Trade policy regime

trade policy regime: framework and objectives

1 INTRODUCTION

The overall aim of China's trade policy, which has remained unchanged since its previous Trade Policy Review, is to accelerate the opening of its economy to the outside world to introduce foreign technology and know-how, develop foreign trade, and promote "sound economic development". China aims to further strengthen themultilateral trading system; at the same time, it has been intensifying its pursuit of bilateral/regional free-trade agreements with some of its trading partners.

China has continued to place high emphasis on the multilateral trading system and has been participating in the Doha Development Agenda negotiations. China grants at least MFN treatment to all WTO Members except El Salvador and someterritories of EC member states. China has been a party to one dispute as a complainant and nine disputes as a respondent since 2006.

During the period under review, two free-trade agreements entered into force (China – Chile FTA on 1 October 2006, and China – Pakistan FTA on 1 July 2007). The Agreement on Trade in Services of the China–ASEAN Free Trade Area also entered into force on 1 July 2007.Four further agreements (with Australia, Gulf Cooperation Council, Iceland, and New Zealand) are being negotiated.

China unilaterally grants preferential treatment to some products from 39 least developed countries (LDCs).

Although some aspects of China's trade policy regime remain opaque, it has continued to adopt measures to increase the level of transparency of its trade andtrade-related policies, practices, and measures. Since its previous Review, additional measures, such as the Regulation on Open Government Information, have been introduced with a view to enhancing transparency. The National Corruption Prevention Bureau was established on 13 September 2007. Since its previous Trade Policy Review in 2006, several new trade-related laws have been adopted, including theProperty Law, the Enterprise Income Tax Law, the Anti-Monopoly Law, and the Law on Enterprise Bankruptcy.

China has recently been moving towards achieving a level playing field for foreign and domestic investors in China. Until the end of 2007, China had provided better than national treatment in its taxation policies for foreign-invested enterprises (FIEs); since 1 January 2008, a uniformenterprise income tax rate of 25% has been applied to all enterprises (including FIEs) in accordance with the Enterprise Income Tax Law, with some exceptions, such as certain "grand fathering" and lower rates granted for investment in certain industries. It would appear that all tax incentives now apply equally to domestic firms and FIEs. Several regulations and rules have been introduced or amendedwith a view to further liberalizing foreign direct investment and establishing a more rules-based and predictable business environment for foreign investors.

2 Institutional and Legal Framework

Since its previous Review, China's institutional and legal framework has remained largely unchanged. The current Constitution states, inter alia, that "sole proprietorship", "domestic private", andother non-public sectors of the economy, within the limits prescribed by law, are major components of the "socialist market economy".[1] It also explicitly provides for the protection of private property rights in Article 13, which states that a "citizen's lawful private property is inviolable". The role of the Communist Party of China (CPC) in the NPC's legislative and law enforcement activitieshas also largely remained unchanged.[2] The most recent amendment to the Constitution was adopted on 14 March 2004.

1 Institutional structure

1 Legislature

Under the Constitution, the National People's Congress (NPC) is the highest organ of state power, and its permanent body is its Standing Committee.[3] The NPC and its Standing Committee exercise the legislative power of the State....