The Transformation of the Global Trade Governance System and China’s Role

The global trade governance system is the institutional safeguard for maintaining the operation of world trade. It consists of governance entities， platforms and rules. Since the end of World War II， the global trade governance system has mainly referred to the multilateral trading system， with the General Agreement on Tariffs and Trade （GATT） and the World Trade Organization （WTO） serving as governance platforms. However， as the international political and economic landscape changes， the global trade governance system with the WTO as its main platform， is facing increasing challenges. The transformation of the global trade governance system and the role China plays in it have attracted wide attention.

The Global Trade Governance System Since the End of World War II

After World War II， the GATT was established as a provisional agreement aimed at promoting tariff reduction and trade liberalization. From the establishment of GATT to the Doha round of trade talks， a total of eight rounds of negotiations were held， each of which achieved significant progress in advancing trade liberalization. Meanwhile， multilateral trade governance rules gradually extended from tariff barriers to non-tariff barriers， and further expanded into other areas. The first five rounds of GATT negotiations focused solely on tariff reduction without involving other issues. However， the 6th round， the Kennedy Round， introduced the issue of anti-dumping measures; the 7th round， the Tokyo Round， addressed non-tariff barriers; and the 8th round， the Uruguay Round， added issues such as trade in services and intellectual property rights.

There are four main reasons for the continued development of the multilateral trading system. First， countries had an urgent need for economic reconstruction and development. World War II inflicted severe damage on many countries， and they all needed to rebuild. Through multilateral trade， they could expand markets， acquire necessary resources and technologies， and accelerate economic recovery. Second， the support from the GATT and the WTO. Tariff and non-tariff barriers had long restricted the development of multilateral trades， especially during World War II， with acts like the Smoot-Hawley Tariff Act greatly limiting global trades. The GATT gradually reduced these barriers through multiple rounds of negotiations. The establishment of WTO further expanded multilateral rules from trade in goods to services， intellectual property， and investment measures， while also strengthening the dispute settlement mechanism. Third， the driving force of the United States. On the one hand， the U.S.-led Marshall Plan greatly promoted economic development in Europe and boosted trades between Europe and the U.S. On the other hand， the U.S. ideology of “liberal internationalism”， which emphasizes open markets and rule-based order， served as the ideological foundation for building an open multilateral trading system globally. Fourth， the participation of developing countries. Many developing countries， especially East Asian economies， actively integrated into global industrial chains through export-oriented strategies. The multilateral trading system became an important platform for their economic growth.

Since the end of World War II， the global trade governance system has exhibited two prominent features. First， multilateral platforms serve as the core. The multilateral GATT and WTO have played irreplaceable roles， while regional trade agreements received little attention. After the GATT was established， the United States prohibited bilateral agreements. It was not until the 21st century that the U.S. resumed negotiations on regional trade agreements. Economies mainly sought to join GATT to integrate into the global trade system. Second， it has been U.S.-led. After World War II， the then-U.S. Secretary of State Cordell Hull strongly supported low tariff barriers and advocated enhanced international cooperation on trade. This was a long-term guiding principle for U.S. participation in the global trade system and enabled the U.S. to play a leading role in the multilateral trading system. With both capacity and willingness， the United States dominated the global trade system in the post-World War II era.

The GATT and the WTO have played important roles in promoting economic globalization. The foundation of economic globalization is trade liberalization. The GATT and the WTO ensured trade liberalization in three ways. First， negotiation rules： contracting parties or members promised to reduce tariffs and maintain a low tariff level. Second， the Trade Policy Review Mechanism： the WTO reviews the trade policies of its members， especially major economies， to ensure their compliance with commitments. Third， the dispute settlement mechanism： if trade frictions arise among WTO members or a member adopts trade protection measures， others can file complaints to urge the removal of such protection. Through these mechanisms， the GATT and the WTO effectively promoted trade liberalization， which significantly advanced economic globalization in the post-World War II period.

New Situation Facing the Global Trade Governance System

With changes emerging in the international political and economic landscape， the global trade governance system， with the WTO as its core governing entity， is facing increasing and intensifying challenges. In particular， with the collective rise of emerging and developing economies， the United States is no longer willing to play the role of leader in the multilateral trading system， and has even become a disruptor of the current system. The shifting balance of international power and the evolution of the times have also raised new demands for international economic and trade rules.

The first is the U.S. policy shift： from a supporter of the multilateral trading system to an advocate of so-called “reciprocal trade”. Since the end of World War II， the U.S. had long been the main promoter of the multilateral trading system， leading globalization rules making through the WTO and regional trade agreements. However， in recent years， U.S. policy has shifted markedly toward the so-called “reciprocal trade”， emphasizing bilateral games based on strength and weakening the constraints of multilateral frameworks. This shift began during the first term of the Trump administration， which championed the “America First” principle， withdrew from the Trans-Pacific Partnership， obstructed the operation of the WTO Appellate Body， launched trade frictions against China， and deeply linked national security issues with trade policy. Although the Biden administration has nominally returned to multilateral cooperation （e.g.， rejoining the Paris Agreement）， it continues the logic of “reciprocity” in trade. For instance， the Inflation Reduction Act links electric vehicle subsidies with North America manufacturing， effectively excluding foreign competitors. It also led the negotiations for the Indo-Pacific Economic Framework， which avoided traditional tariffs and market access discussions and instead emphasized supply chain alliances and technical barriers. During Donald Trump’s second term， he further proposed the America First Trade Policy and the Reciprocal Tariff policy， both of which fundamentally reject the multilateral tariff negotiation mechanism under the existing WTO trade system.

The second is the rise of the Global South： from rule-takers to rule-makers. According to International Monetary Fund data， the total GDP of emerging markets and developing countries had reached 59.8% of the global total by 2024. The BRICS countries， represented by China， India， and Brazil， have surpassed the G7 in total economic size when measured by purchasing power parity. This signifies that the Global South has moved from the periphery to the center of the global economic system. However， the current trade system still follows the Washington Consensus framework dominated by developed countries. The voting rights and the voice of emerging markets and developing countries do not match their economic status. Core issues such as agricultural subsidies and intellectual property rights have long been dominated by developed countries. As Global South countries significantly enhance their economic strength and awareness of global governance participation， contradictions between the global trade governance system led by developed countries and the interests of these countries are becoming increasingly pronounced. The Global South is actively participating in and promoting reforms of the global governance system， which will profoundly reshape the international landscape.

The third relates to new issues of the era： contestation and challenges over the controversial rules. For rule-making in emerging areas， the global trade governance system also faces severe challenges. This institutional dilemma is particularly evident in two new areas： industrial policy and data flows. The industrial policy dispute essentially represents a conflict between the right of development and the principle of fair competition. Developed countries， taking “market distortion” as an excuse， suppress strategic industries of other countries using unilateral tools like “Section 301 investigations”. For example， the U.S. imposed restrictions on China’s semi-conductor and new energy industry. The Biden administration has levied a 100% tariff on Chinese electric vehicles and demanded technology transfer or local manufacturing. The EU has followed by imposing tariffs ranging from 17.4% to 38.1% on Chinese electric vehicles， forming a pattern of “precision strikes”. Developing countries， by contrast， argue that industrial policies are necessary for technological catch-up， and existing WTO rules fail to balance differences among countries. Disputes over data flows highlight the contest over rule-making authority in the digital economy era. The U.S. seeks to incorporate business rules derived from cutting-edge digital technologies into digital trade clauses， pushing for binding cyber-security clauses and international cooperation in digital privacy and AI usage standards. The EU imposes specific restrictions on cross-border data flows， emphasizes the free flow of non-personal data， and focuses on rules like trade benefit distribution at consumer-end platforms. China， meanwhile， is developing more comprehensive trade facilitation rules based on industry models， and accelerating the formulation of digital economy rules according to the global market expansion demands of digital service firms. Although global digital trade continues to grow rapidly， the development of international rules based on the WTO framework still lags behind.

The Direction of Transformation of the Global Trade Governance System

Driven by policy shifts of major countries and intensified geopolitical competition， the global trade governance system is undergoing accelerated transformation. As the Trump administration withdrew its support for the multilateral trading system， the status of the WTO has declined. Meanwhile， regional trade agreements are playing a greater role in advancing economic globalization. As the level of trade liberalization has already become quite high， many international trade rules are shifting from “at-the-border” to “behind-the-border” measures.

First， the decline of the multilateral trading system. The core institution of the multilateral trading system， the WTO， has recently faced systemic crises， falling into a state of institutional paralysis and negotiation stagnation. Its consensus-based principle， rule-making function and dispute settlement mechanism are all under severe challenges. In particular， disputes among members and the blow of unilateralism both impaired the multilateral trading system. On the one hand， disputes among members are intensifying. Developed countries are having doubts about further committing to the multilateral mechanism and have been increasingly relying on regional or unilateral tools. Developing countries， on the contrary， are promoting multilateral mechanism reform through ways such as the BRICS expansion and Global South cooperation， attempting to break the rule-making monopoly of developed countries. However， on issues such as agricultural subsidies and technology transfer， they still find it difficult to shake the dominance of developed countries. On the other hand， unilateralism has become a normalized force undermining the multilateral system. Unilateralism refers to certain major countries， in order to preserve their hegemonic status， pursuing self-interest alone， disregarding international rules and multilateral cooperation mechanisms， and using tools such as tariff barriers， technology blockades and long-arm jurisdiction to forcibly reshape the global order. With the rise of conservatism and other ideologies， the United States’ unilateralism policies have directly trampled on WTO principles. For example， the Trump administration， using the excuse of national security， recently imposed a ridiculous level of 245% tariffs on Chinese exports to the U.S. （for most Chinese exports， the actual tariff rate is 145%）. The U.S. also raised tariffs on EU steel and aluminum products， and even applied indiscriminate measures against allies such as Canada and Mexico.

Second， the surge in regional trade agreements. The proliferation of regional trade agreements （RTAs） is another major direction in the transformation of the global trade governance system. In recent years， amid the stagnation and eventual abandonment of the Doha Round negotiations and the paralysis of the Appellate Body， WTO members have increasingly focused on negotiations and implementation of RTAs. According to WTO statistics， there were only 83 regional trade agreements before 2001. Between 2001 and 2023， an additional 283 RTAs were signed， bringing the total to 366. The rise of RTAs has also brought about clear exclusivity and a growing trend of geopolitical alignment. On the one hand， many RTAs emphasize the unique values and political goals of their member countries during rule-making， and this exclusiveness leads to the fragmentation of the global trade market. The formation of blocs within RTAs has become increasingly evident， with many agreements based on shared geographical， economic and political interests， resulting in relatively closed trade circles. On the other hand， differences in rules and exclusive requirements across different regions make it difficult to maintain the unity and coherence of the global market， thereby undermining the WTO’s principle of non-discrimination. The divergence of rules among RTAs has also increased the complexity of international trade and led to the fragmentation of global trade rules.

Third， the trend toward high-standard trade rules. At present， the global trade governance system is undergoing deep transformation toward high-standard rules. Firstly， the scope of rules is extending “behind-the-borders”. Traditional international trade rules primarily focused on “at-the-border” measures such as tariff reductions and market access. The core shift in high-standard rules lies in their extension to domestic regulatory areas， covering “behind-the-border” measures such as intellectual property protection， competitive neutrality， environmental standards， labor rights， data flows， and reform of state-owned enterprises. Secondly， the topics are expanding beyond the economic realm. In addition to traditional economic rules such as market access， investment protection and trade facilitation， high-standard free trade agreements （FTAs） also include non-economic issues such as environmental protection， labor and anti-corruption. These agreements aim to build an institutional environment for the smooth flow of goods and production factors， and a fair competition market environment. For instance， in the area of labor， the Comprehensive and Progressive Agreement for Trans-Pacific Partnership （CPTPP） requires member states to legislate for the protection of the International Labour Organization core clauses， such as banning forced labor and safeguarding collective bargaining rights. It also authorizes member states to suspend tariff preferences for enterprises that violate labor standards through a “rapid response mechanism”.

China’s Role in the Transformation of the Global Trade Governance System

On December 11， 2001， China formally joined the WTO. Over the past two decades， China has actively participated in the multilateral trading system， played a constructive role， served as a strong promoter of the Doha Round negotiations and made major contributions to reforming the global trade governance system toward greater fairness and rationality.

First， providing Chinese wisdom and solutions for the maintenance of the multilateral trading system. In maintaining and reforming the multilateral trading system， China has always upheld the overall vision of “improving global trade governance and building a world economy characterized by openness”. China has actively promoted negotiations on the E-commerce agreement， the investment facilitation agreement and the initiative on plastic pollution and environmentally sustainable plastics trade. It has not only released position papers on WTO reform but also proposed concrete reform plans. On November 18， 2024， during the 19th G20 Leaders’ Summit in Rio de Janeiro， Brazil， President Xi Jinping emphasized the need to “improve global trade governance and build a world economy characterized by openness”. This statement provides the fundamental guidance for China’s participation in the reform of the multilateral trade governance system. “Improvement” means making enhancements on the basis of preserving the multilateral trading system， rather than starting from scratch. To “build a world economy characterized by openness” serves as the standard for evaluating the multilateral trading system reform. China will firmly safeguard the multilateral trading system and promote reforms conducive to building an open world economy.

Second， expanding the network of regional trade agreements. Firstly， China is an active promoter for signing FTAs. As of January 2025， China has signed 23 FTAs with 30 countries and regions， covering about one-third of its total foreign trade volume. In addition， China has signed the world’s largest trade agreement—the Regional Comprehensive Economic Partnership. Secondly， China is actively aligning with international high-standard economic and trade rules. By applying to join the Digital Economy Partnership Agreement and the CPTPP， China is promoting rule innovation in emerging areas such as digital trade and green economy. To adapt to these rules， China has already piloted CPTPP rules in its pilot free trade zones and established alignment mechanisms in areas such as cross-border data flow and intellectual property protection.

Third， actively promoting bilateral negotiations between China and the United States. Against the backdrop of profound changes in the global trade governance system， bilateral negotiations between China and the United States—the world’s two largest economies—will have a major impact on the transformation of the global trade system. In recent years， trade frictions initiated by the United States have intensified， bringing uncertainty to the global trade system， thus severely hindering global economic recovery and the development of international trade. China insists on promoting sound and stable development of China-U.S. trade relations based on principles of equal dialogue and mutual benefit. China emphasizes that global trade should uphold multilateralism and oppose all forms of unilateralism and protectionism. Through bilateral negotiations with the U.S.， China aims to address issues such as trade imbalances， technology transfers and intellectual property protection， while also promoting the establishment of fairer and more reasonable international trade rules to ensure an open and inclusive global trade environment.

Fourth， promoting positive interaction between trade and development. Although promoting development is a fundamental goal of global trade governance， it has long been neglected in practice. In recent years， China has innovated the concept of global trade governance and committed itself to fostering positive interactions between trade and development. Firstly， China proposed the Global Development Initiative（GDI）， advocating a development-first approach and leading efforts to build a new pattern of international development cooperation. Secondly， China actively promotes South-South cooperation within the WTO framework and views smooth trades as a key component of high-quality Belt and Road joint construction. At the same time， as the largest Global South country， China insists on placing development at the center of the international agendas and promotes the high-quality development of cooperation mechanisms of Global South countries. Thirdly， China is expanding unilateral trade preferences for the least developed countries （LDCs）. Beginning on December 1， 2024， China has granted zero-tariff treatment on 100% of tariff lines from LDCs that have diplomatic relations with China， using trade to drive development and share new opportunities for growth.

Conclusion

At present， the Trump administration’s trade policies for its goal of “America First” pose severe challenges to the global trade governance system， especially as unilateral tariff policies have triggered a worldwide tariff war. Amid changes in the international political and economic landscape， some countries and regions have adopted so-called “de-risking” strategies， excessively emphasizing supply chain security. At the same time， although the digital economy contains tremendous growth potential， the digital divide also presents challenges that cannot be underestimated. These developments threaten to disrupt the normal operation of global trade， undermine the division of labor in global industrial and supply chains， and widen the global development gap. Countries need to work together closely and place greater emphasis on the institutional safeguarding role of the global trade governance system. In the face of the destructive effects of U.S. unilateral actions on the global trade governance system， China’s firm advocacy for enhancing the authority and effectiveness of the multilateral trading system is all the more significant. China will work with other countries to safeguard the status of the multilateral trading system， actively participate in the negotiation of regional trade agreements and the formulation of economic and trade rules， provide more Chinese wisdom for the transformation of the global trade governance system， and promote economic globalization to a more dynamic， inclusive and sustainable new stage.

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Su Qingyi is the Director and Research Fellow of the International Trade Division， Institute of World Economics and Politics， Chinese Academy of Social Sciences