Rising China seen keeping low profile at WTO talks

BEIJING, (Reuters) - China is a rising trade colossus with more farmers than any other country in the world, but it is expected to keep a low profile at world trade talks this week as negotiators debate contentious agricultural reforms.

The Dec. 13-18 WTO ministerial meeting in Hong Kong will be struggling to reach agreement on reducing agricultural trade protection, especially in the United States and Europe, in order to clinch a broader global trade deal next year.

Many trade officials have said that unless major countries engineer a breakthrough, a deal is unlikely; and the U.S. has pressed China to put its weight behind negotiations. Hong Kong, a former British colony, returned to Chinese rule in 1997.

Chinese officials and experts said their country hopes an agreement in Hong Kong will spur trade liberalisation, but diplomatic habit, inexperience and above all self-interest prevent China from presenting itself as a deal-maker.

"China doesn't have as many direct bargaining chips in Hong Kong, and the ones it has, it doesn't want to show off by pushing itself forward," said Liang Yanfen, the director of the Chinese commerce ministry's Centre for WTO Studies.

Among the nearly 150 countries attending the Hong Kong meeting, China stands out as a huge and often awkward hybrid.

It is a novice member of the WTO that has nonetheless grown to be the world's third biggest trading power, behind only the United States and Germany, and is an export powerhouse with a poor, mostly inward-looking rural economy.

China is the biggest member of the G20 group of developing countries pushing for richer countries to lower barriers to Third World farm goods. Like Brazil and India - the most vocal members of the G20 - it wants special treatment and greater export access.

But the very concessions China made to join the WTO in 2001 included dramatically lowering barriers to farm imports, setting China apart from many G20 members. Chinese farmers get few domestic subsidies - the other controversial topic at the trade talks.

"For us, it's not a matter of how many subsidies farmers enjoy, but how much the government takes. We're just not in the same negotiating boat as Japan or South Korea," said Ren Yifeng, executive secretary-general of the China Society for WTO Studies, which advises the government on trade policy.

Ren said that China's already low agricultural protections, size and large export potential often put it closer to the Cairns Group of countries, including Australia and Canada, which advocates dramatic cuts in agricultural protection.

So when trade ministers meet to discuss lowering tariffs and other protection, China is at the intersection of several negotiating blocs, but at the centre of none, said Liu.

"China hopes a low-key approach will help keep it in alignment with other developing countries' interests," said Liu. "But all the participants - the G20, the Cairns Group, the EU - hope to pull China to their side, so it doesn't make bargaining sense for us to come with strong commitments."

While authoritarian China has not seen passionate anti-WTO protests like those in South Korea, domestic nerves have also encouraged Beijing to be more a handmaid than a broker of a deal.

China's 900 million rural residents were promised that accession to WTO would dramatically boost farm exports and raise rural incomes, which have suffered years of stagnation and were an average 2,936 yuan ($367) per head in 2004.

But export growth has been retarded by domestic inefficiency and rising export barriers in Europe and elsewhere, said Liu.

About two years ago, China sought to curb domestic wariness about more concessions by shifting much power over agricultural trade policy from the generally pro-trade Ministry of Commerce to the more cautious Ministry of Agriculture, which has less experience in trade negotiations, Liu said.

But by keeping lobby groups and industry associations at arms length, China may sap its influence at trade talks, said Ren.