China rebuts criticisms of SOEs, overcapacity at WTO review

July 17, 2018
Editors note: China ineffectively tries to defend its state directed economic system by pointing out that the US has Fannie Mae.

In the final day of the World Trade Organization’s biennial review of Chinese trade policies, Beijing fought back on criticism offered by other members in a host of areas, including claims that it unfairly subsidizes state-owned enterprises, contributes significantly to global steel overcapacity and is implementing unfair industrial policies.

[Brett Fortnam | July 16, 2018 | Inside US Trade]

Chinese Vice Minister for Commerce Wang Shouwen on Friday challenged other members to conduct countervailing investigations if they believed China was providing unfair subsidies to state-owned enterprises. According to Wang, SOEs are prevalent in major developed economies and China’s operate “on a level playing field.”

“SOEs can be found in many WTO members,” Wang said. “The United States has Fannie Mae and Freddie Mac. Canada, France and a number of developed members also have SOEs. SOEs in China, just like private companies, [foreign-invested enterprises] and other enterprises of this country, are independent market players that compete on a level playing field.

“If a member believes that certain SOEs get special subsidies from the Chinese government, and their exports affected that member’s domestic industry, the member could just conduct countervailing investigations according to the rules of [Agreement on Subsidies and Countervailing Measures], just like what they normally do with private companies and FIEs,” he added.

According to a report issued by the WTO secretariat, the Chinese government is heavily involved in the economy but does not disclose sufficient information on public support for SOEs. “State involvement in the economy remains considerable,” the report said. “According to a notification submitted in 2015, state-trading requirements concerned, inter alia: grain, sugar, tobacco, rice, maize, cotton, coal, crude oil, processed oil, chemical fertilizers, tungsten, tea, silk, antimony and silver. The state retains a majority share in all but one of the 100 largest publicly listed companies. No information was provided on public financial support for SOEs.”

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