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Article: Building A Market Economy Through WTO-Inspired Reform of State-Owned Enterprises in China

A recent article by Herbert Smith Freehills China International Business and Economic Law (CIBEL) Centre member Dr Weihuan Zhou, CIBEL Seed Grant recipient Associate Professor Henry Gao and CIBEL PhD student Xue Bai challenges the widespread view that existing WTO rules are insufficient for dealing with State capitalism in China.

In this article, “Building A Market Economy Through WTO-Inspired Reform of State-Owned Enterprises in China”, published in Volume 68, Issue 4 of the International & Comparative Law Quarterly, the team argued that it is not necessary to develop new rules to deal with the unique challenges China’s State capitalism brings as they could be appropriately addressed by the WTO’s existing rules on subsidies coupled with the China-specific obligations.

China’s State capitalism, which has been described as "[an unprecedented] threat to the world trading system" by the US Trade Representative Robert Lighthizer, is now at the centre of academic and policy debate given its growing influence on the global economy.

Among the debates, the key question has been whether the existing WTO rules are adequate to address the effects of the Chinese government’s intervention in the domestic market on trade and competition.

By taking a detailed review of China’s current SOE reform, the team argued that “WTO rules on subsidies and countervailing measures, coupled with these China-specific commitments, have already provided sufficient tools for Members to use when dealing with China.”

“Therefore, instead of trying to negotiate new rules, WTO Members should make more active use of the existing provisions.”

The International & Comparative Law Quarterly is the journal of the British Institute of International and Comparative Law and is published by Cambridge University Press. It is one of the world-leading journals in the area of public and private international law, comparative law, human rights and European law.