During a hearing regarding the possibility of China being granted the status of a market economy, US Assistant-Secretary for Import Administration James Jochum yesterday announced that it may take the US years to make such a move. Although China has not in fact asked to be granted this status, the US is currently conducting a hearing on the matter in a move to allay fears regarding the mounting trade imbalance and tense bilateral trading relations that the US currently has with China (see also Global: 22 April 2004: Chinese Concessions at Trade Meeting in Washington Set to Ease US Concerns Temporarily). Jochum revealed that as the situation stands, the US remains in the early stages of considering whether it should alter China's status and that Beijing first needs to make a number of 'fundamental reforms' across a range of areas, including labour rights. The US reportedly has six criteria that an economy must fulfil before it will grant market economy status and China currently falls short of each of these. Under World Trade Organization (WTO) rules, members do not have to consider China to be a market economy until 2016, though considering its economic size and growing importance, it is likely to achieve this status much earlier.
Significance: It would be to China's advantage to become recognised as a market economy, not least because without this WTO members like the US can consider production costs in other countries when it is evaluating the pricing of Chinese imports. China argues that this is unfair because its own costs are not used and, as such, it has to pay higher anti-dumping duties than other nations.World Markets Analysis:
