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OECD Trade Policy Working Paper No.44 examines China’s emergence as a global player in international markets over the last few decades. It provides an overview of China’s trade policy environment following the country’s process of market opening and joining the WTO.

The report analyses China's role in international processing activities and moving up the global value chain. It also examines China's impact on world prices and the deterioration of its own terms of trade. The paper looks at China’s two-pronged export growth strategy. The first part of the strategy is to capitalise on one of its greatest factor endowments – a surplus of labour – by promoting job-creating, labour-intensive manufactures. The second aspect of this strategy is to further its goal of economic development by upgrading its economy by producing and exporting higher-technology goods.

The paper also addresses intellectual property rights (IPR). The preponderance of evidence indicates that there has been significant progress in development of an IPR regime appropriate to the needs of a modern market economy. However, there remain certain deficiencies – particularly with respect to IPR enforcement – that may be damaging to domestic and international interests.

The latter part of the report examines the impact of China’s integration into world’s goods and services markets on selected OECD countries. In order to quantify China’s impact on the world economy, new estimates – based on a general equilibrium model the FTAP – are used. Based on 2001 data, it provides quantitative estimates of the sectoral output and price effects caused by China’s integration into global trade. It also quantifies the welfare impact on the selected OECD economies. The report finds substantial gains for China and a rather limited impact on OECD economies as a result of China’s implementation of WTO commitments or completes liberalisation in the area of tariffs and services.