The head of the WTO on Friday urged China to change its growth model, arguing that its soaring trade surplus was ultimately unsustainable and risked sparking new trade barriers.
Beijing says it wants to support the multilateral trading system, “because it has benefited quite a bit from it,” WTO Director-General Ngozi Okonjo-Iweala told the Munich Security Conference.
However, “the export-led growth model that drove China’s growth for the past 40 years cannot drive China’s growth for the next 40,” Okonjo-Iweala said.
Photo: AP
“And the US$1.2 trillion trade surplus is not sustainable. Because the rest of the world cannot absorb it,” she added. “And if China does not act, we will see more barriers.”
China’s trade surplus hit a record US$1.2 trillion last year.
This was despite a sharp decline in its trade with the US, as a fierce trade war between the world’s two largest economies revived after US President Donald Trump’s return to the White House.
Other trade partners more than filled the gap, increasing Chinese exports overall by 5.5 percent last year, while imports stayed flat in US dollar terms.
China’s economy expanded 5 percent last year, one of its slowest growth rates in decades as the world’s second-biggest economy struggled with persistently low consumer spending and a debt crisis in its property sector.
In October last year, Trump reached a truce with Chinese
President Xi Jinping (習近平). However, last month, he announced that he would impose tariffs on countries trading with Iran.
China, which is at the forefront of these countries, has warned that it would defend its economic interests.
Other major markets for Chinese products, such as the EU, are alarmed by the imbalance in their trade balance with China.
Europeans, concerned that their markets would serve as an outlet for Chinese production surpluses, are urging China to stimulate its domestic consumption, which has been sluggish for years.
The WTO is holding its ministerial conference, its biennial main gathering, in Cameroon next month.
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