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Published online by Cambridge University Press:  24 April 2014

Ming Du*
Reader in Law, Lancaster University Law School. E-mail:


Melding the power of the state with the power of capitalism, state-owned and state-controlled enterprises continue to control the commanding heights of the Chinese economy even though market-oriented reforms have led to a rapid expansion of the private sector in China. This article reflects on how China's practice of state capitalism challenges the world trading system and how WTO law, as interpreted by WTO Panels and the WTO Appellate Body (AB), addresses these challenges. The article concludes that the WTO Agreement on Subsides and Countervailing Measures (SCM Agreement) has been interpreted in such a manner that many key features of China's state capitalism could easily be challenged by its trading partners in a WTO-consistent manner. This finding has profound implications for China's domestic economic reforms, especially China's ongoing reforms of its state-owned enterprises and commercial banks.

Copyright © British Institute of International and Comparative Law 2014 

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222 ibid para 455.

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228 ibid para 503.

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230 WTO Appellate Body Report (n 155) paras 108–109.

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232 ibid para 10.184.

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238 Wouters and Coppens (n 158) 33.

239 Dukgeun (n 198) 764.

240 Council Implementing Regulation 452/2011 (n 214).

241 ibid.

242 F Allen et al,‘China's Financial System: Challenges and Opportunities’ (2011) <>.

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