Taming the Dragon: China’s Experience in the WTO Dispute Settlement System

Abstract

To many observers, a major challenge raised by China’s accession to the WTO is whether the WTO dispute settlement system could cope with China, one of the major traders in the world with an economy that is halfway between a planned economy and a market economy. In this article, the author tries to answer this question by reviewing China’s experience in the WTO dispute settlement system. Historically, the senior leadership in China attached disproportionate importance to the WTO dispute settlement system and preferred to avoid using the system. Thus, in the first four cases in which China was sued or threatened to be sued in the WTO, China tried to keep a low profile and settled the cases with the complainants. As more and more cases are being brought against China, however, the effectiveness of the WTO dispute settlement system as a trade policy tool in dealing with China has gradually faded away. This is illustrated by China’s reactions to the cases brought against it over the past two years, where China has taken a more and more legalistic approach. While China, just as any other WTO Member, has every right to use the WTO dispute settlement system, an over-aggressive strategy against China runs the risk of dragging everyone into trade wars, which is not conducive to the solution of trade disputes.