China and the WTC – a real game changer

published 30 November 2018

What was the most important event of the past two decades? Some might say 9/11; others the financial crisis of 2008-09. Stewart Paterson argues the real game-changer was China's accession to the World Trade Organisation in 2001. That was sold as an attempt to bind China to the rule of law and allow US exporters to gain access to Chinese markets. If those were the goals, then the move has failed, says Paterson.

Indeed, by allowing China to develop using a mixture of mercantilism and state capitalism, China's WTO accession probably slowed the pace of genuine political and economic change. Meanwhile, Chinese imports destroyed manufacturing in the developed world, increased income inequality and unbalanced the global financial system.

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To solve these problems, the developed world needs to put pressure on China to raise consumption, open itself up and engage in genuine political reform.Its trade war with the US might not be a bad thing if it forces China to make these changes.

This is a short book and there are times when a bit more detail would have been useful. The author also at times overstates his case. Still, he's surely right that China has been taking unfair advantage of the world trading system and that its authoritarianism and state direction of the economy are no models to follow.

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri