China's new leadership team is considering ways of tweaking its policies to address the challenges that will emerge over the next decade. The "China Dream", which the leadership led by Communist Party chief Xi Jinping and Premier Li Keqiang is looking to achieve, will move Beijing from its current position of being overdependent on exports for growth towards building domestic demand.
The question that arises is whether China will consider altering its current position across the whole spectrum of multilateral and bilateral trade negotiations or not.
China's new Commerce Minister Gao Hucheng has been in charge of the country's global trade negotiations since 2010. His understanding of the nuances could help Beijing in driving home its point during difficult negotiations.
News reports indicated that the 61-year old, who didn't join the Communist Party until his late thirties, worked at the ministry's predecessor, the ministry of foreign trade and economic cooperation, beginning in the early 1990s. Currently, the longest serving of the commerce ministry's vice-ministers, Gao studied abroad, worked in Africa, and earned his doctorate in sociology in France.
Analysts in China have indicated that the Chinese commerce ministry is seen as one of the agencies most amenable to broader reforms - what could give Gao's appointment wider implications.
China is expected to adopt a strategy shift in its approach to economic growth, since it has been hit hard in the last few years owing to the global crisis that has knocked out European economies, especially in the euro zone, putting pressure on a heavily export-dependent economy.
China has also looked to invest abroad to supplement the growing energy demand to meet the aspirations of people in the country. Several countries have been wary of allowing Chinese takeovers of important assets of natural resources, since they fear that the Communist Party primarily owns the Chinese companies. The change in leadership could help bring about a change in China's overseas ventures in mergers and acquisitions that will be at the core of Beijing's global trade and investment strategy in the coming years.
During his meeting with World Trade Organisation (WTO) Director-General Pascal Lamy, who was in Beijing recently, Gao has indicated the country's commitment to multilateral trade negotiations. He said the Geneva-based WTO had played an important role in coping with the global financial crisis, and it was hard to imagine the development of global economy and trade without WTO rules.
He reiterated Beijing's commitment to the multilateral trading system, and was clear that the country would continue to push forward the Doha Round negotiations. Giving some broad indications of the stand that the government would adopt, the commerce minister said the "agreement on the early harvest" for the Doha Round negotiations that the countries want to adopt at the Bali ministerial at the end of the year is a positive signal, for keeping the Doha Round intact.
He indicated that China would adopt an active opening-up strategy, especially in the service sector, and continue to support and safeguard the multilateral trading system.
The position that China will adopt at the multilateral and bilateral negotiations will be important given the country is likely to become the largest economy in the world by 2016. Its strategy will be important to understand for industry in India, since the latter will also look towards investing in assets abroad to meet its growing needs for raw materials and intermediates.
Industry in India will need to work closely with policy makers to ensure that government policies remain supportive of mergers and acquisitions that can help build economies of scale at the global level for Indian companies. The coming years will lead towards greater presence of global value chains and the emergence of China as a large market owing to a growing domestic demand will provide large opportunities for Indian companies, as well.
Industry in India will need to work with trade negotiators to understand the strategy adopted by Beijing in the WTO multilateral negotiations but, more importantly, in regional negotiations like the Regional Comprehensive Economic Partnership where China and India are negotiating a free trade agreement. It aims to be the largest free-trade bloc in the world, comprising all 10 Asean (Association of Southeast Asian Nations) nations as well as China, India, Japan, South Korea, Australia, and New Zealand.
The writer is Principal Adviser at APJ-SLG Law Offices