Reversal of Roles: China, the WTO, and the Global Trade Order Post-Accession

China’s accession to the World Trade Organization on December 11, 2001, was a watershed moment for the global trading system. At the time, the prevailing expectation in the West was that integrating China into WTO disciplines would not only open China’s markets but also encourage it to adopt the norms of the liberal international order.​​ In exchange for WTO membership, China undertook extensive commitments to reduce tariffs, remove import quotas, protect intellectual property, and level the playing field for foreign businesses​. Many hoped this would steer China toward a more market-driven, rules-abiding economic model – a win-win for both China and the developed world​. President Bill Clinton argued that WTO entry would “open new doors of trade for America and new hope for change in China”, predicting that economic liberalization would eventually lead to political liberalization in China​.

More than two decades later, these hopes have only been partially realized. China did rise to become a trading superpower, but it did not evolve into the “normal” market economy that many anticipated​. Instead, China often “wrote its own script” within the WTO​ – embracing the benefits of free trade for itself while maintaining (or adapting) many state-directed practices at home. This dynamic has had profound consequences. On one hand, China’s WTO membership contributed to an era of hyper-globalization that drastically lowered consumer prices worldwide and integrated supply chains. On the other, it intensified competition that contributed to industrial decline in parts of the developed world, fueling political backlashes against free trade. For example, between 1999 and 2011, the United States lost an estimated 2.4 million jobs due to import competition from China​, stoking discontent in industrial communities. By the late 2010s, U.S. trade policy had dramatically shifted – including tariff wars and open skepticism of the WTO – in direct response to China’s trade practices.

Ironically, as the U.S. and some other developed countries grew more protectionist, Chinese leaders began casting themselves as champions of the multilateral trading system. In a role reversal, Beijing’s rhetoric pivoted to defending WTO rules and critiquing the “America First” approach. At the World Economic Forum in Davos in 2017, President Xi Jinping warned that “no one will emerge as a winner in a trade war” and pledged that China would “champion free trade” if others retreated​. Chinese diplomats at the WTO increasingly admonished the U.S. to follow the rules, even as the U.S. accused China of longstanding rule-breaking​. This reversal has raised fundamental questions about fairness and hypocrisy in the global trading system: How has China managed to benefit so greatly from WTO membership while often skirting its rules? And now that China professes to uphold those rules, how are developed nations responding – are they truly flouting the system, or trying to reform it to address China’s state-driven model?

This research article examines these questions in depth. We begin by analyzing China’s behavior under WTO norms – the strategies it used to circumvent or reinterpret rules, from asserting “developing country” privileges to leveraging state subsidies and regulatory tools. We then assess how WTO-era liberalization fueled China’s economic boom and how that, in turn, altered global trade patterns. Next, we explore the multi-dimensional reversal of roles: China’s newfound vocal support for WTO norms versus the U.S. and others’ growing disenchantment. This section evaluates the economic interests at stake (market access, trade balances, supply chain dependence), the political drivers (nationalist economics, domestic pressure, great power rivalry), and the legal/institutional clashes (WTO dispute settlement, rule reform, definitions of “market economy”). Finally, we delve into a specific case study in the maritime industry – a sector where China’s rise has been especially pronounced – to illustrate the tangible outcomes of WTO-era globalization and their strategic implications. Through this comprehensive analysis, we aim to shed light on the evolving power dynamics in global trade and the challenges of reconciling an ascendant state-capitalist economy with a rules-based liberal trade order.

China’s Approach to WTO Rules: Selective Compliance and Strategic Circumvention

From the outset of its WTO membership, China’s compliance with trade norms was a mixture of genuine reforms and creative evasion. Legally, China did implement many WTO obligations – slashing average tariffs from over 15% to under 10%, phasing out import quotas, and revising hundreds of laws and regulations to align with WTO agreements​. It established intellectual property laws on paper consistent with the WTO’s TRIPS Agreement, and created new legal bodies (including a specialized IP court) to handle disputes​. These steps were significant, contributing to a surge in foreign investment and trade. Politically, however, the Chinese Communist Party never relinquished its core strategy of state-directed development. Rather than embracing free-market liberalism, China sought to reap WTO benefits while maintaining control over key economic levers. This led to a pattern in which China technically complied with many WTO rules, yet often undermined their intent through loopholes, opaque policies, or delayed implementation.

Several major areas illustrate how China circumvented or reinterpreted WTO norms:

• “Developing Country” Status and Special Treatment: China joined the WTO as a self-declared developing country, despite having the world’s sixth-largest economy at the time​. Developing status entitles members to certain flexibilities – e.g. longer phase-in periods for commitments and the ability to retain some trade protections. China negotiated additional transitional arrangements in its accession protocol, including a 10-year window to comply with certain rules and safeguard provisions that other members could use if Chinese imports surged​. While these measures were legal, other WTO members expected that, as China grew, it would “graduate” from special treatment. Instead, China has clung to its developing-country label even as it became the world’s second-largest economy​. This has “watered down” the enforcement of subsidy and transparency commitments, according to analysts​. By 2023, frustration over China’s status prompted calls in the U.S. Congress and elsewhere to strip China of developing-country perks​. China resists, citing that hundreds of millions of its people still have incomes far below Western levels​ – an argument grounded in domestic inequality even as its overall economic might is unmistakably advanced.

• State Subsidies and Industrial Policy: Chinese industrial subsidies – through direct grants, cheap loans from state banks, energy and land at below-market prices, tax breaks, etc. – became a focal point of trade tensions. WTO rules (the Agreement on Subsidies and Countervailing Measures) do prohibit certain trade-distorting subsidies, and China did agree to some subsidy disciplines in its accession. In practice, however, China continued to heavily support strategic sectors like steel, solar panels, shipbuilding, and later high-tech industries (e.g. under the Made in China 2025 plan). Many of these subsidies were structured to avoid clear WTO violations or simply went unreported, exploiting the WTO’s limited enforcement capacity on domestic subsidies. The U.S. and EU launched numerous WTO disputes against Chinese subsidies (for example, on auto parts, rare earth exports, and agricultural goods), often winning rulings. Yet even when China lost, compliance was slow or partial. A U.S. government report observed that China “failed to comply” with key WTO subsidy obligations and had “embraced a state-led, mercantilist approach” by the late 2010s​. In essence, China prioritized its industrial strategy over WTO principles of market competition, calculating that the economic gains at home outweighed the costs of occasional trade disputes.

• Market Access Barriers and Joint Ventures: Despite lowering tariffs, China long maintained an array of non-tariff barriers and market access restrictions that frustrated foreign companies. These included opaque import licensing, burdensome product standards, and restrictions on foreign investment in many sectors. A prominent example is China’s requirement that many foreign investors form joint ventures with local partners (especially in autos, finance, telecoms, and other pillar industries). While technically allowable under WTO rules, these joint ventures often came with an unwritten price: foreign firms had to share technology and know-how with the Chinese partner (which frequently was state-owned or state-aligned). This practice of forced technology transfer was a core grievance of China’s trading partners​. China could claim that any technology transfer was voluntarily agreed in a private contract – thus not a WTO matter – but foreign companies felt they had no real choice if they wished to access China’s vast market. Through this tactic, China gained access to advanced technologies in industries from wind turbines to high-speed rail, accelerating its climb up the value chain. WTO rules did not clearly forbid such arrangements, since they occurred outside the scope of WTO-enforceable law, and China defended them as standard business deals. However, the spirit of WTO norms – requiring fair, non-coercive treatment of foreign investors – was arguably violated. As one analysis noted, China’s forced tech transfer and subsidy practices often broke “no explicit rules, but they [violated] the spirit of WTO regulations”​.

• Intellectual Property (IP) and Innovation Mercantilism: A related issue was weak protection of intellectual property rights in China, especially in the 2000s. Counterfeit goods, pirated software, and theft of trade secrets were rampant, benefiting Chinese firms at the expense of foreign IP holders. WTO’s TRIPS Agreement obliged China to tighten IP laws, and indeed China did update its statutes​. Yet enforcement remained lax. Furthermore, for strategic technologies, Chinese regulations often forced foreign companies to license IP to Chinese entities on skewed terms. For instance, China’s regulations on technology imports imposed requirements that, in effect, limited foreign licensors’ rights and forced sharing of improvements – in contradiction to TRIPS obligations​. The United States eventually responded by conducting a special investigation (the Section 301 investigation in 2017) that documented widespread IP theft and cyber espionage by China to benefit domestic firms​. That investigation concluded that Chinese policies (some WTO-legal, others illegal) had collectively caused tens of billions of dollars in IP losses annually to U.S. companies​. The U.S. cited these findings as justification for unilateral tariffs in 2018, effectively sidestepping the WTO process out of frustration with its limits.

• Transparency and Institutional Behavior: China’s large, complex bureaucracy also enabled subtle ways of skirting WTO commitments. WTO members are expected to notify new trade-related laws and disclose subsidy programs regularly, but China often failed to fully do so, leaving trading partners in the dark about its policies. Chinese officials tended to interpret WTO rules literally and exploit gray areas. For example, when challenged, China would insist on strict proof that a given policy violated a WTO provision, which in cases like state-owned enterprise (SOE) behavior or cybersecurity rules could be difficult to establish. Meanwhile, China itself became an adept user of the WTO’s dispute system to challenge others. It filed complaints against U.S. anti-dumping measures and European tariffs, learning to play the legal game it was accused of abusing. Notably, when WTO rulings went against China, it generally brought itself into compliance after a period of delay​. This contrasts with the United States and EU, which have at times ignored WTO rulings outright​. (For instance, the US refused to remove illegal steel tariffs even after losing a WTO case, and the EU ignored parts of a WTO ruling on subsidies in the Airbus case – points Chinese officials eagerly highlight.) Thus, Beijing can credibly claim a record of technical compliance, even as its broader trade strategy has stretched the WTO framework to its limits.

In summary, during the first 15+ years of its WTO membership, China’s approach was characterized by a duality: it obeyed many WTO rules to the letter – enough to avoid overt penalties and to reassure foreign investors – while pushing the boundaries of what was permissible through state-driven practices. This strategy was highly successful in economic terms (as the next section will show), but it also generated a perception among advanced economies that China was a “free rider” in the system​. China’s government did little to dispel this notion; in fact, it often doubled down on the very policies criticized by the West. As a Council on Foreign Relations analysis put it, “China learned, quickly and effectively, how to navigate the rules so the global economy works for it, not against it.”​. By the late 2010s, this perception reached a boiling point, leading directly to the trade confrontations and the ironic role reversals that unfolded.

Benefiting from Global Trade Liberalization: China’s Economic Rise

While China may have bent the rules, there is no question that it also benefited immensely from the WTO-era trade boom. China’s accession came at a time of surging globalization, and China became the single biggest winner of that trend. Economically, the numbers tell a striking story of transformation:

 Figure: China’s share of global merchandise exports, 2000–2022. The graph shows a steep rise from roughly 4% of world exports around 2001 to about 15% by 2021, illustrating China’s extraordinary export growth in the WTO era. This rise made China the world’s largest exporting nation by 2009​. China’s share peaked at ~15% of global exports during the early 2020s​, up from only a few percent in 2001 – a more than threefold increase. The country leveraged WTO accession to integrate into global supply chains on an unprecedented scale, moving from the periphery of world trade to its very center.

China’s export machine drove its GDP to new heights. In the 1980s and 1990s, China was an important but secondary player in global trade. After joining the WTO, its exports of goods exploded: from about $266 billion in 2001 to over $2.3 trillion by 2020, and then a further surge to $3.6 trillion in 2022 (making it the top exporter globally)​. Its trade (exports + imports) as a share of GDP doubled, reflecting deep integration into the world economy. Low-cost “Made in China” products flooded global markets, from electronics and appliances to textiles and toys, bringing down prices for consumers everywhere. Multinational corporations took advantage of China’s labor pool and manufacturing prowess, offshoring production to China and turning it into the hub of countless supply chains. By 2015, China had become the largest trading partner for over 120 countries​, a position once held predominantly by the United States. This interdependence gave China significant leverage and also vested interest in keeping trade flows open.

The development gains within China were equally dramatic. Between 1990 and 2015, the share of China’s population living in extreme poverty plummeted from 67% to under 1%​ – an achievement frequently credited in part to job creation via export-led growth. Coastal provinces became manufacturing powerhouses, attracting massive investment. Cities like Shenzhen and Shanghai skyrocketed in wealth and global influence. China’s overall economy expanded to 11 times its size from the time of accession (in real terms)​, catapulting China to the rank of the world’s second-largest economy. Its foreign exchange reserves swelled above $3 trillion, largely earned from trade surpluses. These reserves gave China financial clout and stability (evidenced during the 2008 global financial crisis, when China’s export resilience and stimulus helped prop up global demand​). Simply put, WTO membership turbocharged China’s rise into an economic superpower.

However, these gains for China coincided with adjustment pains in the developed world, which set the stage for later political backlash. As noted, import competition from China was linked to manufacturing job losses in North America and Europe​. Entire industries, like furniture-making and textile mills in the U.S. Southeast or parts of Central Europe, struggled or collapsed under waves of Chinese imports. Economists term this the “China shock” – a once-in-a-generation disruption of labor markets as Western production moved overseas or shut down under import pressure​. Although consumers benefitted from cheaper goods, the regional concentration of job losses (and the insufficient safety nets for affected workers) led to political repercussions: rising anti-trade sentiment, populist movements, and calls for protection. The U.S. experienced this acutely: by the 2010s, skepticism of free trade spanned the political spectrum, paving the way for the Trump administration’s tariff-centric trade policy. In Europe, too, concerns grew about unfair competition and dependency on China for critical supplies.

From China’s perspective, its leadership felt vindicated by the economic success achieved. The Communist Party argued that it had delivered on prosperity – validating its model of gradual reform without ceding one-party control. In fact, China’s rulers perceived that the West’s own rules (global free trade) had enabled China’s rise while Western democracies faltered in managing the downsides. This emboldened Beijing. Far from feeling pressure to liberalize further, by the mid-2010s China began reinforcing state control in some areas (e.g. tighter Party oversight of private firms, expansion of state enterprises in strategic sectors) while continuing to enjoy WTO market access abroad​. The narrative in Beijing became that the “Western model” – which presumed that free trade would lead China to convergence with liberal capitalism – was flawed. China’s own model was delivering superior results in growth and stability, without the political chaos seen in some Western countries.

This mindset helps explain why China was reluctant to concede to Western complaints about its trade practices. Chinese officials would acknowledge certain problems (like IP enforcement gaps) and make incremental improvements, but fundamentally they saw demands for deeper structural changes as attempts to contain China’s rise. After all, from their vantage point, China played by enough of the rules to gain admission and then simply outperformed others within the global trade framework. The fact that WTO rules did not fully constrain state capitalism was – implicitly – a shortcoming of the WTO, not China’s fault. And indeed, many analysts agree that the WTO’s rules were ill-suited for a hybrid economy of China’s size, leaving loopholes that China legally could exploit​.

By the end of the 2010s, a rift had formed: China was both a principal beneficiary of the WTO system and a principal source of strain on that system. This paradox set the stage for the reversal of roles in which China would claim the mantle of defending the WTO, as the United States in particular began to question whether the WTO could address the “China problem”. The next section examines how this role reversal unfolded, analyzing the economic, political, and legal dimensions of the shifting positions.

Role Reversal: China as Defender of WTO Norms, the West as Skeptic

Around the time of the WTO’s 20th anniversary in the mid-2010s, global trade leadership underwent an unexpected role swap. China – long seen as a rule-breaker or at least a rule-bender – started presenting itself as a staunch supporter of the multilateral trading order. Conversely, the United States – the principal architect of the WTO – began openly flouting certain rules and disabling parts of the WTO system. This reversal did not happen in a vacuum; it was the product of years of mounting grievances and changing political winds in each country. We explore this reversal through three lenses: economic interests, political imperatives, and legal/institutional changes.

Economic Perspective – Trade Imbalances and Market Frictions: By the late 2010s, China had a large trade surplus with the United States and many developed countries, which became politically contentious. The U.S. trade deficit with China exceeded $300 billion annually, a figure often cited as evidence of an uneven playing field. American and European businesses also complained of asymmetry: China had relatively free access to Western markets, while their access to China was still hindered by various barriers and an unleveled field (e.g. subsidies to Chinese firms). In market access terms, frustration grew that China was not as open as expected. Sectors like finance, media, telecommunications, and cloud computing remained heavily restricted or dominated by state incumbents in China, limiting foreign penetration. Moreover, high-profile incidents – such as China’s use of informal retaliation against countries that crossed its political red lines (for example, cutting off Norwegian salmon imports after a Chinese dissident won the Nobel Peace Prize, or boycotting South Korean goods over a U.S. missile defense deployment) – made developed nations worry that China would leverage its market power contrary to WTO principles. These economic frictions fueled a sense in Washington, Brussels, and Tokyo that a tougher stance was needed to ensure reciprocity. Thus, even as global companies continued to profit from the Chinese market, Western governments grew more willing to intervene in trade to counter China. This led to tariffs on Chinese goods, stricter investment screening (to prevent Chinese state-led acquisitions in sensitive sectors), and export controls on advanced technology. China, seeing these moves, argued that the West was now weaponizing trade and violating WTO norms of free and fair trade.

Political Perspective – Nationalism, Trust, and Global Leadership: On the political front, leadership changes and domestic currents played a critical role. In the United States, the election of Donald Trump in 2016 on an overtly protectionist platform marked a turning point. The Trump administration’s view was that past U.S. trade policy had been naïve and that China had “cheated” its way to prosperity at American expense​. This administration did not place faith in the WTO to resolve issues – in fact, it saw the WTO as ill-equipped and “unfair” in certain respects (Trump himself called the WTO a disaster for the U.S.). Instead, the U.S. took matters into its own hands by imposing sweeping tariffs on Chinese imports in 2018, citing Section 301 of its domestic trade law (a mechanism to address unfair practices) and Section 232 (on national security grounds for steel/aluminum tariffs). These tariffs clearly violated WTO rules (they were far above agreed tariff bindings and targeted one country), which led China to challenge them at the WTO. When China condemned the U.S. tariffs as “trade unilateralism” and destabilizing to the global system, Washington brusquely dismissed the criticism as hypocrisy, pointing out China’s long history of market distortions​. Both sides accused the other of bad faith – a war of words that reflected deeper role reversal: China defending the rules-based system, the U.S. deriding China’s “predatory” non-market economy.

At the same time, President Xi Jinping had consolidated power in China and started to explicitly cast China as a champion of globalization. His 2017 Davos speech was emblematic, but he reiterated the theme in subsequent years. China’s message was that international rules must be respected by all – pointedly including the United States – and that China stands ready to uphold those rules. Part of this was savvy geopolitics: as the U.S. retreated from some global commitments (like pulling out of the TPP trade pact and Paris climate accord), China sought to gain stature by contrasting itself as a stable, reliable partner. Yet there was genuine concern in Beijing about the U.S.’s new protectionism. A trade war and techno-economic decoupling threatened China’s growth. So Chinese officials doubled down on multilateralism talk, hoping to isolate the U.S. and rally other countries to its side. Indeed, when the Trump administration blocked new appointments to the WTO Appellate Body (crippling the WTO dispute appeals mechanism in 2019), China joined the EU and others in establishing an interim appeals arrangement to keep trade cases adjudicated​. China and the EU both publicly lamented the U.S. actions and called for restoring the WTO’s functionality​. Thus, politically, China found itself more aligned with European and many developing countries in supporting the WTO, while the U.S. appeared as the disruptor – a remarkable reversal of the roles held since 1995.

However, it must be noted that China’s advocacy for WTO rules often coexists with self-interest and selective compliance. Beijing’s calls for obeying WTO rulings, for example, grew louder after the U.S. simply refused to comply with certain decisions (such as the WTO panel report that judged the Section 301 tariffs on China to be WTO-inconsistent). Chinese state media and diplomats have emphasized that the U.S. has lost multiple WTO cases yet failed to correct its measures​, painting the U.S. as acting above the law. This rhetorical high ground serves China’s interests: it underscores U.S. isolation and depicts China as a responsible major power. But critics observe that when WTO rulings go against China’s own practices, China often implements minimal changes or finds alternative ways to pursue its goals (a case in point: after losing a WTO case on its agricultural subsidies, China adjusted some programs but then introduced new subsidy schemes in industrial sectors not tightly covered by WTO rules). In other words, China’s commitment to the letter of WTO law remains pragmatic. What has changed is the geopolitical calculus – China now benefits from appearing law-abiding as the U.S. questions the value of the system.

Legal/Institutional Perspective – The WTO Under Strain: The role reversal also stems from fundamental issues in WTO law that were exposed over time. The WTO operates on consensus and binding dispute settlement; it was long assumed that major players like the U.S., Europe, and rising economies like China would all eventually agree on updates to the rules (a “Doha Round” of negotiations was launched in 2001 alongside China’s entry). That never happened – the Doha Round collapsed in failure, largely because developed and developing members (with China often a key voice) could not agree on new commitments. As a result, the WTO’s rulebook remained mostly stuck in the late-1990s framework, which did not address emerging issues like China’s state capitalism, digital trade, or industrial subsidies in technology. The U.S. by the late 2010s grew increasingly frustrated that WTO rules could not rein in practices it viewed as abusive by China. From Washington’s perspective, the WTO was impotent: China could always appeal a case and, even if it lost, would modify the policy at margins without abandoning its model. Meanwhile, certain Chinese practices (like forced tech transfer via investment requirements or cyber theft of trade secrets) weren’t explicitly covered by WTO rules. Thus, USTR (United States Trade Representative) reports started to argue that WTO rules were inadequate and that China had “moved further away” from market principles in recent years, embracing a “state-led, mercantilist” model​. The U.S. essentially concluded that unilateral and plurilateral tools (like tariffs, export controls, or new trade pacts excluding China) were needed, since WTO multilateral efforts had stalled.

China, on the other hand, has officially supported some WTO reforms – particularly those that do not undermine its interests. For example, China says it is open to clarifying rules on subsidies (as long as they address all big subsidizers, implicitly also targeting agriculture subsidies in the West)​. But China has pushed back against any proposal to strip it of developing country status at the WTO, and it opposed efforts that would single out state-owned enterprises for special disciplines​. In WTO councils, China often aligned with other developing nations to resist what it saw as attempts by rich nations to rewrite rules in their favor. In this sense, the WTO became a venue where China acted as leader of the developing bloc (pointing out, for instance, that the U.S. and EU also bent rules – citing their refusal to comply with certain dispute rulings or their own subsidy excesses in areas like agriculture and aerospace). The legal stalemate – with the Appellate Body defunct and negotiations moribund – ironically handed China an opportunity to champion returning to WTO norms, since it knew U.S. objections prevented the WTO from functioning fully. Chinese officials repeatedly urged the U.S. to lift its blockade on Appellate Body appointments and to accept multilateral solutions instead of unilateral sanctions​. This put the U.S. on the defensive in Geneva forums, where only a few allies (e.g. the Trump administration had some support from Japan and the EU on identifying WTO gaps regarding China, but not on crippling the dispute system) sided with it.

In sum, by 2020 we had a picture almost unthinkable in 2001: China as a vocal advocate of the WTO’s authority and the U.S. as a disruptor. An illustrative episode occurred at a WTO General Council meeting in 2018: China convened a special discussion on the “crisis” in global trade sparked by U.S. tariffs, warning of global recession if the WTO rules were ignored. The U.S. ambassador retorted by calling China’s economy “predatory” and accused Beijing of “violating and evading WTO rules” itself​. Observers noted the almost theatrical irony – each side invoking the WTO to shame the other​. This mutual accusation of hypocrisy underscores how intertwined and fraught the China-WTO relationship has become.

Yet, beyond rhetoric, both powers know that a functional global trading system still serves their interests. The U.S. and China did sign a limited “Phase One” trade deal in 2020 (outside the WTO framework) focusing on some IP and agricultural issues​, showing a pragmatic avenue to manage conflicts. And at the WTO’s 12th Ministerial Conference in 2022, China and the U.S. unexpectedly found common ground to support a deal on fisheries subsidies – a small but positive sign of engagement. Going forward, the true test will be whether WTO members can update rules to address state intervention (a key U.S. demand) while preserving the system that enabled China’s rise (a key Chinese demand). The outcome will shape not just trade, but the broader balance of power in the world economy.

Before concluding, we turn to the maritime industry as a concrete case study of China’s globalization journey and its strategic consequences. The seas are where commerce and geopolitics meet – and China’s behavior there mirrors the themes discussed: rapid ascendance through global integration, heavy state support, and emerging rivalry with established powers.

Maritime Industry Case Study: China’s Rise in Shipping, Ports, and Naval Power

One of the most striking manifestations of China’s post-WTO ascent is its emergence as a dominant maritime nation. In the span of two decades, China transformed from a minor player in global shipping to a linchpin of the world’s seaborne trade. Hand-in-hand with commercial expansion, China has also built a formidable navy to protect its maritime interests. This section analyzes China’s growing clout in global shipping and port ownership, and its parallel expansion of naval capabilities, all in the context of WTO-era globalization. The maritime domain exemplifies how economic might can translate into strategic influence – and thus is a microcosm of the shifting roles between China and the developed world.

From Tramp Steamers to Shipping Titans: China’s Commercial Maritime Surge

In the early 2000s, China was mainly a venue for foreign shipping lines to pick up containers filled with export goods. Chinese shipping companies were relatively small, and foreign firms (Maersk, MSC, CMA CGM, etc.) carried much of China’s trade. That changed rapidly as the Chinese government identified maritime transport as a strategic sector. Chinese state-owned enterprises (SOEs) such as COSCO Shipping and China Merchants Group received ample financing to acquire ships, build port terminals, and merge with or acquire other companies. By the 2020s, China not only dominates manufacturing of goods, but also increasingly their transportation:

• World’s Largest Merchant Fleet: China now boasts the world’s largest oceangoing commercial fleet by some measures. Chinese companies own or operate over 5,500 oceangoing merchant vessels, including thousands of bulk carriers, container ships, tankers, and other ships​. This fleet is several times larger than that of any Western nation. By stark contrast, the once-great U.S. merchant marine has dwindled to around 80 internationally trading ships under its flag​ (most U.S. trade is carried on foreign-flagged vessels). China’s fleet expansion was driven by both state policy and market opportunity – Chinese firms wanted control over logistics for reliability and profit, and Beijing wanted assurance that its critical imports (like oil, iron ore, food) and exports would not be at the mercy of foreign shipping lines. Today, Chinese shipping lines like COSCO (which merged with China Shipping) rank among the top 3 container carriers globally, and China is the largest ship-owning nation by gross tonnage when including Hong Kong. This dominance gives China a huge stake in keeping sea lanes open and commercial shipping uninterrupted.

• Global Port Ownership and the Maritime Silk Road: Perhaps even more significant than ships is China’s investment in port infrastructure worldwide. Through its Belt and Road Initiative (the “Maritime Silk Road” component), China’s state-backed companies have financed or bought stakes in ports across Asia, Africa, Europe, and the Americas. As of 2023, Chinese firms (led by COSCO and China Merchants) have invested in 129 ports in dozens of countries, with Chinese entities holding majority ownership in at least 17 major overseas ports. The scale is unprecedented in modern history – no country has ever had such a global network of port holdings. Some high-profile examples include: Piraeus Port in Greece, where COSCO holds a 67% stake and has turned it into the Mediterranean’s busiest port; Hambantota Port in Sri Lanka, leased to China Merchants for 99 years after Sri Lanka couldn’t repay Chinese loans; Gwadar in Pakistan on the Arabian Sea; Doraleh Terminal in Djibouti at the mouth of the Red Sea; and Chancay in Peru, a new US$3.6 billion port project led by COSCO​. The strategic chokepoints haven’t been ignored either – Chinese-affiliated firms manage terminals at both ends of the Panama Canal​ (though not the canal itself), and are involved in projects near the Suez Canal and Strait of Malacca. The result is that more than a quarter of global container traffic is now funneled through ports or terminals in which Chinese companies have a controlling or significant interest​. Chinese SOEs directly control about 12.6% of worldwide port container throughput on an equity basis​, and influence even more via minority stakes and operational partnerships. This port portfolio could give China preferential access and pricing, insights into trade flows, and even potential diplomatic leverage (host countries worry that ports could become dual-use logistics or naval facilities for China in a crisis).

• Shipbuilding and Technology: China also became the world’s shipbuilder. With heavy subsidies and state-directed consolidation, Chinese shipyards now account for roughly half of global ship production (South Korea and Japan making up most of the rest)​. In some segments like bulk carriers and general cargo ships, China is utterly dominant. This not only contributes to China’s own fleet growth but makes foreign shipping lines dependent on Chinese-built vessels. Moreover, Chinese tech companies and state agencies have invested in digital logistics platforms (e.g. the LOGINK system for tracking shipments​) and in emerging areas like autonomous shipping and Arctic route exploration. Beijing’s maritime strategy is holistic: secure the supply chains by owning the infrastructure, building the vehicles, and even developing alternative routes (like an Arctic Silk Road via the Northern Sea Route in partnership with Russia​). These efforts tie into WTO-era globalization by ensuring China can handle increased trade volumes efficiently and by reducing reliance on Western-controlled bottlenecks.

 Figure: China vs. US maritime fleet sizes (commercial and naval). Left: China’s ocean-going merchant fleet is estimated at around 5,500 ships, compared to roughly 80 for the United States​. This staggering gap illustrates China’s dominance in commercial shipping capacity – a direct outcome of its globalization-fueled maritime strategy. Right: The number of naval battle force ships (major warships) in China’s navy is about 370, versus under 300 for the U.S. Navy​. China now operates the world’s largest navy by count of ships​, reflecting two decades of rapid naval buildup. Together, these charts highlight the dual nature of China’s maritime rise – as a trading superpower and a growing military power – far outpacing the United States in sheer numbers of vessels.

Naval Expansion and Strategic Implications

China’s economic interests in maritime trade have increasingly been backed by military muscle. Historically, commercial shipping and naval power often grow in tandem for great powers – and China is following that pattern. As its global trade expanded, China became more reliant on distant sources of energy and raw materials (Middle Eastern oil, African minerals, Latin American soy, etc.) and on export markets across oceans. The Chinese leadership grew concerned about the vulnerability of these sea lines of communication (SLOCs), especially with the U.S. Navy dominant on the high seas. The answer was to build a blue-water navy capable of securing China’s extensive maritime interests.

The People’s Liberation Army Navy (PLAN) has undergone a dramatic modernization since the 2000s. China commissioned its first aircraft carrier in 2012 (the Liaoning, a refurbished ex-Soviet vessel) and has since built two more indigenous carriers with more in planning. The PLAN expanded its destroyer and frigate fleets with each new class more advanced and with greater range. It now operates dozens of ultra-modern guided-missile destroyers, giving it substantial firepower for fleet air defense and long-range strike – capabilities once exclusive to Western navies. Submarine development has been robust as well: China deploys a mix of nuclear-powered submarines (including ballistic missile subs that form the sea-based leg of its nuclear deterrent) and a large number of diesel-electric submarines. Quantitatively, by the early 2020s, China surpassed the United States in the number of deployable warships. The Pentagon’s 2023 report on China’s military noted the PLAN has around 340-370 battle force ships and is on track for 400+ by 2025, whereas the U.S. Navy has under 300 and is slowly shrinking​. While the U.S. Navy still outweighs China’s in tonnage (due to its much larger carriers and heavy auxiliary ships) and retains technological superiority in certain areas (like nuclear submarines and combat experience), the balance is unquestionably shifting. The U.S. Chief of Naval Operations acknowledged that China now has the “largest navy in the world” in terms of numbers.

This naval buildup has several global implications. First, it means China can project power along the major trade routes that matter to it. Since 2008, the PLAN has conducted anti-piracy patrols in the Gulf of Aden (off Somalia) – its first sustained out-of-area naval operation, done in cooperation with other navies to protect merchant shipping. What began as participation in a global public good also provided invaluable experience in long-range deployment and logistics. In 2017, China opened its first overseas military base in Djibouti, strategically located near the Suez route and African markets. Ostensibly a logistics base for peacekeeping and anti-piracy, it is clearly also a foothold for power projection in the Indian Ocean region. China’s port investments, as discussed, often raise the prospect of dual civil-military use. While most of those ports are commercial, the Chinese concept of “Military-Civil Fusion” means critical infrastructure (like ports) can be leveraged by the PLA if needed​. The U.S. and allies worry that down the line, China could secure naval access at some of its port holdings – for instance, a future use of Pakistan’s Gwadar or Cambodia’s Ream port by Chinese warships (in Cambodia, a Chinese-assisted port project has already stirred speculation of potential PLAN access).

Second, China’s naval strength, combined with its commercial sway, gives it a bigger voice in setting maritime norms. For example, China is more assertive in regional waters like the South China Sea – building artificial islands and claiming sovereignty – confident that its naval and coast guard presence can now challenge even U.S. Navy patrols. While that dispute is outside the WTO’s scope, it is tied to control of sea lanes and resources. If China eventually controls the South China Sea, it gains de facto control over a crucial conduit of trade (though it insists it would never obstruct innocent passage, the strategic advantage is clear). More broadly, China’s naval rise means it could, in a conflict scenario, disrupt adversaries’ shipping even as it protects its own. Studies of war games have suggested that China’s larger fleet could sustain losses and keep fighting longer than a smaller U.S. fleet​. This possibility – however remote the chance of actual great power war – influences peacetime behavior. U.S. allies in Asia are bulking up their defenses or deepening security ties (India, Japan, Australia, etc.) to counterbalance China at sea, forming what some call a nascent “anti-China coalition”. In turn, China sees such coalitions (like the Quad and AUKUS partnerships) as attempts to contain its rightful naval reach.

Importantly, China’s emphasis on maritime power was facilitated by wealth generated through WTO-led trade. A prosperous China could afford double-digit annual increases in defense spending for two decades, fund cutting-edge shipyards, and sustain naval training and maintenance. In a sense, the global trading system financed the rise of a navy that now rivals that of the system’s guarantor (the U.S.). This outcome was not anticipated by architects of the WTO order but is a reality that strategists must grapple with. It also reinforces the reversal narrative: the U.S. used to be the uncontested guardian of global sea lanes for free trade (a public good often benefiting China); now China has both the means and intent to play a similar role – at least for its own trade, and perhaps more broadly, if U.S. engagement wanes. Chinese officials have even suggested that if the U.S. Navy pulls back, China could step in to secure critical waterways – which would have sounded far-fetched a few decades ago but now is within the realm of possibility.

In summary, China’s maritime ascendancy in the WTO era encapsulates the dual nature of its rise. Economically, China leveraged open markets to build world-leading commercial shipping and port enterprises, giving it leverage in global trade logistics (overlapping with legal debates on fair competition and subsidies). Politically and strategically, it translated economic gain into military capability, upending the naval status quo and challenging U.S. supremacy at sea. The maritime case also highlights how China’s actions blur the lines between civilian and military, commerce and security – a challenge for WTO-style governance which traditionally compartmentalizes “trade” issues from “security” issues. As trade tensions and security tensions increasingly intertwine (for instance, export controls on high-tech goods are issued for national security reasons; port deals are scrutinized for strategic implications), managing China’s role in the international system requires a holistic approach.

Conclusion

China’s entry into the WTO set in motion a profound realignment of the global economic order – one whose consequences are still unfolding. Initially, it appeared that China was the student and the developed world the teacher in the ways of free trade and rules compliance. Two decades on, those roles have to some extent reversed. China has grown confident, even zealous, in extolling the virtues of the very system it was once accused of undermining. Meanwhile, the United States and some of its allies, grappling with the downsides of China’s meteoric rise, have taken a more transactional and skeptical view of globalization and multilateral rules.

This reversal is laden with ironies. China urges the U.S. to abide by WTO dispute rulings – yet China itself built its economic miracle in part by maneuvering around WTO rules and only partially adhering to them​. The U.S. accuses China of bad faith in trade – yet it was the U.S. that in recent years disabled the WTO’s top court and imposed blanket tariffs in defiance of WTO obligations, actions unthinkable from Washington a generation ago​. Europe finds itself caught in between: sharing many U.S. concerns about Chinese state intervention, but also defending a rules-based order that U.S. actions have strained. Other countries, especially in the developing world, watch this great power role reversal with a mix of confusion and opportunity – some aligning with China’s calls for respecting WTO rules (since it protects smaller states too), others quietly pleased that U.S. pressure might force China to open its markets more.

From an economic standpoint, the fundamental question is how to rebalance the trading system so that it remains sustainable and fair. China’s continued high savings and export surplus model, buttressed by subsidies and industrial policies, poses systemic risks – contributing to trade imbalances and overcapacities (like the glut of steel and solar panels in the 2010s). As China’s domestic wages rise and its comparative advantages shift, there is some natural adjustment (for instance, lower-end manufacturing has begun relocating from China to countries like Vietnam or Bangladesh). However, China aims to move up the value chain rather than simply relinquish industries, and it has the scale to dominate new sectors (e.g. electric vehicles, where Europe is now alarmed by a flood of subsidized Chinese EVs). Developed nations are responding with new tools (e.g. the EU’s foreign subsidy regulation to investigate subsidized Chinese investments, or U.S. industrial policies like the CHIPS Act to onshore semiconductor supply). These steps mark a departure from the laissez-faire approach that accompanied WTO orthodoxy, suggesting a more managed form of globalization ahead. How to accommodate these defensive measures with WTO rules is an open question – one of many areas where WTO reform is needed if the institution is to stay relevant.

In political terms, the narrative of who benefits and who loses from trade has shifted. The Chinese Communist Party has very effectively used China’s WTO-fueled success to bolster its domestic legitimacy, arguing that only under its guidance could China have navigated to prosperity. Nationalism in China also has an economic tint: calls to support “national champion” firms, pride in projects like Belt and Road, and a sense of a historic resurgence. In the West, by contrast, the body politic has grown more wary of free trade. Populist movements have seized on trade grievances, and even centrist policymakers now speak of “resilient” or “secure” supply chains rather than simply efficient ones, implicitly targeting dependence on China. Trust between China and the West has eroded, due not only to trade issues but also human rights and security issues, creating an environment in which cooperative rule-making is difficult. Yet, paradoxically, the global trading system binds them together: China depends on foreign consumers and technology; the West depends on Chinese manufacturing capacity and market growth. This interdependence may ultimately impose a degree of pragmatism. We saw an example during the COVID-19 pandemic – despite talk of decoupling, record trade flows continued between China and the U.S. as stimulus-driven demand met China’s production might​. In the long run, a complete unwinding of WTO-led integration is unlikely; more probable is a partial realignment where like-minded countries form closer trade networks (e.g. US-EU initiatives, or Indo-Pacific partnerships) alongside the multilateral system which still includes China.

The legal and institutional future of the WTO is at a crossroads. The organization faces pressure to adapt its rules to the realities of China’s system (and others like it). Some potential reforms under discussion include tighter subsidy notifications and new categories for state enterprises, stricter disciplines on forced tech transfer, and even redefining development status criteria. China’s stance on these will be critical – as will the U.S. stance on restoring the dispute settlement function. If China truly wishes to champion the WTO, it may need to show flexibility (for instance, by foregoing some developing-country exceptions voluntarily, or by agreeing to new rules on transparency of state support). Conversely, if the U.S. wants to regain moral leadership in the trade system, it will need to return to engaging and negotiating rather than simply confronting. So far, there are modest signs of convergence: China has signaled willingness to discuss limiting fisheries subsidies and electronic commerce rules; the U.S. under the Biden administration, while still tough on China, has tempered the unilateral rhetoric and engaged in WTO reform talks (albeit cautiously). The onus is arguably on China to demonstrate that its calls for others to follow rules are made in good faith – meaning Beijing itself would abide by not just the letter but the spirit of updated WTO norms. Only then can it escape the charge of hypocrisy and credibly lead the developing world in trade discussions.

In conclusion, the story of China and the WTO after 2001 is one of both great success and great friction. China’s integration into the global economy lifted growth worldwide, but also exposed weaknesses in the frameworks governing trade. The reversal of roles – with China as defender and the West as critic of the WTO – reflects deeper shifts in power and perspective. Managing this new reality requires creative policy solutions and renewed commitment to international cooperation. A balanced approach would involve reforming trade rules to address 21st-century challenges (state capitalism, digital trade, climate action) while preserving the core principle that has underpinned global prosperity – that open, rules-based trade benefits all in the long run. Whether China and the developed world can find common ground on such an approach will determine if the WTO remains a cornerstone of global economic governance, or if it gradually fades in relevance as the locus of action moves elsewhere. The stakes are high: a failure to reconcile these differences could lead to a fragmented trade order and lost opportunities for growth, whereas a successful adaptation could revitalize the WTO for a new era, with China and the West both as responsible stakeholders. The reversal of roles need not be permanent – it could yet evolve into a sharing of roles, where all major powers jointly steward a fair trading system. Achieving that will require rebuilding trust, bridging divergent ideologies, and above all, a recognition that cooperation – not just rivalry – is necessary to tackle the complex interdependence that defines the global economy in 2025 and beyond.

Sources: High-quality academic analyses, policy reports, and news sources were used in this study, including documents from the U.S. Trade Representative​ustr.gov, WTO trade policy reviews​wto.org, think tank publications (CFR​education.cfr.org​education.cfr.org, Jamestown Foundation​jamestown.org, Wilson Center​mexicoelections.wilsoncenter.org), and scholarly commentary on China’s trade strategy​realinstitutoelcano.org. These sources provide evidence of China’s WTO compliance record, its trade and industrial policies, and shifts in U.S. and Chinese approaches to the multilateral system. The maritime case study draws on industry data and strategic analyses highlighting China’s port investments​channelnewsasia.com and naval expansion​businessinsider.com​csis.org. Together, they support the narrative of China’s evolving role in the global trading system and the resulting geopolitical implications. The data visualization figures were constructed based on statistics from these sources to illustrate key trends (China’s export share growth, and comparative ship fleet sizes). This comprehensive examination thus integrates economic data with policy analysis to present an academic-level overview of the topic.