Regional trade agreements vs. multilateral trading system: a study of Chinese interests and policy options

Since joining the WTO, China has pursued a three-pronged economic and trade development strategy of pushing forward regional and bilateral trade cooperation while enhancing multilateral trade and cooperation. Asia is especially important to China, and Asian economic cooperation is the foundation of China’s RTA policy. This paper explores policy options for China in terms of regional trade agreements (RTAs) and multilateral trading system (MTS).

China has recently developed a spatial landscape of focusing on Asia-Pacific and reaching out globally with regard to its participation in the RTAs. However, the author argues that it is important for China not to act too hastily, but to push forward regional cooperation level by level, from easy to difficult regions.

The paper points that China’s economic development needs a stable and peaceful environment. The dynamic global development of RTAs, coupled with China’s economic boom, has provided a sound foundation for China to seek regional economic and trade cooperation. Consequently, it is highly possible that China will become more progressive in considering bilateral and sub-regional RTAs in the near future. The paper suggests the following policy options for China:

• China should take the establishment of the “Greater China Free Trade Area” as the most preferred option
• China should further strengthen its regional economic cooperation with ASEAN countries and build up ACFTA in 2010
• China should further participate in Asia-Pacific Economic Cooperation (APEC) activities and seek to speak out in the rule-setting process
• China should advance sub-regional economic cooperation on a selective basis, while pro-actively participating in RTAs
• reform and opening up to improve international competitiveness and overall national strength are prerequisite factors for more actively participation in RTAs and MTS.