why doesn't china qualify?
China has argued that it should automatically be granted Market Economy Status after the 15th anniversary of its accession to the World Trade Organization (WTO) in December 2016.
We disagree. Here’s why:
China is still a Non-Market Economy.
- While China has made a number of economic reforms in recent years, the Chinese economy remains fundamentally a non-market economic system dominated by the Communist Party and the state.
- The party and the government today still play a major and direct role in many critical aspects of the economy, including the financial system, upstream resource and energy sectors and through ownership and control of many strategic industries.
China’s state-intervention in the economy hurts U.S. workers.
- Government ownership and financial support encourage and enable overproduction in many sectors.
- As supported production makes its way into the global marketplace, it displaces U.S. production. This non-market economic system has enabled China to maintain stability and long-term economic growth but at the expense of U.S. and other global manufacturers.
- There’s a reason China is the subject of more anti-dumping actions globally than any other country. In 2014, 63 cases were initiated against Chinese manufacturers. Compare this with 11 against US manufacturers and 8 against EU manufacturers.
Price distortions can create an unlevel playing field for U.S. and global producers.
- While China has made some important economic reforms in recent years, its progress is not even. In certain sectors, continued government support is encouraging overproduction, distorting prices and flooding the global market.
- When Chinese producers do not have to bear the full cost of production, they can sell products overseas at prices that are less than fair value, creating an unfair price advantage.
- U.S. trade remedy laws are designed to address this circumstance. To be effective, the U.S. government must retain the ability to evaluate the level of market distortion in China’s Non-Market Economy.