China's market economy recognition still up in air_Iron Ore

About_Us Contact Us

Info Data technology Sell Buy Report

Market

Report

Conference

2011 China DRI industry ...

China's market economy recognition still up in air

作者：25 发布时间：2010-05-28 文字大小：【大】【中】【小】

The second US-China Strategic and Economic Dialogue (S&ED) sent out a signal that the US might recognize China as a market economy, an issue that has concerned China for years. The Chinese media regards this as a positive commitment, but foreign media see it as more ambiguous. How certain is the US commitment? Global Times (GT) reporters Wang Yuan and Li Yanjie talked with He Weiwen (He), director of the Study Center for China-US Economy and Trade, University of International Business and Economics, Wang Dong (Wang), assistant professor with the School of International Studies, Peking University, and Ni Feng (Ni), deputy director of the Institute of American Studies, Chinese Academy of Social Sciences, on this issue.

GT: How should we perceive the two country's agreement on recognizing China's market economy status (MES), since the Chinese media and the foreign media offered different interpretations?

He: I think we should look at the wording of the official US statement. According to a statement from China's Xinhua News Agency, "the US will promptly recognize China's MES," but I have not yet seen a statement from the US side.

Last year, in the first round of the Sino-US S&ED in Washington, the US Department of Treasury just stated that the US would "work toward China's MES in an expeditious fashion." But at the time, some Chinese media also interpreted this as meaning prompt recognition of China's MES. Actually, this was kind of a misunderstanding.

Therefore, as the US Treasury Department has not released its formal statement on this issue, we cannot jump to any hasty conclusions. If the US side just uses the same wording as last year's, it does not mean "prompt recognition."

Wang: Chinese media portrays the situation as if the US has given a promise on this issue, but I think the US has just said it will cooperate with China to "work toward" resolution "in an expeditious manner."

The US understands very well that this issue is of great concern to China. If the two can't make any progress during this dialogue, they will hold further discussions.

I think China can be cautiously optimistic about that.

Ni: When China became a WTO member, and other members discussed whether to recognize China's MES, the US proposed a probationary period of 15 years. Now nine and a half years have passed, and for the US, the advantages China's probationary status brings are lessening. That's why the US has made such a vague promise.

GT: According to WTO rules, China will automatically acquire MES in 2016. How will the US use the bargaining chip of recognizing China's MES in the years before 2016?

He: The US will not easily recognize China's MES, but neither it will not wait until China acquire MES automati-cally in 2016, since that means the US would gain nothing from this issue. So I personally think the US will finally recognize China's MES very late, but still within the next five years.

China still needs to actively press the US to recognize MES as soon as possible. In the US, there are many interest groups strongly opposing accepting China's MES. And in recent years, many US firms and unions attending congressional hearings on China's MES all presented their objections.

Therefore, considering there are many voices of disapproval in US civil society, China should improve its civil exchanges with the American people, as well as different businesses, labor unions and interest groups.

Not only Chinese government agencies, but also Chinese enterprises, especially those having trade contacts with US firms, should play an active role in this. Chinese enterprises can directly show their US counterparts the real situation of China's market economy.

Wang: We have to confess that there are still many problems and insufficiencies in China's transition toward a market economy. I think we should take a positive view on this and acknowledge that it is a good opportunity for China to deepen market reform and further promote its transformation from an export-driven growth model to a more consumption-driven model.

No doubt the US will consider its own interests first, and criticize China's protectionism on government procurement and nonstandard market norms, but China also has complaints about market entry barriers for Chinese companies investing in the US. We should bear in mind that negotiation means compromise. This is what negotiation is about.

GT: How seriously is the US taking Chinese companies' market-orientated status, especially when it comes to doing business in the US?

Wang: Chinese companies have encountered many problems when trying to invest or expand in the US, and these need to be solved.

But on specific problems, we have to leave them for further negotiations, as two days were too short to resolve every issue.

I think as long as Chinese companies play by the rule and can help create jobs and deliver economic growth in the US, the US political elite and the public will eventually come to the consensus that these Chinese investors should be welcome.

As for how and when the US will recognize China's MES, more negotiation and discussion are needed. Different groups in the US may have different opinions because of their diverging domestic political interests. It's hard to predict now.

GT: What does US want in return for recognition of China's MES?

Wang: The US has complained about a number of problems, such as China's national innovation support policy pre-excluding many foreign companies from having fair access to governmental procurement. So they will look for progress on these issues.

He: Yes, it's give and take. If the US recognizes China's MES, it will certainly ask China to make some concessions on other affairs, such as opening Chinese markets, helping reduce the trade deficit, protecting intellectual property and giving US firms the same opportunities in competing with their Chinese counterparts in the field of technical innovations.

Recognizing China's MES is beneficial to the US. With China's MES, the two sides could resolve trade and investment problems within the WTO framework. This could reduce unnecessary arguments and simplify the procedures of resolving disputes.

GT: How do you evaluate China's commitment to MES?

Wang: I think China's promises, most of them measures for marketization, can promote its market economy reforms. More foreign investment can help China to improve its financial supervision and legal system.

Sometimes, it's hard to carry out reforms purely from the inside and the drive from outside can be very useful.

He: When facing the financial crisis, in order to maintain economic growth, the Chinese government intervened in the market to a certain degree. This was necessary when we faced the prospect of economic depression.

But in the long term, Chinese government should strike a careful balance between too much and too little intervention.

Ni: I think if China can find a way to let national innovation and imported technology work together, it will benefit from both aspects.

Only relying on national innovation may not be enough, and only relying on imported technology might ruin Chinese companies' creativity and competitive ability.

Sourced from www.globaltimes.cn