Chinese Trade Relations within the Context of a Struggling WTO: A Play on Multiple Levels

Despite being a member of the World Trade Organisation (WTO) for the last 25 years, China’s position in the international trading system is still being questioned by other WTO members. During the final months of 2025, China demonstrated its commitment to conformity and flexibility in evolving within the Organisation by renouncing its claim to benefits under the special and differential treatment (SDT) provision. However, around the same time, China also distanced itself from the WTO by strengthening its cooperation with the Association of Southeast Asian Nations (ASEAN) through the signing of the China-ASEAN Free Trade Area (CAFTA) 3.0. This leaves us with two important questions: what is China’s strategy behind these seemingly contradictory steps, and what are the implications for the multilateral trading system?

When China joined the WTO in 2001 – following 18 rounds of negotiations over 15 years – the Chinese government amended more than 2,300 national laws and regulations in an unprecedented effort to comply with WTO provisions, despite difficulties arising from so-called ‘WTO-plus’ obligations and ‘WTO-minus’ rights. Since 2019, following the breakdown of the Appellate Body amid controversy over its role and mandate, the WTO has been awaiting reform. In this context, China has been actively supporting the Multi-Party Interim Appeal Arbitration (MPIA), the temporary reform solution to the deadlock, which allows members to settle trade disputes. In parallel to China’s efforts to join, comply, and reform the WTO, it has never stopped increasing its presence on the regional and bilateral stages, either.

In fact, China has recognised that effective trade collaboration requires alternative frameworks – mostly regional or bilateral agreements – to ensure stable and predictable enforcement of commitments. Its current strategy can be characterised as a calculated balance between the multilateral and bilateral systems, allowing China to project its commitment to global value chains while simultaneously constructing functional frameworks for its trade partnerships. 

Renunciation of Special and Differential Treatment (SDT) within the WTO

On 23 September 2025, China announced that it would no longer seek to benefit from SDT. Remarkably, it decided to maintain its developing country status, despite the fact that the primary objective of this status is to provide access to SDT provisions. To understand this seemingly contradictory stance, one must look beyond the surface contradiction and examine the strategic logic that underlies it.

The SDT offers developing countries legal pathways to bridge developmental disparities in their technological or knowledge economies, enabling them to better adhere to WTO rules. SDT clauses are inserted into WTO agreements and offer benefits such as longer implementation periods for carrying out commitments and various measures to increase trading opportunities for developing states. Nonetheless, many criticise this framework, arguing that it amounts to a form of positive discrimination. In an attempt to correct an unequal playing field, the system introduces alternative ways of differentiating between states. However, this raises an important question: how can such differentiation be consolidated with the system’s ultimate goal of creating a truly level playing field? Many developing countries contend that SDT does not offer sufficient support, or at least not in a way that would lead to meaningful long-term changes.

China’s decision to withdraw from the use of preferential provisions followed years of debate over its access to SDT within the WTO. Both developing and developed states had criticised this arrangement before, arguing that based on the data of international organisations, – like that of the World Bank, which demonstrates China’s steady GDP growth over the past 30 years, – the country no longer qualified as a developing country, and thus, it is unjust to provide them a more favourable treatment. As a result, China’s decision to decline SDT is not only an economic decision, but a political statement. By doing so, China reinforced its role as an equal competitor in the global market and eliminated a point of conflict with its bilateral partners, particularly the United States. More importantly, it demonstrated a willingness to adhere to the WTO’s authority at a time when the architects of the system appear reluctant to. Furthermore, maintaining its developing country status represents China’s desire to remain aligned to the ‘Global South’. This approach strengthens its diplomatic ties and economic cooperation with long-standing partners such as Cambodia or Ethiopia. 

Strengthening Cooperation with ASEAN

Complementary to its multilateral engagement within the WTO, China’s global trade strategy reflects the global trend that pushes countries to conclude regional and bilateral trade agreements as well. Although this is not a new tendency for China, it has become increasingly significant as the WTO’s Appellate Body – and thus the whole WTO judiciary system – continues to be blocked by the U.S. 

In this context, as of 2025, China has signed 22 Free Trade Agreements (FTAs) with 29 countries and regions, accounting for a third of its foreign trade. The decision to sign a more comprehensive FTA with ASEAN members, the CAFTA 3.0, fits this logic of deepening cooperation with developing nations. Such Regional Trade Agreements (RTAs) constitute an exception to the Most-Favoured-Nation (MFN) clause enshrined in WTO Agreements. At first glance, these agreements appear to represent a contradiction with the WTO system. In fact, the MFN clause states, in simple terms, that benefits extended to one member shall be equally granted to all others. However, an FTA is only applicable between its signatories. The WTO’s system resolves this tension by authorising FTAs provided they adhere to procedural and substantive rules, as set out in Article XXIV GATT, Article V GATS, and Article 2 of the Enabling Clause. 

Originally, RTAs were designed to serve as a complement, rather than a substitute for the multilateral trading system. However, this role has been called into question by the rapid proliferation in recent years, leading to an increasingly complex ‘spaghetti bowl’ of RTAs. This trend is particularly evident in the case of China: A primary example of its bilateral and regional cooperation is the Belt and Road Initiative (BRI). While its position within the WTO allows China to counterbalance dominant powers like the U.S., the BRI and similar regional initiatives grant it a leading role among developing countries, as well as a competitive edge against other emerging powers such as India. Through this dual strategy, China seeks to balance cooperation and competition across developed, developing, and least-developed countries alike.

An Ambivalent Strategy: What Significance for the Multilateral Trading System?

A critical analysis of China’s recent manoeuvres within the global trading system reveals a complex but effective strategy thus far. It remains a willing participant in the WTO while simultaneously concluding newly reinforced regional trade agreements like CAFTA 3.0. At the same time, it is worth noting that China is not the only actor to engage in such multi-layered strategies. Indeed, as the international stage sets out to be increasingly unstable, more and more governments are making seemingly controversial decisions. What distinguishes China, however, is its long-term strategic foresight. China has never underestimated the importance of its regional partnerships, as evidenced by the long line of agreements concluded under the BRI.

Indeed, the very fact that China remains active within the WTO, seeking to hold the U.S. and the European Union accountable for trade violations, raises important questions about the system’s evolution since 1994. Since 2019, China has initiated over a dozen cases against partners, including Canada, Australia, the EU, and the U.S., despite the paralysis of the Appellate Body. Paradoxically, China appears to place greater value on the system than the very powers that were instrumental in establishing it.

Despite China's ambivalent approach, its recent actions suggest a potential strengthening of the multilateral trading system through the observance of rules in areas where other global powers, notably the U.S., are offering resistance. It is reasonable to conclude that the contradictions in its approach stem from a strategy of survival within the destabilised system it faces today.

The views expressed in this article belong to the author(s) alone and do not necessarily reflect those of European Guanxi.

ABOUT THE AUTHOR

Zselyke Lévai is currently pursuing a Master of International Economic Law at Paris I Panthéon-Sorbonne University. She has a strong focus on Chinese foreign direct investment screening and promotion, as well as on trade barriers affecting Chinese firms in Europe. She previously graduated from The Hague University of Applied Sciences with a BA in European Studies, having spent her second year on an Erasmus+ exchange at Sciences Po Lille. During her undergraduate studies, she interned at the Embassy of Hungary in Paris and joined as a volunteer and blog writer to the European Union's cultural and information centre in Budapest. She is fluent in English, French, and Hungarian and has been studying Mandarin for three years.

This article was edited by Daria Bogolyubova and Mengfei Xu.

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