Two coins in a Chinese fountain: opinions on China’s growth and international trade

With a spectacular growth rate intact and Western rivals continuing to struggle, China seems more than ever a land of boundless opportunity. However, skepticism remains over the true extent of the country’s commitment to the merits of foreign investment and fair trade practices.

On one hand, China’s supporters argue passionately in favour of the country as a welcoming and rewarding destination for investment, pointing to a variety of initiatives since joining the World Trade Organisation in 2001. These include a progressive lowering of the entry threshold for foreign investment and revising the official list of industries where investment is encouraged, aiming to provide greater market access. China’s robust attractiveness was highlighted during the Global Financial Crisis, when FDI dropped only 2.6 per cent, compared to a global decline of around 40 per cent. Supporters also point to the remarkable opportunities for multinationals, with firms such as GM able to some extent offset flagging sales in traditional markets with impressive performances in China. Such developments are heralded as evidence of China’s progress and achievements as a responsible member of the international economic system.

Conversely, however, China has been accused of heavily protectionist practices, with positive steps easily dismissed as window dressing. Detractors point to numerous export subsidies, weak environmental or worker safety standards and an artificial undervalued Yuan. The so-called ‘Great Walls of Protectionism’ and the ‘China first’ industrial policy have made it difficult for foreign companies to compete, producing significant imbalances in the global economy. Foreign involvement in China’s booming growth, it seems, is permitted so long as it benefits China itself.

Of course, the divergent arguments are testament to the complexity of China’s evolving relationship with the international economic system. While China’s growth is generally positive for the world, its leaders are likely to face increased pressure to reform and redress obvious imbalances and unfair practices. So long as such practices remain in place, the true extent of their commitment to reform is likely to remain contentious.