WTO Rules On Subsidy And China's Subsidy System Reform

The theory and practice of international trade indicate that all countries to specialize in producing their competitive products on the base of comparative advantage for international exchange is beneficial to enhancing the whole welfare. Nevertheless, the process of free trade is flexural in striving with all sorts of trade protectionism. With the development of international trade, it is essential to build a stable and wholesome world trade system to harmonize different countries' trade relationship. As a result, WTO and its predecessor GATT have been playing an important role in booming the global economy. China's entrance into WTO after 15 years of hard negotiation denoted its merging into the global economy. By examining China's current subsidy system, there are still a lot for China to do in fulfilling the compliance of agreement and commitment of accession so as to meet the requirements of WTO, which operates on rule.Under the guide of Marxism economics theory, absorbing the scientific ingredients of western economics, using the tool of law science, game theory and public administration theory, this research demonstrates the inevitability of free trade and trade protection from the point view of international trade theory and world trade history, grasps the connotation of WTO rules and China's commitment, analyzes the insufficiency of the China's existing subsidy system, compares different countries' subsidy practices. On this foundation, the research brings forward the proposal of rebuilding China's subsidy system. To summarize, China's subsidy system should be guided by market economy, respect and utilize the rules of WTO, refer to other contries'experiences, meet the request of public finance, practise moderate protective subsidy policy, make comprehensive uses of other trade protection methods, improve the efficiency of subsidy, and thus reestablish a subsidy system which complies with socialism market economy as well as the rules of WTO.