A senior trade official called on the European Union (EU) to grant China full market economy status at an early date to pave the way for better trade.

“It will give relations important impetus,” said Wang Shichun, director-general of the Bureau of Fair Trade for Import and Export (BOFT) under the Ministry of Commerce.

Granting China the market economy status would represent an important embodiment of the comprehensive strategic partnership between the two sides and will benefit both, Wang said in an interview with China Daily.

Non-discriminatory treatment in world trade will create more motivation for Chinese entrepreneurs to actively participate in international co-operation in the competitive European arena, which, he said, will encourage all China’s trade partners, including the EU.

Granting market economy status should lead to stronger, healthier Sino-EU trade, Wang added.

Although the EU removed China from its non-market economy list in 1998, it continues to regard China as a market-transition economy.

“Their failure to recognize market economy status is damaging normal trade,” Wang said.

‘Unfair’ anti-dumping moves

According to government statistics, from 1979 to 2004, the EU has initiated 107 anti-dumping cases against China. Last year alone, the number of cases climbed by nine, a 200 per cent jump over the previous year.

Analysts say the anti-dumping measures being adopted by the EU against China are not fair in terms of either policy or practice.

About 70 per cent of China’s economy is market-based, above the recognized minimum level of 60 per cent for a market economy. And two-thirds of China’s gross domestic product growth is created by the non-State sector, according to a report on China’s market economy released by Beijing Normal University.

Currently, more than 95 per cent of China’s commodities are subject to the market to generate prices, according to the ministry.

The engine driving EU’s relationship with China has been its growing trade and investment with China. What is more, economic flow looks set to grow in the future, said Ding Yuanhong, China’s former ambassador to the EU.

EU decision-makers are feeling double pressure on this issue, from both industries and member countries. Since tariff and non-tariff barriers are strictly restrained in international trade, many countries allege dumping as a form of protection that is allowed by the WTO.

China is playing a positive role in the EU’s development of foreign trade although some countries worry that granting China full market economy status may affect their own self-interests, Ding said.

Meanwhile, China is trying to assure its partners and upgrade its own industry, Ding stressed, noting that China, as a growing player in global economic trade, should learn more national legislation and financial marketing skills that will enable it to work more efficiently in international economic competition.

“We know how important the achievement of market economy status is for China, and we are working proactively with China to achieve that goal,” said the EU’s Ambassador to China Serge Abou.

Calling such status is essentially a technical matter, Abou said a number of technical criteria have to be fulfilled.

“We are glad to see that China is moving forward on these and other fronts and I am hopeful that we will start political contacts on this soon.”

China has adopted regulations on mergers and acquisitions and on price controls including the prohibition of abusive behaviour by dominant companies.

Best interests of both sides

Wang said there are many reasons to believe that it is in the best interests of both sides to solve the problems as early as possible.

Both sides have expressed their goal “to become each other’s largest trade and investment partner,” said Wang.

China’s more co-operative approach to the EU is reflected in its range of initiatives.

An expert-level working group from both China and the EU concluded a new round of discussions on the issue in late April.

The Chinese Government is currently drafting legislation on competition, including the prohibitions on abusive behaviour in the market by Chinese and foreign-dominant companies. It is reported that China’s top legislative body’s legislation plan includes scrutinizing about 60 draft bills in the coming five years.

Among them there may be new laws covering areas such as bankruptcy, dumping, monopolies, telecommunications, State-asset management and taxation.

Voices from the EU are also encouraging.

On April 21-22, European Commission Director-General Philip Lowe, the highest-ranking European competition official, visited Beijing and discussed the issues with Vice-Minister of Commerce Ma Xiuhong in the EU-China competition policy dialogue.

“In order to foster economic reforms, we are encouraged by the Chinese Government’s efforts to set up a modern framework on competition policy” said Lowe. “The EU is willing to exchange views and share its experience with China.”