107: Bombed Embassies and Document Leaks – How China Got into the WTO

Episode Summary

Executive Summary: The episode examines China’s prolonged and politically fraught path into the WTO, emphasizing that accession was not a favor to China but the outcome of hard bargaining, domestic reform pressures, and repeated setbacks including Tiananmen and the 1999 Clinton summit failure. It argues the U.S. secured major concessions, yet China’s later evolution created new enforcement problems for the global trade system.

Main Topics: China’s long and difficult WTO accession (Priority: 5/5): China’s entry took 15 years and was blocked by political events, especially Tiananmen, even as Chinese leaders kept pushing to rejoin the multilateral trade system. Zhu Rongji as reform driver (Priority: 5/5): Zhu Rongji is portrayed as the key Chinese leader who understood economics, pushed privatization/state-enterprise reform, and accepted that WTO entry required difficult concessions. The 1999 turning point and Greenspan channel (Priority: 4/5): A meeting between Alan Greenspan and Zhu Rongji helped restart momentum by signaling that China was prepared to make real commitments and that Washington should take the talks seriously. U.S.-China bargaining over market access and transparency (Priority: 5/5): Negotiations covered tariffs, quotas, technology transfer, telecom restrictions, and publication of laws, with the U.S. demanding sweeping liberalization and enforceability. The failed April 1999 Clinton-Zhu summit and its aftermath (Priority: 5/5): Despite apparent progress, Clinton declined to finalize a deal over domestic political constraints, causing Chinese anger and an embarrassing leak of a 17-page concessions summary. The final deal and lingering dispute over WTO outcomes (Priority: 4/5): China eventually signed in November 1999 and entered the WTO in 2001, but later U.S. and global frustrations centered on state capitalism, subsidies, currency issues, and legal opacity.

Key Arguments: China did not enter the WTO on easy terms; the U.S. was the toughest hurdle and forced substantial concessions. Tiananmen Square in 1989 froze accession talks for years because of U.S. political opposition and human-rights concerns. Zhu Rongji’s rise was decisive because he believed reforms and WTO entry would benefit China and he overrode hardliners. Alan Greenspan’s 1999 meeting with Zhu helped break the deadlock by conveying Chinese willingness to compromise. The U.S. insisted on practical rule-of-law measures, especially publication of regulations, because opaque enforcement made market access meaningless. The April 1999 summit failed not because terms were absent, but because Clinton feared political backlash and congressional rejection. The later controversy is less about the original accession terms than about China’s evolution into a system the WTO rulebook struggles to police.

Data Points: Time to join WTO: 15 years - The conversation repeatedly notes China’s accession process stretched from the mid-1980s to December 2001. Initial accession effort: 1986 - China first sought to reenter the trading system when it began emerging as an export powerhouse. Major disruption: June 1989 - Tiananmen Square ended the early negotiating momentum and froze political support in the U.S. WTO creation year: 1995 - China still was not allowed to enter even after the WTO replaced GATT. Key turning point: 1999 - Zhu Rongji became the decisive pro-accession leader and negotiations accelerated. U.S. tariff on autos: 100 percent - Used as an example of how high Chinese tariffs were and how much liberalization Washington demanded. Chinese embassy bombing casualties: 3 killed - The accidental NATO strike in Belgrade further inflamed Chinese suspicions during the negotiation period. Leak length: 17 pages - A document summarizing Chinese concessions was posted online after the failed April 1999 summit. Final accession: December 2001 - China ultimately entered the WTO after the November 1999 bilateral deal and subsequent multilateral approval.

Pivotal Quotes: "we must cast away illusions that the U.S. will make concessions and take a step backward if we adopt a tough stance." — Zhu Rongji: Cited from the book discussed in the episode to show that Chinese leaders believed the U.S. would not yield easily. "if China is willing to play by the global rules of trade, it would be an inexplicable mistake for the United States to say no." — Bill Clinton: Clinton’s public signal in April 1999 that suggested a deal was likely before he ultimately refused to finalize it. "the wolf is coming" — Chinese establishment phrase: Used to describe Chinese fears that WTO accession would damage domestic workers, farmers, and state firms.

Implications: The episode suggests China’s accession was a hard-won deal, not a U.S. giveaway, but its later rise exposed gaps in WTO enforcement and helped fuel today’s trade conflict and skepticism about global rules.