China’s foreign trade, WTO accession and institutional quality
China opened its economy to free trade in 1978 and in the ensuing three decades has been transformed from one of the most isolated economies into a paragon of liberalism and openness. To date, China’s openness ratio, defined as total trade (exports plus imports) relative to GDP, has reached around two-thirds. This ratio is higher than not only that of countries with equivalent income levels, but also that of the United States and Japan, both of which have higher incomes than China. In 2001, China’s efforts to gain entry into the WTO, stretching over a decade and a half, were finally rewarded. Membership of the WTO serves as an admission ticket for China to the global economic system, into which it can integrate and reap the benefits that come from being a WTO member state.