The world may have never encountered a more crucial Year of the Monkey than 2016.
That is, at least as far as global trade between China and the Western world is concerned. At the end of this year, China believes it ought to receive Market Economy Status (MES). This would allow China to enjoy the same market status as the U.S. and European Union when it comes to anti-dumping investigations before the World Trade Organization.
Recently, China’s Ministry of Commerce responded to questions from the Financial Times with this: “China is firmly against any misinterpretation or delay in performance of the [WTO] clause [that “automatically” grants China MES on December 11, 2016]. We call on members, such as the U.S. and E.U., to take necessary measures as soon as possible in order to ensure ending the [current methodology used in anti-dumping cases] before the due time.”
However, since China’s economy — and the role of its government within it — operates differently than much of the rest of the world, that country is effectively able to export and offer its products much more cheaply to many of its trading partners. Depending on the circumstances, this has spurred allegations of “dumping” over the past several decades, and has now come to a head.
Currently, China is considered a ‘non-market economy’ under WTO rules. Achieving market economy status would ultimately put China on the same level as the U.S. and E.U. in the eyes of the WTO, taking what some already consider a global trade war to new heights.
For a more in-depth investigation of the criteria China must fulfill to achieve MES, and what it could mean for its Western trading partners, start here.