CT: Statistics from the Ministry of Commerce show that, by the end of 2010, China was the country that endured the most anti-dumping investigations for 16 consecutive years, and the country that endured the most countervailing investigations for five consecutive years. What are the reasons for such a situation? How should the Chinese government and enterprises respond?

Xue: The frequency of cases against Chinese enterprises are mounting, involving products in an extensive array of fields and categories, ranging from traditional farm produce, textiles, color TVs and integrated circuits to steel and furniture. More countries have adopted anti-dumping measures against China, including developed countries like the U.S. and regions like the EU, to the emerging countries like India, Brazil, Argentina and Russia. Moreover, overlapping cases are multiplying. One product might be complained about by several countries and regions. Moreover, countervailing cases against China have also appeared in recent years.

There are many causes for such a situation. From the perspective of China, its foreign trade has expanded very rapidly. Now China ranks first in export and second in import, with a large trade surplus. As China has an extensive scope of trade and an obvious competitive advantage, the number increases are bound to attract such complaints, as the Chinese saying goes, "Tall trees catch much wind." However, many Chinese enterprises still work in labor intensive sectors, which depend more on large quantities and low prices than on superior quality. To boost the local economy, some governments have provided subsidies to certain enterprises, which is technically disallowed under WTO rules. In anti-dumping cases some enterprises have failed to take effective or responsible measures in response to the charges. These factors all erode the trade environment.

What's more, according to Article 15 of the Protocol on China's Accession to the WTO, the importing WTO member shall use a methodology that is not based on a strict comparison with domestic prices or costs if the producers under investigation can clearly show that market economy conditions prevail in the industry producing the like product with regard to the manufacture, production and sale of that product. The provisions of that article will expire in 2016. Although political factors may govern achievement of a market economy status, China, in any case, has not fully grasped how to operate a market economy mechanism, which gives other countries excuses.

Besides, it often happens that a competitive Chinese industry is another country's less competitive traditional industry. Being affected by Chinese productivity, the traditional industries in those countries have to switch to other products, which can bring about a series of social problems including unemployment. Therefore many countries find it worthwhile to carry out anti-dumping measures against China in order to protect their employment conditions.

The world economy has not completely recovered from the global financial crisis that broke out in 2008. In one sense, that caused the upsurge and spread of trade protectionism. However, an increase in trade disputes represents development in trade. This will probably be considered normal in the future. How to solve these disputes will then become our major concern.

As for China, it must transform its competitive edge from price to quality and good after-sale services. What's more, we should remove the restrictions brought about by non-market economy status through accelerating reform and perfecting early warning mechanisms. China should also become more proactive towards trade disputes and settlement, solving problems through regular dispute settlement mechanism. Investing in and setting up plants and sales outlets abroad is also helpful to reduce disputes.

CT: What has caused the impasse in the Doha Round negotiations? In what ways can China play a role in breaking it?

Xue: The Doha Round launched in 2002 has been interrupted over and over again. On the one hand, the rise of emerging economies including China, Brazil and India has brought about changes in bargaining power; on the other hand, developed countries show excessive concern for their own interests. The negotiations now focus on market access for agricultural and non-agricultural products. The demands made by developed countries are unacceptable to developing countries.

People are counting on the U.S. to break the deadlock through compromise. However, as the presidential election nears, the U.S. is not likely to make any compromises, considering its political situation, and it is not expected the Doha Round will make progress in the near future. In the meantime, the U.S. intends to shift the responsibility for the deadlock to China, blaming China for not making concessions.

I believe no agreement can be reached unless all participants take the global situation into consideration rather than putting their own interests first. Besides, the WTO's operating mechanism needs to be reformed so as to give the director-general more power.

CT: What kind of role is China supposed to take in the WTO system?

Xue: Over the last decade, China has grown from a new member to a key member of the WTO. China should be bold in taking greater responsibilities and exerting greater effort, taking an active part in various activities of the WTO. As the organization is facing various operational challenges, China should assist it in tiding over these difficulties and pushing the Doha Round negotiations forward. Especially because our country has exchanges and communication with both developed and developing countries, China is irreplaceable as a coordinator.

CT: China's dividends, like its labor force, have kept the economy growing at a high rate. However, these dividends are declining now. How do we best deal with this challenge?

Xue: In general, China must continue with reform and opening-up. We should attach importance to all factors of production. In terms of dividends, although the dividend in wages as a single factor is in decline, it doesn't represent the trend of dividends as a whole. China's sustained development following entry into the WTO comes from the integrated factors of land, labor, capital, technology and management. Hence, we should give full play to all factors, including raising the utilization rate of land, enhancing the quality of work force, improving productivity and the utilization of capital and foreign investment, advancing the level of technology and management, and rule consciousness.

Moreover, we should continue transforming our economic development pattern, boosting the development of the service industry, removing restrictions on nongovernmental capital and granting the same treatment to private companies, foreign-funded enterprises and state-owned enterprises.

In the meantime, we should stick to globalization strategy and set up transnational enterprises while actively organizing and joining regional economic cooperation organizations. Reform of government functions must happen on top of all that. The government is not supposed to intervene too much in market operations. To sum up, China's market economic reform is far from being accomplished. There is still a long way to go and the best way to move forward is adhering to reforms and opening wider to the outside world.