China\'s Trade Policy China Joined

China's Trade Policy

China joined the World Trade Organization in 2001 after a fifteen-year struggle in which major trading partners worked with Chinese officials to open that country's economy to greater international competition. Domestically, the Chinese government hoped to ensure that its market reforms would continue to flourish (BBC, 2001).

China's progress on agricultural duties has been fairly strong. According to the WTO (2009), China carries an average duty on agricultural products of 15.8%, with 5.8% of products being duty free and with 1087 total tariff lines. This compares favorably with most developing nations. China's duties are agricultural products are higher than in some developed nations such as the United States, but they are in line with those of the European Union, which sits at 15.9%. Most tariffs on agricultural products fall within the bound of 5-25%.

The outlook for Chinese tariffs on agricultural products is good. China is losing arable land, both to erosion and to economic development (CIA World Factbook, 2010). As such, the nation faces a strong challenge in feeding itself. With a growing population and no room for growth in the nation's agricultural sector, China will need to increase agriculture imports. China has aimed to reduce the average tariff on agricultural products below 15% by 2009, and has entered into an agreement with the ASEAN nations for a zero tariff on agricultural products (Qiu, Yang, Huang & Chen, 2007).

The World Trade Organization report highlights non-agricultural products (rather than manufactured products specifically). Again, China's duties in this area are lower than for many developing nations, but are considerably higher than most developed nations, include the EU and the U.S. A total off 46.9% of non-agricultural goods are subject to a duty between 5-10% and very few manufactured goods have a duty over 15%.

There are variances in duties by country as well. For example among major trading partners there are duties on most Korean products and a large amount of Japanese agricultural products (WTO, 2009). China has a healthy amount of duty-free trade with the United States, including 45.4% of non-agricultural products designated as duty free imports from the U.S. (Ibid).

In addition to moderate tariffs, there are considerable non-tariff barriers for foreign firms entering the Chinese market. China's currency manipulation is one of the most important. The Chinese government buys foreign currency, keeping the value of the yuan low. While this is a benefit to Chinese exporters, it makes non-Chinese products more expensive in China. High prevalence of government control in key industries is another non-tariff barrier. Some of this changed with China's ascension into the WTO. A government entity, COFCO, handled both imports and exports of a wide range of agricultural products, but now many of China's agencies for agricultural trade have been converted to for-profit enterprises, reducing the impact of government intervention in agricultural trade (Carter & Rozelle, 2004).

Tariffs and minor trade disputes, however, have proliferated between China and major trading partners in recent years as China seeks to stimulate its economy. For example, China has increased tariffs on American chicken (89% of China's chicken imports) in order to protect domestic producers (Food Manufacturing, 2010).

Overall, China has lowered its tariffs over the years since it ascended to the World Trade Organization. Its tariffs are progressive for a developing country, but still are not as low as might be expected from a developed nation. There are also strong concerns about non-tariff barriers to trade such as government intervention in markets for specific goods and currency manipulation that makes foreign goods expensive in China.

Works Cited:

BBC. (2001). China joints WTO -- at last. BBC. Retrieved October 6, 2010 from http://news.bbc.co.uk/2/hi/business/1702241.stm