China’s accession into the WTO facilitates economic globalization
Prof. Holger Görg, Ph.D. Photo: PROVIDED TO CSST
China’s accession into the WTO has facilitated economic globalization, said Holger Görg, president of the Kiel Institute for the World Economy in Germany in an interview with CSST.
CSST: What’s your take on China’s accession into the WTO and this move’s influence on China and the wider world?
Görg: China’s accession to the WTO, and the increase in trade, investment, and links into global value chains which followed it, have undoubtedly contributed massively to China’s economic growth, and have strengthened globalization around the globe. Through this process of globalization, Chinese firms have been exposed to increasing international competition, which has been beneficial for productivity growth. It has also led to further spillover and learning effects for Chinese firms, which also improved productivity. Moreover, and perhaps sometimes overlooked, WTO accession induced China to improve its institutions. This has helped to provide a stronger rule-base for foreign firms engaged in partnership with China.
CSST: How can China and Germany boost economic and trade cooperation, especially in services?
Görg: The perception in many European countries is that China is a strategic competitor on world markets, rather than a strategic partner. In order to boost international trade and investment between the two countries this perception needs to be changed. The relationship needs to move back to being one of cooperation rather than competition. The EU-China Comprehensive Agreement on Investment could be a first step in this direction. The fact that both Germany and China are partners on the new WTO Agreement on Services Trade is also a very good signal and important for fostering trade in services.
CSST: What’s your take on the relationship between trade in services and high-quality economic development?
Görg: The development of the services sector is crucial for high-quality economic development. Currently, around two-thirds of worldwide GDP is attributable to services. This trend is increasing and trade in services has tremendous potential to increase due to further liberalization efforts, as do digital technologies. So services are set to be the engine for further growth in globalization, which will also lead to further economic growth. Many tradable services are skill intensive–think of IT, business consulting, finance, architecture–so a growth in those sectors needs highly skilled employees, further boosting economic development. Lastly, compared to many aspects of manufacturing, many services are far less polluting which also fosters high-quality economic development.
CSST: How can Chinese enterprises go abroad amid the changes unseen in a century?
Görg: China has been very active in investing abroad. I would rather think the challenge that China has is not just how to encourage more and more Chinese firms to go and invest abroad, but how to further encourage Chinese outward Foreign Direct Investment (FDI) of high quality that is both good for the Chinese economy and advantageous for host economies. The aspect that Chinese outward investment can be advantageous for development in host economies is especially relevant nowadays when many countries in the world, particularly in Western economies, focus on emphasizing economic self-sufficiency and technological sovereignty through re-regionalization, re-nationalization, or even decoupling. If Chinese firms’ outward FDI projects can positively support the development of host countries (through, for example, fostering spillovers or cooperation with local partners), they may face far fewer difficulties in carrying out their projects.
Edited by ZHAO YUAN
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