Does China deserve the market economy status?

Abstract

Purpose

Throughout the past 30 years, major economic reforms have been implemented in China; in 2001, China's accession to the World Trade 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 further 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.

Citation

Rinaldi‐Larribe, M., Lightfoot, W.S. and Zhao, Z. (2009), "Does China deserve the market economy status?", Journal of Chinese Economic and Foreign Trade Studies, Vol. 2 No. 2, pp. 110-120. https://doi.org/10.1108/17544400910966086