In a joint statement, the groups warned that persistent institutional paralysis, rising protectionism and unresolved disputes risk undermining the WTO’s core functions, including its ability to negotiate new rules and enforce existing ones.

They said urgent action was needed to restore credibility and ensure the organization remains responsive to modern trade realities.

Officials highlighted the continued dysfunction of the WTO’s dispute settlement mechanism, particularly the paralysis of its appellate process, which has limited the body’s capacity to deliver binding resolutions in trade conflicts.

They called for a fully operational and accessible system to uphold rules-based trade.

The statement stressed the need to update WTO frameworks to address emerging areas such as digital commerce, industrial subsidies and supply chain resilience.

The EU and CPTPP members said current rules do not adequately reflect evolving global trade patterns or technological change.

The groups reaffirmed their commitment to a rules-based international trading system, warning that fragmentation into competing trade blocs could weaken global economic stability.

They urged broader membership engagement to advance consensus-driven reforms.

The WTO, established in 1995 to oversee global trade rules, has faced increasing pressure in recent years amid geopolitical tensions and shifting economic priorities among major economies.

Speaking at the annual China Development Forum in Beijing, Li said China would expand imports of high-quality foreign goods and work with trading partners to promote more balanced global trade, according to state media.

Li’s remarks come as China faces mounting concerns from major economies, particularly the United States and the European Union, over its trade practices, industrial overcapacity and reliance on Chinese exports.

While he did not directly reference the record surplus, his comments indicated an effort to address imbalances that have strained international economic relations.The forum, which brings together foreign business leaders, policymakers and economists, is a key platform for Beijing to outline its economic priorities and signal openness to global investors.

In a separate address, central bank governor Pan Gongsheng said assessments of global imbalances should account for both goods and services trade, as well as financial flows. He noted that while China runs the world’s largest goods surplus, it also posts the largest services deficit.

Pan added that China does not intend to gain a competitive trade advantage through currency depreciation, responding to longstanding concerns from trading partners over exchange rate policies.

Beijing is also attempting to reverse a decline in foreign direct investment, which fell 5.7% year-on-year to just over 92 billion yuan ($13.36 billion) in January, following a 9.5% drop in 2025.

In December, authorities expanded incentives for foreign investors by adding 200 sectors eligible for benefits such as tax breaks and preferential land use, focusing on areas including advanced manufacturing and modern services.

Efforts to stabilise trade ties come as geopolitical tensions persist. U.S. President Donald Trump recently postponed a planned visit to Beijing to meet President Xi Jinping due to the Iran conflict, delaying talks aimed at easing economic tensions between the two countries.

Aiyar cautioned that the simultaneous downturn in the world’s two largest economies would inevitably exert a strong downward pull on the entire global economy.

While the recent trade tensions between the United States and India have garnered significant attention, economists warn that a potential slowdown in the world’s two largest economies, the US and China, poses a far greater threat to India’s economic stability. Swaminathan Aiyar, a prominent economist and consulting editor at ET Now, emphasized that the ripple effects of a major recession in these global powerhouses would significantly outweigh the impact of any bilateral tariff disputes.   

Aiyar’s concerns arise amidst escalating uncertainty in the global economy, largely fueled by President Donald Trump’s aggressive trade policies. Despite a temporary 90-day pause on planned tariffs against several nations, including India, following a sharp decline in US stock markets, the underlying tensions remain. Moreover, China’s retaliatory measures, including increased tariffs on US goods, further exacerbate the situation.   

The economist had previously criticized Trump’s tariff announcements, labeling them a potential “Recession Day” rather than a “Liberation Day,” as the president had claimed. He argued that these policies would disrupt global supply chains, impede economic growth, and plunge the world economy into turmoil. Aiyar dismissed Trump’s assertion that tariffs would revitalize American manufacturing, predicting instead economic disruption.   

The erratic nature of Trump’s trade policies, with frequent changes occurring within hours, has created a climate of uncertainty for economists and investors. Goldman Sachs, while revising its recession forecast, still anticipates a significant US economic slowdown. Conversely, JPMorgan Chase maintains a more cautious outlook, assessing the probability of a US recession as still higher than not. This divergence in expert opinion underscores the precarious state of the global economic landscape, even after the temporary tariff reprieve.   

India’s central bank, the Reserve Bank of India (RBI), has already responded to these growing global uncertainties by reducing its economic growth forecast for the current financial year. The RBI also lowered the repo rate, citing concerns about weakening demand, tighter liquidity, and emerging global risks stemming from the escalating trade tensions.   

Moody’s Analytics has echoed these concerns, trimming its growth outlook for India in 2025, attributing the downward revision to the potential fallout from the US tariff measures. Despite the temporary freeze on some tariffs, Moody’s analysts highlighted that their current forecast reflects the potential economic damage should these tariffs be fully implemented in the future.   

Earlier warnings from leading global banks, including Morgan Stanley and Nomura, had already identified India, along with Thailand, as among the economies most vulnerable to the impact of reciprocal tariffs imposed by the US on key trading partners.   

According to Aiyar, a full-scale financial meltdown may have been averted, primarily due to pressure from the bond market rather than diplomatic efforts. However, he remains convinced that a US recession is highly probable. Furthermore, he anticipates a significant economic slowdown in China, even if the country avoids negative GDP growth, effectively mirroring the impact of a recession.   

Aiyar cautioned that the simultaneous downturn in the world’s two largest economies would inevitably exert a strong downward pull on the entire global economy. The unpredictability of President Trump’s future trade actions has become an embedded factor in the global economic equation, influencing investor behavior and fostering a climate of risk aversion.   

The prevailing uncertainty surrounding US trade policy is prompting investors to prioritize safety, further dampening economic activity. As Aiyar aptly stated, the constant ambiguity of Trump’s next move is “getting baked into everything else,” leading to a cautious approach across global markets.   

In conclusion, while the bilateral trade discussions between the US and India are important, the potential for a significant economic slowdown in the United States and China presents a far more substantial risk to India’s economic prospects. The interconnected nature of the global economy dictates that a downturn in these major engines of growth would have widespread and severe consequences, dwarfing the impact of any specific tariff disputes. The prevailing uncertainty and the potential for a synchronized slowdown necessitate a cautious and adaptive approach to economic policy in India.

Deepshikha Singh is an analytical content writer who enjoys turning complex information into compelling stories. Her passion lies in uncovering insights and sharing them in a way that’s both informative and engaging.

Faisal Ibrahim Alshammeri, a Saudi analyst, has painted a bleak picture of China’s economic landscape, highlighting a rapid financial hemorrhage, difficulties in manipulating the exchange rate, and a failure to inject sufficient liquidity into the markets. All of these factors contribute to a looming internal breakdown in the country’s economic system, exacerbated by an ongoing real estate collapse and a declining investment climate.

The situation is particularly ironic given that those who once championed globalization—the very entities that moved industries and jobs to China in pursuit of lower costs and higher profits—are now among its victims. Multinational corporations that heavily relied on China’s manufacturing and consumer base are witnessing significant financial losses, realizing that their gamble on an opaque and unpredictable economy has not paid off. The once-promising business environment in China is now being seen as a high-risk venture.

Amid these growing economic troubles, Beijing has responded to Washington by imposing reciprocal tariffs. However, this move appears to be counterproductive. China’s exports to the United States are relatively limited in scope, consisting mainly of food and some consumer goods. By shutting itself off from the world’s largest consumer market, China is only deepening its economic troubles. Domestically, it lacks a consumer base with enough purchasing power and confidence to offset these losses, further accelerating its downturn.

This crisis marks not just a temporary economic slump but potentially the collapse of the traditional globalization model that has dominated world trade since the end of World War II. This model, which has overwhelmingly benefited China, is now being reassessed as the United States and its allies shift towards a new economic framework. The diminishing ability of Beijing to effectively manage its internal crises has fast-tracked the decline of the old global financial system, signaling the rise of a new era in international trade and economic policy.

The upcoming transition will be fraught with challenges, but it is expected to be decisive. By the end of this year, the United States is predicted to enter a phase of robust economic recovery, not only bouncing back from setbacks but also leading a restructuring of global economic power. This shift will likely establish an alternative model of globalization—one that prioritizes balance, stability, national sovereignty, and strategic economic interests over unfettered free trade.

In a further escalation of trade tensions, former U.S. President Donald Trump has issued a stark warning to China, threatening to impose an additional 50% tariff on Chinese imports if Beijing does not reverse its recently introduced retaliatory tariffs of 34% by April 8, 2025. Reports indicate that these new U.S. tariffs will be enforced on April 9 if China fails to comply. Trump has also suggested that, should China refuse to yield, the United States may entirely abandon ongoing trade negotiations with Beijing and instead shift its focus to countries more willing to engage in favorable trade deals.

As the world watches these developments unfold, it is becoming increasingly evident that China is navigating treacherous economic waters. Whether Beijing can devise a strategy to reverse its downward trajectory remains uncertain, but one thing is clear: the global economic landscape is on the cusp of a major transformation, with far-reaching implications for international trade, investment, and economic stability.