context: The rules-based WTO system is increasingly being challenged, not least by the impairment of its dispute settlement system, rising trade protectionism, PRC–US trade frictions and controversy surrounding subsidies for green industries. Seeing that this is in their interests, Beijing is vocal about upholding multilateralism with the Global South. But at the same time, the PRC is actively leveraging bileteral, regional and Belt and Road Initiative projects to negotiate new trade deals and rules. In response to recent geopolitical and trade shifts, participating in the current trade order and forging a new one are both high on Beijing's agenda.
Trade conflicts related to green subsidies such as electric vehicles will be more frequent, as the WTO has yet to establish a set of trade framework to addresss climate change, suggests Zhang Xiangchen 张向晨 WTO deputy director-general
- subsidies
- WTO has its own rules about subsidies
- but WTO members do not have a consensus about how to handle new developments such as green subsidies
- more explorations and negotiations are required to discuss what are good and bad subsidies
- conditions for these actions do not exist at the moment
- need to wait until the timing is ripe
- more discussions and negotiations, while complicated, are better than bilateral trade frictions and unilateralism
- conditions for these actions do not exist at the moment
- WTO has its own rules about subsidies
- 'reglobalisation'
- is about being more inclusive to developing countries, especially African countries, allowing them to reap the benefits of this round in globalisation
- the benefits of the last round of globalisation have not been shared equally between countries
- there are now new opportunities brought by the adjustment in supply chains (e.g. in labour costs and geopolitics)
- multinational firms have changed their concepts from the last round of globalisation to priortise efficiency above all else
- now they are balancing between profits and security, which are bringing opportunities to developing countries due to the reallocation of global supply chains
- e.g. Morocoo has attracted a lot of PRC investment as there are no tariff barrriers on production and exports from there to the EU
- now they are balancing between profits and security, which are bringing opportunities to developing countries due to the reallocation of global supply chains
- multinational firms have changed their concepts from the last round of globalisation to priortise efficiency above all else
Zhang points out that further integration in the global supply chains by some of these African countries can help them move up the global supply and value chains, facilitating their digital and green transformation in the process
- e.g. the PRC has been gradually earning more from each Apple iPhone as it takes up more parts on the value chain
- greater integration in the global value chains means a greater chance for that country to improve its industries
- this has allowed the PRC to manufacture more components in the country without relying as much on imports