Former China central bank governor on WTO reform
Former China central bank governor on WTO reform
Zhou Xiaochuan: Resolving New International Trade Issues Through Reform
This newsletter features the translation of a speech by Zhou Xiaochuan, the former governor of the People’s Bank of China. The speech was made on May 27, 2019, but was recently published on Dec. 1, 2021, by the 《中国金融》 China Finance, a magazine under the central bank, at the occasion of the 20th anniversary of China’s accession to the World Trade Organization (WTO).
It’s not long but your Pekingnologist isn’t 100% sure on every translated sentence, so the Chinese original is retained for accuracy check.
Zhou Xiaochuan: Resolving New International Trade Issues Through Reform
2019年5月27日，博鳌亚洲论坛研究院与财新传媒在日本东京联合举办了“世贸组织改革座谈会”，共同探讨国际贸易体系变革以及中日两国的贡献。博鳌亚洲论坛副理事长周小川、中国进出口银行董事长胡晓炼、时任中华全国归侨联合会副主席李波、时任日本太平洋伙伴关系协定（TPP）副首席谈判代表尾池厚之、日本银行前理事堀井昭成，以及包括杨国华、今野、小手川和石川等在内的十余位中日著名专家学者出席了座谈会。时值中国加入世贸组织20周年之际，本刊特发表周小川副理事长在此次会议上的主旨演讲。
The forum on WTO reform was co-organized by Boao Forum for Asia Academy and Caixin in Tokyo, Japan on May 27, 2019. People present at the forum included 周小川 Zhou Xiaochuan, vice chairman of the Boao Forum for Asia, 胡晓炼 Hu Xiaolian, chairman of Export-Import Bank of China, 李波 Li Bo, then the vice-president of All-China Federation of Returned Overseas Chinese, 尾池厚之 Atsuyuki Oike, then Japan's former deputy Trans-Pacific Partnership Agreement (TPP) negotiator, 堀井昭成 Akinari Horii, former Assistant Governor of the Bank of Japan, and a dozen well-known Chinese and Japanese scholars, such as 杨国华 Yang Guohua, Mr. 今野 Konno, Mr. 小手川 Kotegawa, and Mr. 石川 Ishikawa. 《中国金融》 China Finance hereby (Dec. 1, 2021) publishes Zhou Xiaochuan's keynote speech at this meeting, at the occasion of the 20th anniversary of China’s accession to the World Trade Organization (WTO).
非常高兴看到大家对“世贸组织改革”这个题目有如此大的积极性，特别是日方有很多重量级嘉宾来参加今天的讨论。
I’m very glad to see all of you, especially our honored Japanese guests, so interested and take part in discussing WTO reforms.
我担任人民银行行长期间，多次参加20国集团（G20）的各种会议。G20峰会首次举办是在2008年，在此以前只有部长级会议。2008年峰会的主要议题是应对国际金融危机，与会的20国首脑都希望早在2001年就启动的多哈回合能够尽快取得进展、作出结论。但实际上多哈回合谈判困难重重，到现在为止也看不到乐观的迹象。不仅如此，一些新的贸易问题也开始出现并成为G20峰会的重点议题。2018年G20在阿根廷召开的峰会，虽然也有很多别的重要议题，但实际上各国首脑重点关注的还是贸易问题，尤其关注中美两国首脑关于贸易的会谈。
When I was the Governor of the People's Bank of China, I attended many G20 meetings. Its first summit debuted in 2008. Before the 2008 summit, there were only ministerial meetings. The 2008 meeting revolved around how to cope with the global financial crisis, and heads of states or governments all expressed their hope to make progress and reach conclusions on the Doha Round negotiations which started as early as 2001. In fact, numerous difficulties blocked progress, and there isn’t much optimism even until now. Not only that, but some new trade issues have also emerged to become key agendas of G20 summits. At the 2018 Argentina summit, there are many other important issues, but heads of state or government paid attention to trade issues, especially trade talks between leaders of China and the United States.
我们都知道，世贸组织（WTO）能不能够继续有效运作，主要存在哪些问题，究竟需要怎么进行改革，这些都是各国十分关心的问题。大家对2019年6月底即将在日本大阪举行的G20峰会给予很大希望，希望20国首脑能就WTO改革形成一些初步的共识，对改革加以推进。当然，究竟能不能够实现这一点，大家并不是很乐观，也知道还存在着很多困难，时间已经很紧迫。比如，WTO贸易争端解决机制中的一个重要部分就是上诉机制，大家就会看到，到2019年底这个上诉机制实际上就不能正常工作了。当然，目前还有其他若干议题大家都存在分歧。面对诸多挑战和困难，WTO实际上已经很难正常运作。
We all know that the members of WTO are concerned about whether the WTO could continue to perform effectively, what are those major problems, and how to reform them. People hope that the leaders of the G20 could reach some initial consensus to advance the reform at the Osaka G20 summit this June. However, the prospect is not promising, due to existing difficulties and short of time. For instance, the Appellate Body, one of WTO's most important disputes settlement mechanisms, will stop working normally by the end of this year. There are also disagreements on several other items. In face of the challenges and difficulties, it’s in fact very difficult for WTO to function properly.
此外，这些年国际贸易中还出现了一些有待解决的新议题如数字贸易等。但按照现有的程序，能否制定出新规则来解决这些问题显然也是不乐观的。所以我们迫切希望在座各位共同出主意，对G20大阪峰会各国领导人讨论这些问题有所推动。特别是希望日本作为主席国，能在这方面起到主导和推动作用。
In the meantime, new international trade issues, including those concerning digital trade, have also emerged in recent years. Apparently, it’s not optimistic to establish new rules for resolving these issues based on existing protocols. Therefore, we urgently hoped that guests here today can work together to figure out some ways to facilitate the talks at the upcoming Osaka summit. It is hoped that Japan, as the host of the summit, could play a leading role in this regard.
关于WTO改革，2018年我也参加了一部分研究和讨论。中国方面，李波先生主持了一些课题研究，一会儿他会介绍一下。2018年，我们见到了几篇关于WTO改革的文件，其中包括来自加拿大、欧盟以及德国一个智库的。中国也需要认真研究这些事情。多年来，亚太国家一直在推动跨太平洋伙伴关系协议（TPP），以东盟为首的亚洲国家也提出了区域全面经济伙伴关系协定（RCEP），这些都说明在亚洲范围内推动WTO改革还是有一定基础的。
In 2018, I participated in some research and discussions on WTO reform. Mr. Li Bo will later introduce several research projects he headed in China. The same year, some Canadian and European Union (EU), and German think tanks issued several relevant papers. China should also strengthen research on this subject as well. The progress of TPP promoted by Asian-Pacific nations, and the Regional Comprehensive Economic Partnership (RCEP) led by the Association of Southeast Asian Nations (ASEAN) demonstrate that there is a basis in Asia to push forward WTO reform.
加拿大、欧盟和德国在文件中提出了许多改革设想，其中的大多数建议是非常积极有效的。虽然从外部来看，里面也有很多内容实际上对中国是带有批评性的，比如补贴的透明度问题、国有企业问题、网络空间的治理问题、技术转让和知识产权保护问题。但是，中国对这些问题已持有明确态度，也确实在借这种外部力量来加快国内改革的步伐。实际上，我们在若干方面已经作了准备，特别是在金融市场开放方面的工作还是做得比较充分的。另外，在技术转让和知识产权保护方面，我们也有很大决心向前推进，力争达到国际上可接受的标准。
Canadian, EU, and German papers have offered many proposals, the overwhelming majority of which are very positive. Looking at them from the outside, some are critical of China, such as those about the transparency of government subsidies, state-owned enterprises (SOEs), regulation of cyberspace, transfer of technology, and intellectual property protection, but China has been clear about its own attitude to those issues and indeed is leveraging these external forces to accelerate domestic reform. In fact, we have prepared for reforms in several aspects, especially in opening the financial market to the outside world. And we have the determination to push forward, in areas such as the transfer of technology and intellectual property protection, to reach the standard that can be accepted internationally.
但同时，我们也感觉有一些问题解决起来可能还有一定的困难，需要通过讨论来增强共识，其中特别值得注意的是国有企业改革和网络空间治理的问题。但总体来讲，我觉得中国的情况和当年日本有点相似。日本过去在国际上面临压力的时候，通常能够把压力变成对外开放的动力，中国也可以通过这样的做法来推动改革。
Meanwhile, we feel that there are still certain difficulties in resolving some issues, and more discussions are needed to enhance consensus, especially those concerning SOE reform and governance of cyberspace. Generally speaking, I think what is happening in China today is a bit similar to Japan in the old days. When facing pressure internationally, Japan usually could turn those pressure into motivations for opening up. China can advance its reforms in a similar way too.
利用G20峰会这一时机推动WTO改革十分必要，与此同时，我们确实也需要准备应对诸多挑战。如果WTO改革不顺利，一段时间内出现WTO作用弱化甚至不怎么太起作用的情况，那么全球多边主义就有可能抬头，全球贸易制度就会出现空白。在这种情况下，就有可能出现这样一个局面：一些主张自由贸易的国家采用诸边主义（Plurilateralism）的做法，率先向前推进，然后再看全球能否向这样的做法靠近。
It is essential for us to grab the opportunity of the upcoming G20 summit to press ahead with WTO reform, and in the meantime get ready to confront many challenges. If the reform does not go smoothly, WTO may lose part or even the majority of its functions in a certain period of time, and multilateralism could probably gain more ground in the absence of an agreed international trade system. In this case, countries in favor of free trade will take the initiative to practice plurilateralism and advance by themselves, and then wait and see if the world follows.
因此，在这方面我们也是要有思想准备的。就中国而言，我个人理解，从政府的立场上来看，首先还是尽全力推动WTO发挥作用，推动WTO改革取得共识并得到落实。与此同时，我们也要做一定的思想准备，在WTO改革出现困难的时候，究竟应该如何体现自由贸易和贸易投资便利化，如何通过局部地区先行推进并以此作为多边主义的替代性渠道。
We should be mentally prepared for such possibilities. In my understanding, the Chinese government’s standpoint is it will try its best to promote a well-functioned WTO by pushing for consensus on the WTO reform and its implementation. Meanwhile, we should also be prepared that WTO reform could meet some difficulties, and when that happens, how can we facilitate free trade and trade investment, and how should we advance regional agreements first and use them as an alternative to multilateralism.
这次的讨论十分热烈，既提出了很多问题，也带来了很多启发。通过交流，很多问题还可以进一步深入研究。我下面就对其中几个问题谈谈个人的看法。
The heated discussions today have pointed out many issues and brought many new ideas. We can further study those issues afterward, and I would like to share a few of my personal views on the following aspects.
第一，关于WTO的规则制定和改进问题。我很赞成今野先生的说法，现在的状况很不令人满意。也许我们需要回顾一下，从关税及贸易总协定（GATT）到WTO究竟是不是一个好的变化？过去GATT那种机制，不管怎么说，促成了东京回合和乌拉圭回合；但WTO来了以后，多哈回合连影儿都没有了。
I. On the formulation and improvement of WTO's rules.
I agree with Mr. Konno that the current situation is very unsatisfactory. Maybe we should look back and consider whether things have become better after WTO replaced General Agreement on Tariffs and Trade (GATT). No matter what, the Tokyo Round and Uruguay Round negotiations during the time of GATT went well; the WTO's Doha Round ended up with nothing.
第二，关于补贴问题。刚才尾池先生、李波先生都谈到了补贴问题。正如尾池先生所说的，中国的补贴有很多是地方政府做的。那么从另一个角度解释，就是中央政府并不希望搞这种补贴，中央政府也没钱。但是，因为中国把很多钱都分到了地方政府，所以地方政府反而可能有钱做一些事情。但如果中央不希望这些事继续发生的话，应该说是有能力把它们纠正过来的，比如通过预算审议机制促使地方政府花钱更加有效。当然，这里也涉及中央政府。比如说，对技术发展，中国的科技部每年就要有一笔预算。就像小手川先生所说的，要是没有这笔预算的话，表明国家对科学技术发展不重视，这不是好事，所以必须要有。而对这笔预算的分配，过去传统上都是分给像中国科学院这类基础研究部门。当然工业部门也会伸手要，这样的话一些预算经费就会分配给工业部门，但实际上数量非常少。有人担心中国一些发展比较快的科技企业比如华为公司得到国家的支持，其实华为这样的公司也从科技部拿不到什么科研经费。所以科技部可以通过预算改变，不再向有市场价值的技术部门分配资金，上述问题就解决了。不管政府部门怎么弄，中国的科学技术都会继续向前发展，这不是坏事。当然，有人担心也是正常的，这也是个全球竞争的过程。
II. On subsidies that Mr. Oike and Mr. Li Bo talked about.
As Mr. Oike pointed out, in China, many subsidies are provided by local governments. In other words, the central government is not willing to offer such subsidies and cannot afford the money. However, because China’s central government gives a lot of money to local governments, local governments have the money to move forward on something. However, if it wants, the central government is able to change the situation, such as employing budget review and approval mechanisms to ensure better and more efficient spending of local governments.
Of course, this also involves the central government. For instance, the Ministry of Science and Technology (MST) makes a budget for technological research and development every year. As Mr. Kotegawa mentioned, it is not a good thing if there are no such budgets, because that would show a country’s neglect of its technological development, which is not good. Therefore, the budget is a must-have.
Traditionally, this budget is allocated to basic research institutes like the Chinese Academy of Sciences. Some in the industrial sector would also apply for the subsidy, and they could get some, though in a very small amount. Some people worry that some fast-growing companies like Huawei can thus get the government’s support. Such worries are unnecessary since those companies barely receive any research funds from the MST.
To summarize, by changing the MST's budget policy, including stopping allocating funds to the science and technology sector that can make a profit on their own in the market, this subsidy issue can be solved.
On the one hand, whatever policy the Chinese government takes, the good thing is that China’s technology can still continue to advance, which is not bad. On the other hand, it is normal for some people to have certain concerns. It is a part of international competition.
第三，关于发展中国家待遇问题，也就是世贸组织框架体系中的特殊与差别待遇条款（S&DT）问题。我同意李波先生说的，中国在S&DT问题上实际上拿不到多少好处。但是中国有一个特点，就是几十年来它从一个穷国发展起来，应当替世界上其他穷国、发展中国家说话。这是作为一种政治上的立场，并不是说中国自己今后还要追求继续享受特别和有差别的待遇。当然有如果符合条件的待遇，我们也不会拒绝。现在各方在这方面虽然有争议，但我认为也不是特别难解决。
III. On the developing country treatment, namely, the "special and differential treatment (S&DT)" provisions in the WTO
I agree with Mr. Li Bo's opinion that China has not/does not/would not [NOT SURE OF THE TRANSLATION HERE] actually benefit much from the S&DT. However, there is one thing worth noting here: China, which used to be a poor country a few decades ago, should speak for other poor and developing countries. This is the political standing of China. This does not mean that China will continue to pursue special and differential treatment, though we would not refuse the treatment where we qualify. There are controversies among WTO members on this, but I do not think they are particularly difficult to resolve.
第四，关于国有企业的问题。我提一个不成熟的思路，不管是WTO也好，还是TPP也好，里面关于国有企业的描述尚欠准确。在WTO文件中，很多地方使用的是公共机构（public body）。如果说国有企业就是公共机构，那么国有企业的所有行为是不是都是政府行为？这样的话就把牵涉面扩大了，我认为还是应当区分一下。如何区分？我看最近欧盟和一些国家是这样来区分国有企业的：首先，它是不是听从政府的行政指挥；其次，它是不是主动推行政府政策。如果从这个界定来看，中国绝大多数的国有企业早已经不是这样了。特别是在中国经济中地位比较重要的国有企业，很多都是上市公司，其公司治理也不允许它们这样做。那么我们是不是可以找到另外一种描述，这种描述我跟欧洲的一些专家讨论时也形成了一定的共识。欧洲很多国家的国有企业占比超过20%，中国则超过30%。这些国有企业如果能够按照经合组织（OECD）制定的规则实现竞争中立，就可以不算公共机构。这样去看待国有企业就能够解决很多问题。中国剩余的一些国有企业，如果还有对市场扭曲的行为，也比较容易通过改革加以解决，或者通过一些隔离措施把它们界定为政府机构来对待。
IV. On SOEs
Let me propose something immature. I have observed that in both the WTO and the TPP, the definitions for SOEs are not accurate enough. In many WTO documents, they are mentioned as public bodies. If all the SOEs are public bodies, then all their activities are government activities? That would unnecessarily expand the scope here. I think we should make more specific definitions here.
How? I have noticed that the EU and some countries distinguish SOEs on first whether they listen to the administrative orders of the government and secondly whether they take the initiative in carrying out governmental policies. By this, most Chinese SOEs are not public bodies because they no longer operate that way. Many of the SOEs that play an important role in the Chinese economy are publicly listed companies. Their corporate governance would not allow them to do so.
Then, can we find another definition? I have discussed this topic with some European experts and we reached a certain consensus. SOEs in many EU states take up over 20 percent [UNCLEAR OF WHAT, maybe GDP] and in China, SOES take up over 30 percent [UNCLEAR OF WHAT, likely GDP] respectively. If the companies can achieve competitive neutrality by OECD rules, it would be plausible that they not be counted as public bodies. This definition can help solve a lot of problems on SOEs. For the rest of the SOEs in China, if they still retain market-distortion activities, it would be relatively easy to resolve that via reforms, or define them as government bodies via some other measures.
第五，关于市场开放范围的例外问题。今天大家也谈到这个问题。通常而言，市场开放范围一种是以国家安全为依据来界定，还有一种就是以意识形态为依据来界定。但在实践中，什么界定依据都有，甚至包括以宗教为依据来界定的。比如说，大家担心伊斯兰国组织（ISIS）的恐怖主义活动可能会利用服务业开放向其他国家和地区渗透，或者通过数字和网络系统对外渗透。所以我认为，对于市场开放范围的例外问题，恐怕一时半会儿得不出非常明确的界定标准。但是可以在规则制定上留有一定的空间让各国去尝试，反正这种例外也不是能完全管得住的。
V. On the exceptions outside the scope of market opening
It was also discussed here. In general, the scope of the market opening is formed based on national security or ideology. But in practice, the criteria vary including based on religion. For instance, people are worried that terrorist activities by ISIS may infiltrate other countries and regions by taking advantage of the opening of the service sector, or via the digital and internet systems. Therefore, I do not think it is easy to formulate specific standards for exceptions outside the scope of market opening.
However, the formulation of rules could leave room for different countries to try out on their own, since it is not possible to keep those exceptions under control completely anyways.
第六，关于数字贸易的问题。石川先生在前面讲到了数字贸易更理论性的前景，同时还指出我们现在的讨论可能深度上还是不够的。我想这也是正常的。观察第二次世界大战以后的历史，整个国际贸易体系的发展都是动态变化的。最开始是美国等二十几个国家签订了关税及贸易总协定，之后是前苏联与东欧社会主义国家成立了经济互助委员会（CMEA），所以不同国家参与的贸易体系可能不同。与此同时，贸易体系也在竞争中不断向前发展，经历了一个动态改进的过程。数字贸易问题已引起了各国的重视，我们需要很好地研究数字产品的税收问题。实际上目前美国和欧洲在数字产品的征税上存在很大的问题，中国也在关注和研究这个问题。首先是国内数字贸易应该如何收税；其次是数字贸易涉及跨境的时候，有的问题说的是数据可不可以正常贸易，实际上背后说的是该不该收税、税收归谁这样的问题。我觉得这些都是非常有意义的问题。
VI. On digital trade
Mr. Ishikawa talked about the theoretical prospect of digital trade and pointed out that our discussion is not in-depth enough at the moment. I think that’s not abnormal. Ever since World War II, the international trade system has developed in a dynamic fashion. In the beginning, the United States and about twenty other countries signed the GATT, and then the Soviet Union and socialist countries in East Europe established Council for Mutual Economic Assistance or CMEA. So the trading systems that different countries participated in were different. The systems have moved forward in the competition. Digital trade has attracted many countries' attention, and we shall study the tax issues thoroughly.
实际上目前美国和欧洲在数字产品的征税上存在很大的问题，中国也在关注和研究这个问题。首先是国内数字贸易应该如何收税；其次是数字贸易涉及跨境的时候，有的问题说的是数据可不可以正常贸易，实际上背后说的是该不该收税、税收归谁这样的问题。我觉得这些都是非常有意义的问题。Taxation on digital products is a big issue between the United States and Europe. China is also studying it. First, how to tax domestic digital trade. Secondly, when digital trade crosses borders, some issues relate to whether data can be traded normally, in fact, the issues could be about whether taxation should happen and who gets the taxation. I think all of them are very meaningful questions.
以上就是我对WTO改革问题作出的几点回应。我认为座谈会上大家的交流非常有效，提出了一些富有见地的观点，希望这些交流和研究能够继续深入下去。有一些问题如果能够抓紧时间解决并尽早输入给有关的决策机构，既能在G20大阪峰会之前让决策者们对这些问题给予重视，也能为今后一段时间WTO的改革提供借鉴。
Those are my responses to questions on WTO reform. I think, the discussions in this forum are very productive and have produced many insightful views, and I hope such exchanges and researches can continue. If we can seize the opportunity to solve some issues and send our solutions to relevant decision-making bodies, it will not only draw decision-makers’ attention before the G20 Osaka summit but can also provide a reference for WTO reform in the future.
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Again, please note the speech was made on May 27, 2019, but was recently published on Dec. 1, 2021, by the 《中国金融》 China Finance magazine.