Analysis: After 10 years, China's WTO ride could get bumpier

By Michael Martina

BEIJING (Reuters) - Rising trade protectionism and frustration over its domestic subsidies spell trouble for China and could lead to more friction within the World Trade Organization than Beijing has grown accustomed to over the past decade.

On the eve of China accession to the WTO 10 years ago this December, naysayers warned that the country could falter under the demands of opening up its economy. Now there is little debate that it has been a boon in making China the world's largest exporter and the second largest trading nation.

But China's next decade in the trade group could be tougher. That's partly because while the country has opened many of its markets as required under the WTO rules, it still heavily subsidizes key industries.

State spending on clean technologies, which has already drawn ire from China's trading partners, could continue rising after last week's confirmation by Beijing of a massive investment plan for "strategic industries."

That can only lead to increased friction as the global economy slows and countries scramble to boost exports.

"Some aspects of China's economic system are fundamentally inconsistent with the market economy-based principles of the WTO," said Wang Jiangyu, a law professor and WTO expert at the National University of Singapore. "In the first few years, they (WTO members) could tolerate this, but as China's trade grows you will see more and more cases against China."

Experts say a recent WTO ruling that cheap state-supported financing and land give an unfair advantage may lead countries to increasingly resort to anti-subsidy cases against China -- a trade weapon that aims at the heart of China's state-backed economic model.

FIRING AT THE CHINESE "MOTHERSHIP"