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Industry News

EU can benefit by accepting China as market economy

2016/01/05


By Fu Jing (ChinaDaily)Updated: 2016-01-05 07:58

Over the last four decades,Chinahas successfully transformed itself from a planned economy into an open economy where almost all commodities are priced by market forces. More than 80 countries have recognizedChina's strenuous efforts in this regard by granting it market economy status.

However, theUnited  States, the European Union,Canadaand some other developed economies have yet to do the same, either to restrict the flow ofChina's low-cost exports into their markets, or to take advantage of their willingness to bestow such status as a bargaining chip when meeting Beijing at the negotiating table to discuss other issues.

China seeks to get market-economy status in the hope that the impact of antidumping duties on its exports will be diminished. If such status is given, these developed economies would not be allowed to levy anti-dumping taxes againstChina's exports by using a constructed value based on costs and prices from outside the exporting country. During previous years, exports ofChina's textile and solar products, clothes and bicycles to developed economies have been hugely affected due to them not acceptingChinaas a market economy.

Though Beijing expects to "automatically" gain recognition as a market economy by the end of the year, there are still obstacles being put in its path.

Washington has basically opposedChina's rise and it has even recently warned the EU not to "compromise" by grantingChinamarket economy status. In the EU itself, opinion is divided, although there are strong voices in favor of givingChinasuch status.

It is reported that the European Commission, the executive arm of the 28-state union, will be giving its preliminary assessment next week. While most EU member states have recognizedChina's reform progress, countries such asItalyandFrancehave expressed the difficulties they face should the decision go in favor ofChina.

Meanwhile, the US is trying every means to lobby the EU in favor of supporting its position, warning that if the EU grants China market economy status it will be "unilaterally disarming" itself.

Some European experts have expressed their opinion that giving market economy status toChinaneeds coordination among the developed economies.

But Brussels needs to assert its "independence" in decision-making from theUS. More importantly, Brussels should keep the bigger picture in mind when making its decision, which is that the EU and China have been expanding their cooperation with unprecedented momentum over the last few years and China is going to receive market economy status anyway so why not give it a little early so the EU is able to get some benefits from China in return.

The Chinese government's interpretation of its World Trade Organization accession protocol is thatChinawill be "automatically" granted market economy status 15 years after it entered into the global free trade system in December 2001.

Over the last two years, a lot of European countries have ignored Washington's will and joined the China-led Asian Infrastructural Investment Bank and supportedChina's currency being included in the International Monetary Fund's Special Drawing Rights basket of global currencies.

All these decisions are forward-thinking and benefit the world.

In return,Chinahas become the first country outside the European Union to support the European Investment Scheme.

It would not only be the correct decision, but also a historic one, for Brussels to grantChinamarket economy status.

And the sooner the better, because in Chinese philosophy: if you give me an inch, I may return a foot.