Does China deserve the market economy status?

Publication Date19 June 2009
AuthorMarie‐José Rinaldi‐Larribe,William S. Lightfoot,Zhongxiu Zhao
Journal of Chinese Economic and
Foreign Trade Studies
Vol. 2 No. 2, 2009
pp. 110-120
#Emerald Group Publishing Limited
DOI 10.1108/17544400910966086
Does China deserve the market
economy status?
International University of Monaco, Monaco
William S. Lightfoot
School of Business and Mass Communication, Brenau University,
Gainesville, Georgia, USA, and
Zhongxiu Zhao
School of International Trade and Economics,
University of International Business and Economics, Beijing,
People’s Republic of China
Purpose – Throughout the past 30 years, major economic reforms have been implemented in China;
in 2001, China’s accession to the WorldTrade Organization (WTO) was a major step, since it enabled
the country to formally join the globalised world. But China entered the WTO without market
economy status (MES), meaning that other countries can easily use the WTO international settlement
body in antidumping procedures against Chinese firms. Since joining the WTO, Chinese authorities
have repeatedly attempted to gain this status, arguing that considerable progress has been made in
dealing with dumping, and that the transition process from a planned to a market economy (ME) has
been considerable. This paper aims to explore the issues surrounding this situation.
Design/methodology/approach – The authors searched the literature in order to understand the
reasons why China has been denied the MES until now, according to previous analyses, in order to
confront those findings with their own ideas on the subject. Moreover, they list the criteria used by
the USA and the European Union (EU) in order to justify the non-recognition of China as an ME, and
they question whether the Chinese economy meets those criteria.
Findings – The paper assesses the extent of the reforms implemented, and determines the fur ther
stages that are needed in the transition process.
Originality/value – This paper is a viewpoint that enables readers to have a more precise idea of
the present situation of the Chinese economy in terms of being or not an ME, an issue that is often
raised but with no clear-cut conclusion.
Keywords China, Market economy, Emerging markets, National economy, Planned economies
Paper type Viewpoint
1. Introduction
Since the late 1970s, China has implemented major economic reforms aimed at
improving the overall performance of the system. In the 1990s, the notion of a ‘‘socialist
market economy’’ was introduced by the Chinese authorities. In December 2001, the
accession of China to the World Trade Organization (WTO) appeared as a major step,
since it enabled the country to join the globalised world. But China entered the WTO
with a particular status: due to continuous issues related to a suspicion of dumping, it
was not granted the market economy status (MES), which facilitates other member
countries’ especially from the European Union (EU) and in the United States (US), use
of the international settlement body of the WTO in antidumping procedures.
Nonetheless, Chinese authorities have tried to obtain this MES since joining the WTO,
arguing that considerable progress has been made in the overall process of
transitioning from a planned to an ME. In opposition to this request, western countries
have put forward several arguments concerning the regulatory, legal, intellectual
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