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The recent debate between the United States and China triggered by the latter's market status highlighted a shared view that drawing a fine line concerning bilateral trade is in the interests of both.
However, entirely different opinions on the part of participants from both sides expressed at the public hearing held by the US Commerce Department on June 3 made it clear it will not be a smooth sailing during China's quest for market economy status.
The strong opposition made up of a number of US industrial representatives clearly underlined the difficulties for the US side in making a full and fair assessment of China's progress in establishing and improving its market economy.
In spite of the changes the Chinese economy has undergone since the years of central planning decades ago, US participants insisted that China has failed to qualify itself for market economy status according to US criteria. To be designated as market economies, countries are required to meet six criteria ranging from labour issues to currency rate floating under the US Tariff Act of 1930.
In its accession agreement to the World Trade Organization (WTO), China allowed the United States and other countries to treat the nation as a non-market economy for the purposes of anti-dumping cases for up to 15 years from when membership first took effect.
Such an arrangement was then firmly rooted in China's reality. The Chinese authorities keenly realized the formidable task involved in orienting its massive economic reform toward establishment of a socialist market economy, a decision they made in the early 1990s. Out of the belief that further opening up will only propel the country's market-oriented reform, China for the time being put itself at a disadvantage concerning anti-dumping issues under the WTO framework.
The robust growth of the Chinese economy and its trade sector in particular following the country's WTO entry in 2001 testifies to the significance the Chinese Government has put on integration into the global economy. Within just two years, China's trade volume has rocketed by 66 percent to US$851.2 billion in 2003, lifting the country to become the fourth-largest trading economy in the world. The US$100 billion-plus worth of foreign direct investment China has attracted in the past two years has also demonstrated the growing confidence foreign investors showed in the world's largest developing economy.
It is understandably difficult for many other countries to accommodate such rapid growth of the Chinese economy.
In an era of accelerated economic globalization, the rise of a manufacturing superpower will definitely exert a lot of pressure on the related industries of other countries.
One answer to this global challenge is that a country should focus on doing things it can do best. In other words, a country needs to adjust its industrial structure to allow its strongest sectors to shine.
As the largest developed economy in the world, the United States enjoys a great competitive advantage in the global technology market. If not for the die-hard US Cold-War mentality, the United States could have taken a lion's share in China's technology imports. A dynamic high-tech industry, in turn, would create many high-paying jobs to bolster US employment numbers.
Unfortunately, instead of undertaking painful adjustments, the United States has yielded to time and again the temptation of protective measures like anti-dumping.
China's non-market economy status has fallen prey to this creeping protectionism.
For instance, last year, approximately 50 percent of all dumping cases accepted by the Bush administration were against Chinese imports.
China's status as a non-market economy allows the US Commerce Department to look at production costs in other high-cost countries when it evaluates whether imports from China are unfairly priced in the US market.
Surely the United States is not alone in capitalizing on China's disadvantage to abuse anti-dumping suits.
In recent years, anti-dumping actions are increasingly prevalent, in part because of traditional tariff falling as the world marches to the tune of free trade. This measure against unfair competition has gradually been reduced to a course where "one good equals one bad" nowadays.
As a result, the mounting burden caused by abuse of anti-dumping suits imposed by foreign countries on Chinese exporters has necessitated government efforts to seek a level playing field.
The subsequent charm offensive the Chinese Government launched for international recognition of its market economy status has started to work recently.
New Zealand, Singapore and Malaysia have already granted market economy status to China. And the European Union is expected to give a tentative assessment on the issue by the end of this month.
The international community seems to be awakening to the fact that the expanding domestic market which China's strong economic growth brings about provides opportunities for all.
In an optimistic view, the US hearing can also be deemed as a very early step the US Government is taking to reclassify China's status.
A more sober observation, nevertheless, points to a less encouraging reality.
The US insistence on invoking the six criteria set forth by the Hawley-Smoot Tariff Act of 1930 to review China's bid for market economy status is problematic.
The US bill itself stinks of strong protectionism. Its passage brought the US tariff to the highest protective levels ever in the history of the United States.
It is doubtful that any fair conclusion could come out of such a protectionist bill, not to mention the phenomenal changes the international economic order has undergone since then.
Another worrying point is the US attempting to sell its agenda beyond the WTO framework. The labour standards issue the US side raised remains a hot topic for today's WTO talks, and China should not be required to meet such an extra obligation according to its WTO accession agreement.
Securing market economy status is a priority for China, not only for the fair treatment it brings for Chinese exporters in anti-dumping suits but, more importantly, for the greater role that it indicates the market force will play in the national economy.
China will continue to improve its economic efficiency by improving a market economic system. By no means should the United States intend to use the country's bid for market economy status to extort extra gains.
In addition, there was a conspicuous absence of US consumers at the public hearing.
If the vast individual consumer voice is always drowned out in the cacophony of interested groups, the issue of free and fair trade may risk serious distortion.
(China Daily June 8, 2004)
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