Why the US rejection of China's market economy status is wrong

BEIJING — The United States is throwing cold water on the growing geniality of trade relations between itself and China with its rebuke of the latter's bid for recognition as a market economy in the World Trade Organization (WTO).

The US government recently formally opposed to China's bid, citing decades of legal precedent and what it sees as signs the country is moving in the opposite direction.

The truth is that denial of such status for China will give the US government useful tools to launch trade probes into Chinese imports under the excuses of dumping goods at unfair price advantages.  

Refusal distorts facts

The US decision comes as the Trump administration is seeking to bridge the trade deficit with China for the so-called fair and balanced trade. To achieve that end, it is tempting to turn a blind eye to China's concrete moves of market liberalization, international observers said.

Since China has implemented the opening up and reform policy, it has made consistent efforts to improve its market economy system, which has won global recognition. The US refusal distorts facts, according to a spokesperson for the Ministry of Commerce.

China is now the world's largest goods trading nation, being the top trading partner of more than 120 countries and regions.

Su Qingyi, a researcher with the Chinese Academy of Social Sciences, said the "non-market economy status" has not held China back from making those achievements.

The United States will not benefit from a battered bilateral trade relationship considering its interwoven interests with China. Protectionist measures also impair the interests of US companies and consumers.

Over the past three decades, bilateral goods trade surged from $2.5 billion to $524.3 billion. Low-cost and high-quality Chinese products have helped raise the living standard of Americans.

While much of the US political campaign rhetoric focused on jobs leaving the United States, Chinese investment is supporting more jobs on that side of the Pacific.  

Undermined integrity

In response to the US rejection, Chinese commerce ministry official Wang Hejun said it undermines the seriousness and authority of multilateral rules.

Article 15 of the Protocol on China's accession to the WTO in 2001 has clearly dictated that China will automatically switch over to market economy status when the surrogate country approach expires in 15 years, which means, on that day, the legal foundation for treating China as a non-market economy is gone.

The United States is setting a bad example by breaking international rules, Su said.

Honoring contracts is the basic principle of the market economy, and the United States is breaching this principle, said Bai Ming, a researcher with the Chinese Academy of International Trade and Economic Cooperation.

The US rejection reflects its panic and ideological prejudice, said Zhang Jingwei, a researcher with Chongyang Institute for Financial Studies under the Renmin University of China.

Analysts said that China is likely to take legal action at the WTO against members who are not observing the rules, including the United States. Further retaliatory trade measures may also be considered.

Even if an all-out trade war is avoidable, no party will emerge unscathed, Zhang said.