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China and The Collapse of Doha
On issues ranging from exchange rates to energy policy, foreign aid, and the multilateral trading system, China's actions over the past few years have challenged some of the most fundamental norms and rules of the existing global order.
China's key role in torpedoing the Doha Round of global trade negotiations in July is the latest, and a critically important, case in point. China has a huge national interest in maintaining the global trading system and enhancing its effectiveness; this system has played a crucial role in facilitating China's breathtaking growth. The widespread rise of anti-China protectionism in the United States and Europe (not to mention many developing countries) could choke off China's exports and sharply curb its growth. The erosion of the global trading system would cause major problems for China and damage the world economy.
As the world's second-largest economy (and its second-largest exporter), China bears a great deal of responsibility for preserving the global trading system. In the past, China never played an active role in the Doha talks, but it is now aggressively challenging the system. At the WTO ministerial meeting in Geneva in late July, China joined the organization's inner steering committee for the first time. It seemed that China might be willing to help promote a fruitful outcome. But China, far from supporting liberalization, used its newfound clout to join India in seeking new protection beyond the red lines of most of the other participants, including many developing countries. Doha may thus become the first global trade negotiation to fail since the 1930s, when protectionism erupted everywhere and brought on a worldwide depression.
The consequences of Doha's failure will be grave. Developing countries--most of which rely heavily on expanded trade opportunities--will suffer the most. The Doha round's primary aim was to open markets for the lowest income countries and thus accelerate their economic progress. Ironically, it was China and India--the largest and most successful developing countries--that triggered Doha's demise because they were unwilling to open their own markets sufficiently to permit an agreement.