Grandstand. China was admitted to the World Trade Organization (WTO) in December 2001 after fourteen years of tough negotiations. It was the time of the “happy globalization”. It was thought that increased trade would be the key to world peace. Not even to mention the theory of convergence which explained that the different politico-economic systems could only align themselves with supposedly universal “best practices”.
General prosperity would be cloudless, Western-style democracy would logically prevail everywhere. We now know that this theory has disappeared into the depths of magical thought. China has made tremendous progress, as everyone knows. Its gross domestic product (GDP) has increased from 1,300 billion dollars in 2001 to 17,900 in 2021 (15,800 billion euros). Chinese companies, which did not count in the global concert, are now major in all areas.
The 800-page text signed by China is a treaty, a clear legal concept for Westerners. But, for the Chinese, it is an unidentified object, far removed from their politico-cultural traditions. For them, it is unthinkable that national law can be topped by a supranational text. A series of misunderstandings will ensue. Joining the WTO gives the start of a large reduction in customs tariffs.
Dependency for European or American companies
As it works in both directions, it is also an accelerator for foreign companies, which start to sell more and more on the Chinese market. Today, Western brands are part of the daily Chinese landscape, from Starbucks to McDonald’s, from Audi to BMW, from Nike to Louis Vuitton or Gucci. The Chinese market has become an essential driver for European or American flagship companies, which they can no longer do without.
In the other direction, the Chinese “factory of the world” has benefited from a vigorous influx of air. Its exports of manufactured goods have gone from 4% of world sales in 2001 to 20% today. Should we complain? In terms of our trade balances, certainly. Especially for France, which does not produce the machine tools of the German Mittelstand, essential to China.
But, for average Western consumers, the low prices of “made in China” products have been a noticeable boost to their purchasing power. The other effects of the WTO are more vague. China should have practiced opening up to foreign companies at home. In household appliances, SEB was able to buy out its local counterpart Supor in 2007, not without a long local uproar.
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