China’s envoy smells ‘gunpowder’ as US ambassador opens fire on Beijing’s economic model at WTO

Chinese and US envoys presented radically differing visions of Beijing’s economic model at the World Trade Organisation on Thursday, a choice between “the world’s most protectionist economy” and a growth story that has benefited all countries.

The clash came as the two face off in a multibillion-dollar trade war – US President Donald Trump has launched a barrage of tariffs, accusing China of unfair practices and stealing innovation. China has targeted US farm produce.

US Ambassador Dennis Shea was presenting a paper entitled “China’s trade-disruptive economic model” to the last WTO meeting before a summer break.

“Despite China’s repeated portrayal of itself as a staunch defender of free trade and the global trading system, China is in fact the most protectionist, mercantilist economy in the world,” Shea said.

Aside from the tariffs, the two sides are wrestling to get the WTO to see things their way: Washington says China cheats by having an economy run by the state, Beijing says it plays by the rules agreed when it joined the WTO in 2001.

Shea said the harm done by China’s state-led approach to trade and investment “can no longer be tolerated”, and it was not enough to assert that it was following WTO rules.

State-owned enterprises play an outsize role in China, with control exercised by the government and Communist Party, which appoint top executives and hold the keys to crucial inputs such as land and capital, Shea said.