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CGD in the News

Leave China Out of a Trade Pact at Your Peril (Financial Times)

December 9, 2011

Senior fellow Arvind Subramanian's op-ed piece on trade agreements was featured in the Financial Times.

From the Article

When trade ministers meet in the World Trade Organisation in Geneva next week, they will arrive with a set of marching orders from their bosses.

In Cannes last month, the Group of 20 leaders recognised that the present approach to the Doha round could not succeed and that the world would have to confront broader challenges facing the multilateral trading system. One of the biggest challenges is how to deal with the rise of China. Ministers, in our view, need to prepare for a new “China round” of multilateral trade negotiations.

China is the world’s largest exporter and by 2020 the country’s trade will be nearly one-and-a-half times as much as that of the US. China is set to become an economically dominant power. That in itself should not be a cause for worry because China’s economic transformation has been, and will remain, so predicated on an open trading system that Beijing will have a stake in preserving it.

But some of the most contentious issues in trade over the past few years – such as the perceived “beggar-thy-neighbour” effects of undervalued exchange rates and the opaque purchasing and investment practices of government entities – have involved China. World leaders have an interest in ensuring that these issues are resolved without undermining the open trading system. The world has an interest in tethering China more firmly to the multilateral system.

Read it here.