No longer a planned economy

Fujian Pilot Free Trade Zone is looking to innovation, March 6, 2015. [Photo/IC]

According to the accession articles China signed on its entry to the World Trade Organization, China should be granted market economy status in December this year.

The accession articles also stipulate that WTO members should abandon the surrogate country approach used in the past for anti-dumping investigations against China and any investigation should be based on product prices or production costs in China itself.

Nevertheless, since the Anti-dumping Agreement the United States and the European Union have signed is applicable to investigations against China, the surrogate country price clause contained in it is theoretically also applicable to China.

However, the agreement stipulates that the clause only applies to countries whose trade is completely or essentially monopolized.

China's current economic and trade regime is far from what it was in its planned economy era, so the agreement doesn't apply.

Furthermore, the agreement's "special condition", which stipulates that an anti-dumping investigation against a country still can use the prices from a third country if the investigated country has no reference prices or its prices are too low, also offers an excuse for some countries to continuously use the surrogate country approach.

Given that whether to grant China market economy status is more based more on their domestic political factors than legal or technical standards, it is unlikely that the US and the EU will extend China such a treatment in 2016. However, the US and the EU are obliged to stop the surrogate country practice in the anti-dumping investigations against China.

Prior to their abolition of such a practice, what China should do is keep a rational, objective and calm mind and do whatever it can do improve its market economic environment.--China Youth Daily