It is a great honor for me to speak today as we celebrate the 10th anniversary of China’s accession to the World Trade Organization.
China’s economic performance since the beginning of its reforms and gradual opening up in 1979 has been miraculous. From 1979 to 2010, China maintained an average annual GDP growth rate of 9.9 percent. China’s achievements alone have ensured that the world’s Millennium Development Goal on poverty reduction will be met. Moreover, when the global financial crisis hit in 2008, China became the major force driving the global recovery by implementing a timely and effective fiscal stimulus package.
In acceding to the WTO, China made a firm commitment to further reform and open up its economy. The outcome of these efforts has been extraordinary: China’s annual trade growth averaged 13.9 percent between 1979 and 2001, the time of the WTO accession, and since then has accelerated to 21.6 percent. And its trade integration ratio increased to more than 50 percent in 2010, the highest among the world’s large economies. The WTO accession also facilitated an enormous rise of foreign direct investment (FDI), which increased 10-fold over the same period. Today, more than half of China’s manufactured exports are originating in Chinese enterprises supported by FDI.
According to studies done by the World Bank and other international institutions, China has the potential to continue its dynamic growth, quadruple per capita income to about $16,000, and become the world’s largest economy by 2030. But, to realize that potential, China needs to overcome emerging new challenges, adapt its growth model to avoid the middle-income trap, reduce its large trade surpluses to mitigate tensions with trading partners, and increasingly play an active leadership role in global forums and multilateral institutions:
- First, China will need to increase services and consumption. By 2030, the World Bank estimates that China’s service sector could expand from 43 percent of GDP today to almost 60 percent. Consumption could also expand to 60 percent, from about 50 percent today.
- Second, given China’s rising real wages, China will need to upgrade to higher value-added industries, and progressively shift its labor-intensive production to lower-cost locations in Asia and Africa. This shift implies an increase in outward FDI.
- Third, China needs to reform its state-owned enterprises to boost private sector growth and competition.
- Finally, to ensure sustainable growth, China will need to shift to a greener growth model.
Over the past ten years, China successfully moved from being a simple WTO member to becoming a responsible WTO stakeholder. Now, China can become a leader, both in determining the future of the WTO and in participating in global governance more broadly. China now has the chance to tell the global community what a post-Doha world could look like. The rest of the world, including developed countries, have much to gain and learn from China promoting a new global trading system and playing a greater role on the global stage.
China’s development success and record in overcoming poverty are now the subject of global attention. Many developing countries look to China as a source of knowledge and experience. Today, I see the future of China and the World Bank Group’s relationship as one driven by joint-learning and knowledge-sharing. The World Bank and China will continue to work together to end the poverty that still affects millions of people in this country and around the world and to support the rebalancing of China’s economy to achieve the goal of becoming a modern, harmonious, and creative high-income society.