Having waited for 15 years, China will acquire market economy status next year within the World Trade Organization. But a U.S. official recently warned the European Union that when it does, it would be tantamount to unilateral disarmament of the U.S. defense shield in Europe, making it difficult to resist the attack of China’s price dumping. This official secretly criticizes the EU for hastily favoring China as a large investment.
In 2001, China was forced to accept a 15-year non-market economy status to join the WTO. According to rules and regulations, when an importing country conducts anti-dumping investigations on Chinese goods, but does not use internal data provided by mainland China, it compares the prices of these goods with those of countries of similar development levels, then creates an anti-dumping duty.
Europe’s Mixed Feelings
However, as soon as China smoothly acquires MES, the above-mentioned scenario cannot happen. Even if Europe and the U.S. try to resort to old methods now that they need to give more detailed investigations, it will be even more difficult to hope for high anti-dumping or anti-subsidy duties.
The U.S. publicly opposes China’s MES, and Europe has mixed feelings. According to the Financial Times, European supporters include the European Commission, German Chancellor Angela Merkel, and U.K. Chancellor of the Exchequer George Osborne; opponents are mainly headed by Italy, ranging from governments and trade associations to steel, ceramic and fabric industries.
A U.S. official secretly believes that the EU is finding every way to curry favor with China to save the economy. Since this year, crises such as Greece and its refugees are hurting Europe’s economy, causing the EU to turn to cooperating with China. It is as if China’s “One Belt, One Road” strategy meets Europe’s $100 billion investment plan, and China is being accepted as a shareholder for the European Bank for Reconstruction and Development.
Five Crisis Risks of 2017
Clearly, China’s MES desire is no easy issue. In fact, China’s domestic economy has a battle to fight as well. Bloomberg Business points out that China’s economy will face five major risks next year in this order: unrest about RMB rates, increased capital outflow, severe empty property rates, an increase in bad loans and shadow banking. Economists and analysts worry that any of these risks can trigger a sudden fall in China’s economy or ignite a systematic threat to its financial industry.
About this publication