China Uses Rules on Global Trade to Its Advantage

China seems to be pursuing a two-pronged strategy to exploit inconsistencies in global governance systems to benefit its economy at the expense of the rest of the world. On the one hand, China is filing an increasing number of cases with the WTO, despite the country's gigantic trade surplus. On the other hand, China is suppressing reports prepared by the IMF that charge it with keeping the value of its currency artificially low. The combination of a cheap currency and an export-dominated economy has helped China recover from the recession faster than the rest of the world. China’s success in implementing this strategy highlights a problem in global governance: namely that the WTO can enforce its decisions while the IMF has no power over countries that do not borrow from it. As trade and currency are so intertwined, why currency manipulation was not brought under a gaze of a governing body with teeth remains an open question. But if China continues on its present course, currency policies may draw further scrutiny. – YaleGlobal