimate state support, and hence facilitated the application of anti-dumping and anti-subsidy measures against Chinese steel exports. Yet, China’s accession protocol mandated the expiration of its NME status on 11 December 2016 (Article 15; also see Zeng & Liang, 2010). The expectation was that by then, reforms in China would have rendered NME treatment obsolete. Whether or not the expiry of the NME status was meant to be automatic, however, remains unclear.

3.1.2. Patterns of contestation: justificatory discourses on steel

Within the steel sector, our analysis thereby suggests that the Chinese government engages in both claim and frame contestation, pointing to significant disagreement over the liberal principles at stake. In terms of claim contestation, Chinese policy-makers challenge the applicability of existing anti-dumping rules that hinge on the country’s NME status. They demand that fellow WTO members terminate NME treatment in accordance with the timeline put forth in the accession protocol. Chinese trade officials dispute the existence of illegal subsidization and defend the continuation of state support in the steel sector and elsewhere in the economy as WTO compatible (Ministry of Commerce of China [MOFCOM, 2016a). They denounce the decision of trading partners in Europe and the Americas to abandon NME treatment in their anti-dumping proceedings against imports from China. Conversely, the US and the EU argue that domestic prices in China continue to be artificially low because of widespread subsidization and preferential treatment.

Chinese policy-makers also engage in frame contestation by questioning the liberal view that state ownership per se represents a discriminatory practice that undermines fair competition. For instance, Wang Hejun, director of the Trade Remedy and Investigation Bureau of the Ministry of Commerce, and other senior officials regularly complain that existing rules unfairly discriminate against Chinese SOEs and call for the WTO’s liberal trade order to be adapted in order to accept a strong reliance on SOEs (MOFCOM, 2017; Woo, 2017). This reinterpretation of fair competition and non-discrimination is not easily reconcilable with the position of the US and the EU (Miles, 2016).

3.1.3. Reasons for contestation: domestic preferences in the steel sector

Analyzing the sectoral setup helps us to explain why Chinese policy-makers engage in contestation of the applicability (claim contestation) and the validity (frame contestation) of global trade rules affecting Chinese steel mills: Despite past initiatives to reform and liberalize the sector, state permeation remains strong and stands in conflict with the liberal compromise. Given the sector’s strategic importance for national development plans, we find that the Chinese Communist Party (CCP) cannot easily reduce its reliance on SOEs. Domestic demands for discretionary autonomy, therefore, clash with the liberal underpinnings of existing anti-subsidy and anti-dumping regulation, and the focus on behind-the-border barriers to trade they entail.

From the 1980s onwards, the Chinese steel industry, especially the smelting and processing of steel, served as a prime object of substantial state intervention. Understood and designated as a strategic sector of the economy, the biggest steel SOEs have assumed a prominent position in plans and strategies for national development (Taube & in der Heiden, 2010; ten Brink, 2019). Due to steel’s disproportionately large number of downstream applications and linkages to other sectors of the economy, SOEs in this sector have received much attention from successive party-state leadership generations. Steel enterprises have been able to count on financial aid when confronted with a tough (global) market environment and deteriorating financial positions (Ernst & Young, 2017). Assistance came not only in the form of direct cash injections from state organizations, but also through low-interest loans from banks or the provision of goods and services (water, electricity, land, transportation and other production factors) at deep discounts from other state-affiliated units (Taube & Schmidkonz, 2015). State-permeation in order to foster competitiveness is also exemplified by recent practices to merge steel SOEs. Domestically, there is no plan to introduce further liberalization measures to address behind-the-border barriers to trade in the steel sector, especially given that earlier privatizations of smaller SOEs led to large job losses (SCMP, 2016; Xinhuanet, 2017).⁸

This makes it unlikely that China will put further strain on the steel sector by adjusting more fully to the requirements of the relevant WTO rules on anti-dumping and anti-subsidies, since doing so would require a risky change of the sector’s economic setup. A Chinese interviewee stated that ‘we cannot totally take the Western model’ and that even though China wants to reform its SOEs, it is very difficult to change their governance model fundamentally.⁹ Another Chinese trade expert stated that ‘the WTO is not going to change China – SOEs are not going to go away’, adding that ‘WTO rules are not going to change China, and they should not.’¹⁰ One trade expert even stated bluntly that China lost interest in becoming a market economy under President Xi Jinping.¹¹ This implies that despite China’s willingness in the past to comply with DSB rulings on steel, domestic dynamics in the steel sector are hardly compatible with the liberal principles of non-discrimination and fair competition.

3.2. The conflict over Chinese subsidies in agriculture

Agriculture is a core issue in the ongoing Doha Development Round, and negotiations here have been fraught with conflict. Traditionally, developing countries have put pressure on Western nations to further liberalize their agricultural sector, and to revise existing rules on agricultural subsidies accordingly (Narlikar, 2010). Since the beginning of the round, however, North-South conflict lines have become blurrier as emerging countries, most notably China, introduced their own subsidy schemes (Hopewell, 2019). Chinese subsidies, including seed subsidies, direct payments and agricultural input subsidies, increased from RMB 14.5 billion in 2004 to RMB 167.5 billion in 2014 (Li, 2017). In response, the US initiated WTO dispute proceedings against China in September 2016 claiming that in 2015 Chinese subsidies were nearly USD 100 billion above WTO-permissible levels for products such as Indica rice, Japonica rice, wheat, and corn (USTR, 2016a).

The existing literature mentions the competing interests of China and established powers in agriculture (Hopewell, 2017; Singh & Gupta, 2016) and how they affect negotiation dynamics (Hopewell, 2019), but it does not assess their implications for the WTO’s liberal trade order. As we show in the following, the conflict exemplifies processes of claim contestation through which China, as a latecomer among today’s major trading powers, wants to bend the application of existing WTO rules in its favor without substantially questioning the weak ‘liberal’ compromise upon which rules on subsidies rely.

3.2.1. The prevailing ‘liberal’ compromise

The conflict over agricultural subsidies touches upon the liberal notion that subsidies, as trade-distorting measures, potentially undermine fair competition among trading partners. Existing rules on agriculture are still less ‘liberal’ in orientation compared to other issue areas, as they leave ample room for exemptions to provide subsidies. When the General Agreement on Tariffs and Trade (GATT), the WTO’s predecessor, was created in 1947, the US and its European partners put in place a protectionist regime that was tailored to their domestic needs and included the provision of subsidies to small-scale farmers to maintain employment.

The level of domestic support that China is allowed to provide is stated in its WTO accession protocol. This protocol stipulates a de minimis threshold that allows for subsidies of up to 8.5% of the value of production among China’s farmers (International Food Policy Research Institute, 2008, p. vii). This level of subsidies falls in between the threshold for developed country members (5%) and developing country members (10%). Despite these relatively clear-cut rules, however, it remains contested in how far China complies with existing rules, given that Chinese policy-makers, much like other WTO members, often delay the official notifications of subsidies in agriculture.¹²

3.2.2. Patterns of contestation: justificatory discourses on agriculture

In the ongoing debate, Chinese policy-makers contest the application of existing rules (claim contestation), i.e. where to set the limit of acceptable state subsidies. They seek to justify that China should be granted subsidy levels that are higher than the current de minimis threshold. They advance two arguments. First, policy-makers claim that the existing rules on subsidies are biased towards established nations. They point out that in contrast to other WTO members, China is not entitled to use the special agriculture safeguard to protect domestic producers, and has less access to domestic support measures than developed countries.¹³ Second, Chinese officials argue that the legitimacy of domestic support measures should not only be judged according to their trade-distorting nature, but also according to the necessities deriving from the country’s stage of economic development (Zhong, 2016). This developmental purpose of supporting small-scale farmers, the argument goes, differs from subsidies to large farms and agribusinesses provided in the US and EU and should thus be considered a legitimate exemption (compare MOFCOM, 2016b). The US and other powers counter that as ‘the world’s second largest economy’ (USTR, 2016b), China can no longer claim developing country status (Lamp, 2017, p. 496).

Notably absent from these discourses, however, are attempts by Chinese policy-makers to challenge the validity of the liberal compromise upon which WTO rules rest. They do not question the basic idea that there should be a limit on subsidies given their trade-distorting potential. Instead, they seek to achieve a more favorable application (or ‘bending’) of existing rules. This indicates that the conflict at stake is more about the ways in which Chinese actors try to maximize the gains they can get within the given set of rules.

3.2.3. Reasons for contestation: domestic preferences in the agricultural sector

How can we explain this difference in the pattern of contestation in agriculture and steel? As in the steel industry, strong state-permeation characterizes the Chinese agricultural sector. Yet, differences in Chinese preferences and those of established Western powers are to a lesser extent the result of major differences with liberal principles, partly because the liberal compromise regarding agriculture is itself less ‘liberal’ in spirit and in principle allows for the provision of state subsidies. Chinese policy-makers have relied on agricultural subsidies to achieve societal goals, a practice that is common in Western nations as well. The prevalence of claim contestation is then primarily a reflection of the divergent domestic preferences that China and established Western nations hold over the kinds of exemptions that should be considered legitimate. These differences reflect the historical trajectory of China’s agricultural sector and intrinsic characteristics that follow from societal and geographical factors.

China remains a net food importer and its competitiveness remains rather low regarding most agricultural products, even if we account for Chinese reforms since the 1980s that improved the competitiveness of some products such as garlic, apples, farm-raised fish, and shrimp. The protection of import-competing agricultural products has come to dominate Chinese policy-making in this sector, particularly as agricultural support is seen as necessary for employment, poverty alleviation, and development (Liang, 2013, p. 213). A widening rural-urban income gap, for instance, is understood as a strain on the fabric of social stability. As an interviewee pointed out, the state needs to maintain a living for small-scale farmers in areas lacking basic competitiveness.¹⁴

This policy preference is unlikely to change soon, given that there are physical limits to industrializing agriculture in China. Arable land is scarce in China and farms are often in hilly, mountainous areas, which is reflected in the small average size of farms (Li, 2017). Especially in the East, planting land is rather limited.¹⁵ A Chinese interviewee pointed out that there are few gains to be made through upscaling, and that ‘too much liberalization is not good’ given the risk of unemployment in rural areas¹⁶ (see also Wang & Zeng, 2013, p. 225). In fact, large parts of China’s population continue to depend on subsistence farming.

In contrast to the highly commercialized forms of agricultural production in the EU and US, the setup of the Chinese agricultural sector leads to different preferences regarding subsidies. However, the preference to support small-scale subsistence farming as such does not necessarily indicate a major difference with more ‘liberal’ nations as agriculture also remains highly protected in Western nations (Scott, 2017). The dispute over agricultural subsidies is thus the result of a new trading power trying to reinterpret existing rules on the legitimate level of subsidies to better match its own domestic preferences.

3.3. China’s IT sector: selective support for the WTO’s liberal trade order

In contrast to steel and agriculture, negotiations on the liberalization of trade in IT products have not been characterized by persistent conflict and allegations of rule breaking. The IT industry comprises both companies involved in the production of IT-related goods, such as semiconductors, computer hardware or communications equipment, and those providing consulting and IT services. China’s IT industry has been rapidly expanding since the 1990s with particularly strong export growth (Ning, 2009; WTO, 2017). At the same time, new sectors within the IT industry are booming with dramatically increasing e-commerce transaction volumes (CNNIC, 2018). In response, WTO members have increasingly turned their attention to potential gains from further liberalization both regarding trade in IT products as well as e-commerce.¹⁷

Notably, WTO members concluded an expansion of the Information Technology Agreement (ITA, originally concluded in 1996) in 2015, which updated the list of covered IT-related products. This was the first substantial tariff-cutting deal concluded since the launch of the Doha Development Round. Moreover, China was actively involved in the discussions and contributed to the successful conclusion of the ITA expansion agreement at the Nairobi Ministerial Conference in December 2015. In fact, at the time, the Chinese Ambassador to the US emphasized that ‘this deal would not have been possible without a critical agreement between China and the US … and close coordination and cooperation between the two sides’ (Ma, 2015). Interviewees also confirmed China’s proactive engagement in the negotiations.¹⁸

3.3.1. The prevailing liberal compromise

The negotiations of the IT agreement were, in essence, about reducing tariff barriers. They were geared towards advancing the goal of progressive trade liberalization and reflected the normative presumption that the reduction of tariff barriers across an increasing range of products is desirable. Moreover, underlying the negotiation dynamics was the reciprocity principle, which holds that liberalization occurs ‘on a quid pro quo basis’, with ‘import barriers [being] … reduced through an exchange of ‘concessions’ (Sally, 2004, p. 107). Despite its centrality, however, this principle is not very precise and the exact levels of liberalization committed to by individual states remained subject to the negotiations.

3.3.2. Patterns of contestation: justificatory discourses on IT products

In contrast to agriculture and steel, contestation was notably less pronounced in the case of IT products. To the extent that processes of contestation were present during the negotiations, they mostly revolved around the application of the reciprocity principle to developing countries (claim contestation). China did not seek to engage in frame contestation by challenging the validity or desirability of the goal of progressive trade liberalization that the expansion of the ITA stands for (Li, 2013).

To justify its initially defensive negotiation position and the reluctance to rely on full reciprocity when making concessions, Chinese policy-makers advanced an argument similar to the one they used with respect to agriculture: as a developing country, China should be allowed to adopt higher levels of protection compared to established powers. Along these lines, the Chinese Commerce Minister at the time, Gao Hucheng, emphasized the ‘huge gap’ between the US and China, and the ‘weak position’ of Chinese companies (Li, 2013). An influential academic, Sang Baichuan, added that ‘the US made too high requirements for developing countries. Not only China, but also negotiators from other developing economies agreed that developed economies should make more concessions and come up with flexible arrangements and transition periods for developing economies.’ (Ibid.) Ultimately, however, these problems were overcome. The product list was narrowed down during the negotiations and China was allowed to phase out tariffs on some ITA products.

3.3.3. Reasons for (the absence of) contestation: domestic preferences in the IT sector

Why did China support liberalization in the IT sector? Our analysis of domestic political-economic dynamics reveals a configuration that differs from the one in steel and agriculture. More specifically, China’s IT sector is both more competitive and more liberalized. This underlines the need to pay close attention to the heterogeneous nature of China’s economy, and the variation in preferences that correspondingly shapes trade-policy making.

On the one hand, the Chinese IT industry has long been dominated by foreign (East Asian and Western) companies (Shih, 2015), and is thus characterized by a profound integration into global production and supply chains. On the other hand, private domestic firms have increasingly become more successful in this sector (compared to SOEs). Export-oriented domestic firms already benefitted significantly from the original ITA agreement, which China joined in 2003 (Ernst, 2016, p. 6). In 2004, China turned into the world’s largest exporter of ITA products. Through a continuous technological upgrading of its firms thereafter, the prospects for China to benefit from the extended ITA agreement a decade later were very high, and consequently, the state had a strong interest in liberalization. At the same time, it profoundly supported industrial upgrading and local governments often supported efficient production infrastructures in the form of technology development zones, for instance. More than 60% of IT products are produced by export-oriented enterprises in zones that attract foreign R&D centers, entrepreneurs, researchers, and venture capitalists.

The overall success of export-oriented firms, in turn, led Chinese officials to prefer tariff cuts (see also, USTR, 2018). Hence, the increased competitiveness of Chinese firms and the weaker role played by forms of state-permeation running against liberalization commitments distinguishes this sector from steel or agriculture and explains China’s interest in supporting and indeed using the WTO to achieve greater market opening via the ITA expansion agreement. In this sector, more than in others, ‘China was able to reap the gains’ from a more liberalized trade regime (Ernst, 2016, p. 1).

Moreover, the IT expansion agreement falls into the traditional realm of trade in goods and, as a tariff-cutting deal, leaves behind-the-border topics such as prioritizing national IT companies in competition policy, public procurement, or investment conditionality untouched. This made it less likely that China’s economic preferences would prove incompatible with the liberal compromise at the WTO, especially given that the reduction of tariffs did not threaten the maintenance of discretionary regulatory autonomy in the IT sector. The IT case shows that China is willing and able to cooperate with other trading powers in sectors where domestic preferences align with the WTO’s (traditional) liberalization agenda.

3.3.4. Prospects: contestation over e-commerce in the making?

The conclusion of the ITA expansion agreement, however, does not necessarily imply that China is likely to push for the liberalization of other issues within the IT sector. With respect to ongoing WTO negotiations for a multilateral agreement to liberalize cross-border e-commerce, for example, China is more reluctant. Conflict has already emerged between China and the US on data localization requirements. The US has signaled that it seeks to negotiate an e-commerce agreement that includes ambitious behind-the-border issues such as a ban on domestic data localization requirements similar to the comprehensive provisions on e-commerce in the United States-Mexico-Canada Agreement. While the EU is still looking for ways to reconcile such ‘deep integration’ provisions with its data privacy rules, China has already come forward with its unambiguous objections (DGAP Study Group Meeting, 2019).

The prevailing liberal norm at stake is the question of whether data localization requirements that limit the free flow of data count as non-tariff barriers to trade or as legitimate exemptions from liberalization commitments. The US has already questioned whether Chinese regulation, in particular the 2017 Cyber Security Law, is compatible with WTO commitments (United States of America, 2017).

Contestation is, therefore, likely to intensify, as both sides argue in favor of different conceptions of the line between legitimate societal goals and illegitimate barriers to free trade. A Chinese interviewee stated that in the realm of e-commerce the free flow of data is challenging for the government.¹⁹ Chinese policy-makers, more specifically, argue that their reluctance to ease data localization requirements results from security concerns, which have been pursued through the restriction of free data flows (see also Xinhuanet, 2017). This indicates that China may seek to engage in frame contestation as it questions the liberal interpretation of data localization requirements as a non-tariff barrier to trade. It also suggests that Chinese policymakers are unlikely to endorse an e-commerce agreement that contains behind-the-border regulations on politically sensitive issues, especially as data regulation is tied to national security and the survival of the party-state (Gao, 2019). This position is hardly compatible with US demands for easing rules on data localization. Recent developments, however, do suggest that a less ambitious agreement limited to behind-the-border issues that are primarily technical in nature, such as e-signature standards, may be possible (DGAP Study Group Meeting, 2019).

This pattern of emergent frame contestation can be further explained if we take China’s strong interest in preserving discretionary national autonomy in e-commerce into account. Domestically, private domestic firms such as Alibaba-owned Tmall and JD.com (CNNIC, 2018) dominate the Chinese e-commerce sector. In contrast to IT products, however, it is difficult for foreign firms to enter the Chinese e-commerce market since the state has cultivated a legislative environment that presents significant barriers to foreign actors.²⁰ In addition, the CCP strives for control over the liberalizing forces unleashed in this sector and retains direct influence over key firms. Party committees, for instance, have been established in order to ensure that key firms develop in accordance with party-state developmental objectives (Gruin, 2019; also see Liang, 2017).

4. Conclusion

In contrast to alarmist public debates, the scholarly literature mostly sees China as a pragmatic rule taker, whose interest in an open multilateral trading system makes it less inclined to challenge the WTO. Our conceptual framework on ‘varieties of contestation’ allows for a differentiated assessment that goes beyond the mainstream view of a monolithic Chinese trade policy that either challenges or supports the WTO.

Our analysis shows that a more hybrid scenario is emerging that entails both support and forms of contestation that vary across sectors. In the IT industry, contestation is negligible, as Chinese preferences have supported and used the WTO to achieve greater market opening. In the state-dominated steel sector, however, China not only bends existing WTO rules to justify alleged cases of rule breaking, but also engages in frame contestation by questioning the validity of the prevailing liberal compromise. The confrontation between China and established powers on whether SOEs fall into the realm of fair, non-discriminatory competition indicates a challenge to the normative foundation of the WTO’s order. Nonetheless, our case studies also provide evidence for alleged rule breaking that does not challenge this order. In agriculture, where the prevailing norms are less than perfectly liberal and allow for substantial exemptions from liberalization, the conflict is less about the validity of these prevailing liberal norms. Instead, China, as an emerging trading power, engages in claim contestation to bend existing rules in ways that better match its own preferences, resembling other trading nations.

Our analysis thus reveals five key insights. First, the literature’s tendency to characterize China’s behavior according to the ‘rule taking’ vs ‘rule breaking’ binary appears to be misguided. Not every instance of rule breaking is necessarily a challenge to the liberal trade order. Instead, what matters is whether Chinese policy-makers actively seek to question the validity of the prevailing liberal compromise(s) upon which WTO rules rest. Second, China does not appear to contest or support the WTO’s liberal trade order per se but behaves differently across different industry sectors. Our sector-specific political-economic analysis underlines the need to pay close attention to the heterogeneous nature of China’s economy, and the different preferences that consequently characterize different sectoral policies.

Third, our ‘varieties of contestation’ framework allows us to shed new light on the conditions under which China engages in different forms of contestation or support. In general, behind-the-border measures are more likely than traditional measures, such as tariff cuts, to clash with Chinese domestic demands. The steel case demonstrates that reconciling the prevailing interpretation of the WTO’s liberal principle of non-discrimination between foreign and domestic firms with China’s preferences remains a major challenge. Yet, the successful expansion of the ITA suggests that where behind-the-border regulation does not risk the discretionary autonomy of the state, China supports further liberalization commitments at the WTO. Negotiations on e-commerce, however, simultaneously suggest that Chinese support for liberalization on behind-the-border regulation may only be possible with respect to a limited set of technical issues such as an agreement on the validity of e-signatures. While China is thus similar to other WTO members that seek to bend existing rules in their own favor, its economic setup in some sectors is less compatible with prevailing conceptions of liberal trade policy as geared towards the reduction of behind-the-border barriers to trade that other nations (still) support.

Fourth, the case studies show that whether China contests or supports prevailing liberal principles does not only reflect industry-specific preferences, but also depends on existing ambiguities and loopholes within the WTO’s trade order – especially regarding claim contestation. For instance, China has repeatedly pointed to the unfair bias in ‘liberal’ rules on agricultural subsidies that grant more exemptions to established than to new trading powers to justify its own instances of rule bending. In steel, the lack of a clear set of rules that defines how to deal with subsidies provided in state-permeated emerging economies, or the presumed expiry of China’s status as non-market economy have also opened the door to claim contestation. Since the relevant legal rules were not clear-cut, China was able to argue that its alleged practices of rule-breaking do conform with WTO law. However, we also find that unambiguous rules as such are unlikely to resolve conflicts that reflect incompatible domestic preferences, such as in the case on data localization requirements in e-commerce.

Finally, our findings speak to broader debates about China’s role in global economic governance. The variegation of its behavior makes it unlikely that China will build a parallel trade order and abandon the WTO entirely. However, it is also unlikely that Beijing will proactively ‘revive’ the WTO. Instead, we expect China’s selective pattern of contestation and support to continue. Therefore, it is also likely that we see a continuance on the trajectory towards a minimalist WTO that focuses on traditional areas such as tariff-cutting but leaves domestic regulation largely untouched, as exemplified in the ITA expansion agreement. This pattern is also evident in the absence of China during plurilateral talks on a services agreement, which were moved outside of the WTO, or the rejection of China’s offer to join the revised Government Procurement Agreement due to concerns by other nations that its proposals were not far-reaching enough and did not address SOEs in a meaningful way.

The rise of China does not challenge the WTO’s trade order per se, nor does the disruption of the WTO’s functions unfold in uniform ways. Nevertheless, China’s behavior will certainly shift the lowest common denominator regarding the kind of liberal compromise that the WTO stands for. This influence of course does not preclude the fact that the future trajectory of the WTO will also depend on the direction in which other major trading nations move as well as the emergence of new conflict lines that cut across the North-South divide (Hopewell, 2019).

Regarding avenues for future research, three topical issues merit attention: the ongoing negotiations on e-commerce services are worth investigating in more detail. Moreover, while this article has focused on China, our framework is also applicable to other states that engage in the contestation of the WTO’s trade order. Further research could examine the positions of other large emerging countries such as India and Brazil (on variation in behavior, see Hopewell, 2016; Narlikar, 2019; also see Nölke, ten Brink, May, & Claar, 2019; Stephen & Parízek, 2019), but also the US, which through its recent policies seems to suggest that acceptance of the WTO’s normative foundation may also be shrinking among established powers (Bishop & Muzaka, 2019). Looking at other countries could also help to address the open question of whether variation could to some extent follow from the different nature of the sectors involved. Finally, trade conflict at the WTO has boosted attempts at regional trade talks on new agreements such as the Regional Comprehensive Economic Partnership in East Asia. These agreements and related topics such as partially overlapping, potentially conflict-laden regional institutions, a decline of universal multilateralism, and fragmentation all are in need of further analysis. While China is unlikely to disrupt the WTO, the world trade order may come to take an alternative shape elsewhere.

Acknowledgements

We would like to thank Jue Wang, Annette Stimmer, Peter Tauber, Alexander Meland, Elvira Rosert, Nana de Graaff, Wiebke Rabe, Till Schöfer, Guilherme Cassaro Orio, Johannes Petry, Tim Rühlig, Peter in der Heiden, Adam Dixon, Farida Hassan as well as the RIPE editorial team and three anonymous reviewers whose outstanding comments greatly improved the quality of the manuscript.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the Bremen International Graduate School of Social Sciences (BIGSSS). Earlier versions of this article have been presented at the Maastricht-York workshop “Europe and the Future of Global Rules and Multilateralism”, Maastricht University, (16–17 September 2019), at the International Convention of Asia Scholars (16–19 July 2019), Leiden University, the bi-annual conference of the German Association of Political Science (DVPW), section “International Relations”, University of Bremen (4–6 October 2017), the BIGSSS research colloquium (12 June 2017) and the China Discussion Forum, Jacobs University Bremen (14 December 2016).

Notes on contributors

Clara Weinhardt

Clara Weinhardt is an Assistant Professor in International Relations at Maastricht University and a Non-Resident Fellow at the Global Public Policy Institute (GPPi) in Berlin. Her research focuses on global trade governance and international negotiations. She has previously published in journals such as International Studies Quarterly and Journal of Common Market Studies. Her recent co-edited book “The Language of World Trade Politics: Unpacking the Terms of Trade” (2018) was published in Routledge’s RIPE Series in Global Political Economy.

Tobias ten Brink

Tobias ten Brink is Professor of Chinese Economy and Society and Director of the China Global Center at Jacobs University Bremen. His research focuses on global political economy, international relations, technological innovation, and social policy. He has published in journals such as European Journal of International Relations, International Politics, and Journal of Contemporary China. His new book “China's Capitalism: A Paradoxical Route to Economic Prosperity” (2019) was published with University of Pennsylvania Press.

Notes

1 These include interviews conducted in Geneva in September 2016 with 12 trade officials and experts at the WTO (with a majority of interview partners being non-Chinese), and 19 interviews conducted with (primarily Chinese) trade experts in Beijing and Shanghai in June 2017. To allow for attribution, the interviews are complemented with quotations of Chinese and Western officials in the press.

2 The US for instance pushes for an ambitious e-commerce agreement that includes behind-the-border regulation, see https://geneva.usmission.gov/2019/03/06/u-s-statement-at-the-meeting-of-the-wto-joint-statement-initiative-on-e-commerce/ (6 March 2019); see also Cato (2016) on the more general US position.

3 While China’s bilateral trade relations have also received attention, the WTO remains the central focus. For exceptions see Harpaz (2016).

4 Note that norms can manifest themselves not only as fundamental norms, but also as principles, standardized procedures and regulations endorsed in rules, see Wiener (2018, p. 62).

5 Note that the foreign policy decision-making process in China is more complex (and includes as well contradictory signals and internal divisions) than we are able to take up here; for an analysis of recent changes in Chinese foreign policy under Xi Jinping, who aims at recentralizing decision-making and to more assertively strive ‘for achievement’, see Sørensen, 2015; Hu, 2019. Moreover, we are not dealing in any detail with how the need for imports of products for certain domestic markets affects China’s position at the WTO.

6 See for instance the US case against China on ‘Chinese Countervailing and Anti-Dumping Duties on Grain Oriented Flat-rolled Electrical Steel from the United States’ (DS414) that was concluded in 2015.

7 The latest set of panels that involved the US and China was established in 2018 and concerns the examination of the tariffs imposed by the United States on steel and aluminium imports, as well as the countermeasures that China and other imposed in response.

8 Interview 1, Chinese trade expert, Beijing, 19 June 2017.

9 Interview 11, Chinese trade expert, Beijing, 26 June 2017.

10 Interview 2, Chinese trade expert, Beijing, 20 June 2017.

11 Interview 2, Chinese trade expert, Beijing, 20 June 2017. This is also echoed by Xi Jinping’s speech at the 19^th National Congress of the Communist Party of China where he stated that China will support SOEs in becoming stronger, doing better, and growing bigger, on a global scale (Xi, 2017).

12 China’s last notification of domestic support measures in agriculture covering 2009-10 was made in 2015, see https://www.wto.org/english/news_e/news15_e/agcom_04jun15_e.htm.

13 In contrast to the US and the EU, China has for instance never been part of the so-called blue box system that covers direct payments linked to acreage or animal numbers coupled with production quotes. Moreover, in contrast to many developed countries, China does not provide subsidies under the total aggregate measure of support (AMS), and no total AMS commitment was included in its accession protocol (Cheng, 2008, p. 14).

14 Interview 1, Chinese trade expert, Beijing, 19 June 2016; Interview 14, foreign trade expert, Shanghai, 27 June 2017.

15 Interview 7, Chinese trade expert, Shanghai, 24 June 2017.

16 Interview 2, Chinese trade expert, Beijing, 20 June 2017; Interview 10, Chinese researcher, Beijing, 26 June 2017.

17 Note that it remains contested to what extent e-commerce classifies as trade in goods or trade in services (or both).

18 Interview 1, country representative at WTO mission, Geneva, 15 September 2016; Interview 2, country representative at WTO mission, Geneva, 30 September 2016.

19 Interview 8, Chinese trade expert, Shanghai, 24 June 2017.

20 Interview 14, foreign trade expert, Shanghai, 27 June 2017.