China Research

China wants to receive the market-economy status (MES) from the EU by December 11 at the latest, exactly 15 years after its WTO entry. This request is no surprise since China would see such a promotion as juridically justified and as a prestigious move toward further international recognition.

There are opponents to such a step which would give China cheaper penalties for price dumping on international markets. Experts like Rolf Langhammer (see our blog from March 2) believe, however, that economic reasons for granting China the MES are strong enough.

Here we come exactly to the point. In my view, purely economic reasons are needed for China’s potential MES. Political strategy and tactic on the part of Europe vis-à-vis the powerhouse of China should not be a guideline at all. Today, the Chinese economy is still characterized by a lot of government involvement, maybe too much for receiving MES. On the other side, Chinese leaders move structurally in the right market direction – but how fast?

Nobody can tell. But according to the decisions by the important Third Plenum of the CPC in 2013, China is intended to develop as a country that should give the market economy “a decisive role”. China argues at the same time that Europe is developing away from a genuine market economy which is partly true. These diverging trends make an economically based MES-decision even more difficult – despite China’s simultaneously still imperfect status as a market economy.

Hubert Fromlet
Senior Professor of International Economics, Linnaeus University
Editorial board

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