Re-visited (2): China’s status as a market economy

07:41 by Hubert Fromlet, Kalmar

The topic of China’s future status as a market economy (or not) is getting hot in Brussels and some EU-member countries – but not really in Sweden. Recently, the European Parliament put a lot of pressure on the European Commission, expressed in a resolution that the EU should not grant China the attractive status as a market economy any time soon (see also blog contributions by Langhammer, March 2, and Fromlet, April 26, in www.chinaresearch.se).

Fifteen years after WTO entry in 2001, Chinese officials think that being accepted as a market economy should happen more or less automatically – a position that the European Parliament does not want to share. This rejection has, however, to a high extent political angles. This includes the possibilities of trade impediments and sanctions against China when rules for cross-border trade obviously have been violated, particularly when it comes to price dumping. There are certainly also labor market considerations.

As I have argued before, the market-economy decision should exclusively be based on the answer to the question if China really meets the economic and institutional criteria of a market economy (or not). The whole issue should not be more complicated than this.

In other words: Does China stick to the rules of a market economy – or not?

 

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

 

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